The big news of the morning comes from everyone’s favourite purveyor of aluminium clad electronics seeking to buy everyone’s favourite brand of loudly coloured plastic headphones. That’s right folks, according to multiple sources, including the New York Times and Bloomberg, Apple is looking to drop somewhere in the region of $3.2 billion (around R33bn, or as I like to think of it 132 Nkandla upgrades) to buy Beats Electronics.
The deal will see both the hardware division of Beats, that makes its popular headphones, as well as its Beats Music streaming service joining Apple. While the premium headphone business, which is dominated by Beats, is an extremely lucrative proposition for Apple many believe that the move would be almost exclusively to acquire the streaming service that would give Apple room to compete with the likes of Spotify, Pandora and Rdio.
Apple, which is largely credited with reviving the music industry with its iPod and iTunes services, has seen flagging revenue from digital music sales as more and more people move towards subscription services like Spotify which charge a monthly fee to store downloaded music on mobile devices but allow for streaming music for free. Beats Music originally started off as another subscription service similar to the others but has failed to gain serious traction in a market that continues to be dominated by the established names already there.
Apple would also be able to draw on Beats’ CEO Jimmy Iovine who also sits as chairman of Universal Music Group’s Interscope, Geffen and A&M labels with artists like Lady Gaga and Eminem who could potentially be used in the initial marketing blitz that Apple would likely mount in challenge to its rivals should Apple buy Beats Music.