×
You will be redirected back to your article in seconds

Apple Seals $3 Billion Deal to Acquire Beats Music and Electronics

The Beats deal marks Apple's largest acquisition to date

Apple has sealed a $3 billion deal to acquire the Beats Music streaming service and Beats Electronics audio gear business founded by Jimmy Iovine and Dr. Dre.

The deal marks the largest acquisition in Apple’s history. As part of the deal, Iovine and Dr. Dre will sign on as Apple employees after the transaction is completed, marking a changing of the guard for both the technology and music sectors. Iovine was previously chairman of Interscope Geffen A&M, one of Universal Music Group’s largest label groups.

“Music is such an important part of all of our lives and holds a special place within our hearts at Apple,” said Apple CEO Tim Cook. “That’s why we have kept investing in music and are bringing together these extraordinary teams so we can continue to create the most innovative music products and services in the world.”

SEE ALSO: John Janick to Replace Jimmy Iovine as CEO of Interscope Geffen A&M

Deal calls for Apple to fork over $2.6 billion to acquire the Beats companies, with another $400 million in compensation to vest over time. Apple said it expects the deal to close by year’s end.

The Apple logo won’t suddenly cover up the ‘B’ on Beats’ products, with the brands expected to remain separate entities, the companies said.

Beats’ Twitter feed sent out this message to its 522,000 followers on Wednesday:

And in a memo to Apple employees, Cook wrote:

Beats Music was built with deep respect for both artists and fans. We think it’s the first subscription service to really get it right. … Beats Electronics has become the brand of choice for headphones and speakers in both the music and sports world, just five years after its launch.”

The sale is a significant payout for Iovine and Dr. Dre, who launched the Santa Monica, Calif.-based company in 2008 as a venture that produces colorful headphones at a premium price of around $300. Its products, which became fashion accessories, were produced by Monster Cable until 2012, when founders bought back control of the company from Monster and mobile hardware maker HTC.

Apple said it plans to expand the reach of Beats’ products, making them available in more markets around the world, especially through its online store, physical stores and authorized resellers. Beats’ headphones and portable Pill speakers already were sold in Apple’s outlets.

Apple’s plans to acquire Beats first emerged earlier this month.

Deal represents a shift in strategy for Apple, considering it stayed away from making major acquisitions under Steve Jobs’ leadership — it has made smaller purchases, acquiring 27 companies during its fiscal year 2013 until now. Jobs also was opposed to launching a music streaming service, opting to build a business around digital sales through the iTunes store, believing consumers wouldn’t want to rent music.

Beats Music launched in January as a subscription service for $10 a month. In March, it had 110,000 subscribers. Apple is now expected to use the streaming service to compete with Spotify, Google Play Music, Pandora and Last.fm

More Biz

  • Tan FranceUnforgettable Gala, Inside, Los Angeles,

    'Queer Eye' Star Tan France to Host Audiobook Audie Awards

    “Queer Eye” resident style expert Tan France is taking on a slightly different project next month as he hosts the Audie Awards, which honors the best releases and achievements in audiobooks over the past 12 months. The ceremony, which takes place on March 4 in New York, is an annual event organized by the Audio [...]

  • Obit Obituary Placeholder

    Shelly Saltman, Former Fox Sports President and Promoter, Dies at 87

    Sheldon “Shelly” Saltman, the sports promoter behind the Billie Jean King vs. Bobby Riggs tennis match and Evel Knievel’s Snake River Canyon jump, died Saturday in Los Angeles. He was 87. The original president of Fox Sports, Saltman started his career as a sports announcer before moving to promotions at media companies like the Gillette Cavalcade [...]

  • Arista Records, Mogul Vision Launch Joint

    Arista Records, Mogul Vision Launch Joint Venture

    Arista Records and Smokepurpp/ Lil Mosey manager Josh Marshall today announced the launch of Mogul Vision Music, a new joint venture label focused on “breaking extraordinary talent and building artist careers through innovative A&R, branding and marketing strategy,” according to the announcement. Based in New York with Marshall (pictured above left, with Massey) as its CEO, the [...]

  • Jussie Smollett

    Jussie Smollett Faces Prison, Career Ruin if He Lied About Attack

    Jussie Smollett is facing prison time and the implosion of his career if it turns out he lied about being the target of a hate crime, legal and public relations experts say. “The best thing that Jussie can do is pray and pray a lot,” said Ronn Torossian, founder of 5W Public Relations. “If he [...]

  • Gerrit Meier Variety Strictly Business Podcast

    Listen: Red Bull Practically Invented Branded Entertainment. What's Next?

    With memorable moves like sponsoring Felix Baumgartner’s jump from outer space in 2012 to achieve the world’s farthest ever-parachute drop, Red Bull has been a pioneering force in branded entertainment. While known best for its line of energy drinks, the beverage maker has eschewed traditional marketing for content that blurred the boundaries between advertising and [...]

  • Martin Bandier to Be Honored at

    Martin Bandier to Be Honored at Songwriters Hall of Fame Ceremony

    Martin Bandier, outgoing chairman and CEO of Sony/ATV Music Publishing, will be awarded the Visionary Leadership Award at the 50 th Annual Songwriters Hall of Fame Induction and Awards Dinner. The ceremony will take place on Thursday, June 13 at the Marriott Marquis Hotel in New York City. According to the announcement, the Visionary Leadership Award “acknowledges a member of the Songwriters Hall of Fame Board [...]

  • Hong Kong Disneyland Remains in the

    Hong Kong Disneyland Remains in the Red but Reduces Losses

    The Hong Kong Disneyland Resort theme park remained in the red for the fourth straight year, but there are signs of improvement. For the financial year to end-September 2018, HKDL reported $769 million (HK$6 billion) of revenue from 6.7 million visitors, an increase of 8%. Net losses fell from $32 million (HK$291 million) to $6.92 [...]

More From Our Brands

Access exclusive content