Apple Playing 'Catch Up' With Beats Acquisition as Music Labels Push for Subscription Services

[kas23]

Combine both rumors-- the purchase gets Apple the streaming rights they wanted, at a better price. Plus they get the current biggest brand in music and a pricey accessory to sell.

But is $3.2B less than what Apple would have paid for unfriendly streaming rights? Apple agreeing to a poor streaming rights contract is speculative too.

As for the hype and profits Beats makes through selling accessories, it's unsustainable. We are not talking about great sales due to a great product (think: Apple quality products), but rather great sales due it being a trendy, fashionably cool thing to own and be seen with. Problem is, trends/fashions change. These headphones could easily go out of style in 2-3 years.

 

[Warbrain]

Because I support musicians. They get @#$E$ on streaming deals. And no they can't make that up just touring and selling merch.

You get what you pay for. Cheap prices = cheap, throwaway music. It's like the old adage: "Fast, cheap, or good. Pick two." In this case, it would be more like, "Fast & cheap, or good. Pick one."

Yes, they do make it up touring and selling merch. Buy direct from the artist. They get regular residuals from streaming that they would never get from sales.

That's because streaming hasn't totally taken over the market yet. There's still some good bands out there. But many less quality records in the last few years coming out than there used to be. I'm sure we'll see that downward trend continue as streaming becomes the de facto way of accessing music.

Streaming is taking over much sooner than I thought. It already is making up the difference in lost sales. This year or next it'll outpace music sales.

 

[NoneOfYourB]

Giant label EMI was sold in 2012 for about $4B total (recording + publishing rights went to separate companies). So yeah, buying up labels would be more money, much more, but that's something Apple has more than it knows what to do with. And it would be a much better investment -- not only would they be able to reduce their costs per song to about 0 cents because they wouldn't have to pay anyone, but they could increase rates on competitors. That's not even taking into account publishing rights for commercials, cover songs, etc.

The thing is - they can't buy 'em all.
There are laws against that.

 

[Loge]

Streaming services appear cheap at the moment because they are mostly concerned with growing their number of subscribers. At some point when nearly everyone who wants a subscription has one, the metric changes to revenue per subscriber. Then we will start to see the true cost of subscriptions.

 

[petsounds]

You think the labels care about artists more if they sell CD's vs streaming? The Labels would pay the artists crap either way.

Oh right, it's the old "it's the evil record labels" argument.

1) Not all labels are created equal. Majors have screwed a lot of bands, but bands that knew what they were doing negotiated good contracts. Then there's the indie labels, which mostly are just scraping by.

2) Labels provide some great things like promotion, booking, etc. so that musicians can focus on music and not on business and advertising.

3) Artists are certainly getting paid less under the streaming model than under a purchasing model. Not only because of the reduced revenue, but because major labels seem to be manipulating things in their favor.

 

[kas23]

This alleged acquisition is still just that -- a rumor -- so I'm not sure why MacRumors is using language in this article to make it sound like it's already an official done deal.

If Apple is really buying Beats for streaming rights, they should've just bought up the music companies themselves. At least then they'd get lucrative publishing rights. Buying Beats is like paying for the opportunity to rent.

Didn't you see Tyrese's tweet. Dre basically leaked it out and I'm sure Apple and the test of the lawyers are furious.

Either way, this is a horrible deal. Seems like Apple could've poached some of the engineers and just built this from the ground up or perhaps they don't have the ability to do such things anymore.

 

[subsonix]

Interesting take here:

http://finance.yahoo.com/blogs/dail...s-for--3-2-billion--smart-move-145319949.html

The problem with that imo, is that it assumes that Apple needs something like Beats to create a streaming service, something that I find hard to believe. The head phone business and brand, they have no use for as far as I see it.

 

[LordQ]

I think you're right when it comes to true music fans or musicians themselves. But a large part of today's customer base are the teens and pre-teens who only want the ability to play whatever's trendy and cool, over and over for a few months, until it's no longer cool. Then they'd rather pretend they never had those songs in the first place, and they move on to something else.

Unfortunately, my pre-teen daughter fits this mold precisely. She *loves* her Beats audio subscription. Before that, it was just a big hassle for all of us when she'd fill up her iPhone or iPod with all the random material she said she wanted -- only to have to delete most of it out and replace it with other content, every 60 days or so. (Really, it was all pop and country music garbage that I wouldn't waste the disk space holding onto anyway!)

This happens to me as well and I'm 24. I purchase my favourite music, but cool trendy music is nice to hear for a few months and then just forget about it (remember Gangnam Style?). Personally I use a combination of YouTube, TuneIn Radio and iTunes for this. Works like a charm for me.

 

[Technarchy]

I called it. Nothing to do with headphones.

Apple wanted a cross platform streaming music service which wouldn't require iTunes to be diluted or ported to the android enemy.

 

[mozumder]

All Apple has needed to do to sell me a bunch of music over these past years is offer lossless versions of everything. I've never bought a track on iTunes and never will until I can get full quality audio.

Streaming… meh. Not for me.

Why would you want lossless everything? How does that help your music?

Are you implying that you can tell the difference between 256kbps M4a and lossless?

Because you would be the first person to ever notice a difference.

My advice to you is to ignore technology and just enjoy the music. That's what it was made for.

You're not supposed to care about the bit rate, as it implies you are more concerned with being a geek than being a music fan.

And everyone hates geeks.

 

[Xgm541]

We seem to have quite a few CEOs here on macrumors who know exactly how to build, promote and make music streaming profitable. Please give more advice to Apple because their profits have been do low they must not know what they're doing... Oh wait.

 

[brendu]

They'll almost certainly discontinue the Android and WP versions as soon as they're contractually able to.

I actually think this could be part of apples plan to get money out of android users without giving them iTunes. I could be completely wrong but it is possible.

 

[MacNut]

I called it. Nothing to do with headphones.

Apple wanted a cross platform streaming music service which wouldn't require iTunes to be diluted or ported to the android enemy.

Isn't iTunes already diluted? It is nothing more than bloatware at this point.

 

[subsonix]

We seem to have quite a few CEOs here on macrumors who know exactly how to build, promote and make music streaming profitable. Please give more advice to Apple because their profits have been do low they must not know what they're doing... Oh wait.

And what do you propose people should discuss in a thread like this, are you only allowed to agree with the premise of the article?

 

[Yojimbo007]

Translation: Why not pay 5x more and not pick up a profitable accessory line in the process.

Spotify is valued at 3 b

association between a mediocre product ( beats) and apple could be very damaging to apple's reputation/ image and mantra of "we only make and sell the best"

 

[cube]

As of today, the actual cost seems to be over 5 billion.

 

[JAT]

Some phones have 'beat' speakers or beat something built into them. I have never experienced tremor heard the difference but i imagine that technology could bemused in ALL apple hardware to increase sound quality.

So apple get:
Streaming system
Improved audio in devices
Proper headphones (big headphones for a big screen)
All the Beats team - these guys know a lot about music - And loveine is very important in the industry

Combined with HD iTunes?

Apple could produce the best sounding post pc era devices out there. The only question is.. Do the general public care?

I'll tell you a secret. The "quality enhancements" in most of these products can be imitated thus:
Turn up the crap 50Hz bass.

That's what seems to spur the general public.

 

[tkermit]

This happens to me as well and I'm 24. I purchase my favourite music, but cool trendy music is nice to hear for a few months and then just forget about it

Why listen to it at all, though? I'm a bit older than you, but I don't feel like I'm missing anything by simply skipping the "cool trendy [yet ultimately forgettable] music" (in so far as that is possible)...

 

[Zerilos]

The problem with that imo, is that it assumes that Apple needs something like Beats to create a streaming service, something that I find hard to believe. The head phone business and brand, they have no use for as far as I see it.

The headphone provide a safety net. Beats makes around $400 million in profits off headohones. As a result, this deal pays for itself in less than a decade on headphone sales alone.

 

[koban4max]

Ummm...what?

exactly what i meant.

 

[Carouser]

And what do you propose people should discuss in a thread like this, are you only allowed to agree with the premise of the article?

1) False dichotomy

2) The article is descriptive; there's no premise there for (dis)agreement

3) Playing Armchair CEO is dumb even if there's nothing to do besides play Armchair CEO

 

[cube]

The headphone provide a safety net. Beats makes around $400 million in profits off headohones. As a result, this deal pays for itself in less than a decade on headphone sales alone.

And who guarantees the fad will last?

 

[Zerilos]

Spotify is valued at 3 b

association between a mediocre product ( beats) and apple could be very damaging to apple's reputation/ image and mantra of "we only make and sell the best"

Whatsapp was valued at 1.5 billion when Facebook and Google entered a bidding war for it. Facebook won at 19 billion. A companies value does not equal what you can purchase it for.

----------

And who guarantees the fad will last?

True, it might not.

 

[bbbb4b]

The problem with that imo, is that it assumes that Apple needs something like Beats to create a streaming service, something that I find hard to believe. The head phone business and brand, they have no use for as far as I see it.

No reason for Apple to start from scratch. In fact, it literally makes no sense. (besides, that's simply not how Apple usually rolls anyway; Just look at iTunes)

To reiterate; I say this is deal is all about the the streaming technology, merging with the next quantum leap for Siri. (Just before it jumps to TV services)

 

[subsonix]

The headphone provide a safety net. Beats makes around $400 million in profits off headohones. As a result, this deal pays for itself in less than a decade on headphone sales alone.

But you could name hundreds of other profitable businesses, that still doesn't make sense for Apple to buy. The fact that they are profitable isn't enough to justify this. As far as I can tell, it has to provide something that Apple doesn't have or are unable to create.

No reason for Apple to start from scratch. In fact, it literally makes no sense. (besides, that's simply not how Apple usually rolls anyway; Just look at iTunes)

To reiterate; I say this is deal is all about the the streaming technology, merging with the next quantum leap for Siri. (Just before it jumps to TV services)
]

Yeah, but that assumes that Apple is unable to create their own streaming service, and that the obstacle to get there is technical, which isn't believable imo.