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

[DesterWallaboo]

beats sucks.....

end of story.


I should say... beats audio hardware sucks. I don't know anything about their music service.

 

[bbbb4b]

forget it.
pointless.

 

[xVeinx]

Apple is going to ruin this service.

Judging by iCloud and iTunes Match, Apple really doesn't get the cloud or cloud services.

People STILL have to download iTunes to their desktops just to listen to and buy music for pete sakes. Now wonder Google is killing them in cloud services. All of their software is accessible on any browser, any device.

It's called device lock in. They aren't looking into developing cloud services, AWS/Compute, etc. for anyone or everyone. They are a hardware company filling out an ecosystem to support their own products. The reason for iTunes on Windows is because iPods were often used by owners of Window's machines. iTunes may become web accessible in the future, but it wasn't the goal initially.

 

[subsonix]

But I didn't assume anything

You mentioned that the reason was to get at the streaming service and avoiding starting from scratch, iTunes already is a music service and it already streams. This means that they don't need to start from scratch, they have know-how and infrastructure in place to make it happen.

They are all complete, and new applications. iTunes is already a music service, it can already stream.

They're not. But you're welcome to your ignorance. Enjoy.

How so? They are all new applications that Apple acquired.

 

[Boomish69]

Steve Jobs would hate this type of comment.

He certainly wouldn't have bought Beats tho, Apple will loose so much over this, it looks like they have idea what they are doing - a panic buy!

 

[bbbb4b]

Exactly why it's an assumption.

What did I assume?

They are all complete, and new applications. iTunes is already a music service, it can already stream.

No, they are not, but enjoy your ignorance.

Never said the applications are not "complete" (if that's what you are inferring)

"iTunes is a music service that can stream"
Wow. are you sure? I had no idea.
That changes everything. You are right. No technology here that could be integrated into Apple's plans. In the same manner that they've done with almost every one of their other products. I guess.

 

[subsonix]

No, they are not, but enjoy your ignorance.

Never said the applications are not "complete" (if that's what you are inferring)

They are adding something new that Apple didn't have at the time of the buy.

"iTunes is a music service that can stream"
Wow. are you sure? I had no idea.
That changes everything. You are right. No technology here that could be integrated into Apple's plans. In the same manner that they've done with almost every one of their other products. I guess.

They already have the technology. If the problem is something else, and they are buying "users" or "subscribers" then that's pretty weak imo.

 

[bbbb4b]

You mentioned that the reason was to get at the streaming service and avoiding starting from scratch, iTunes already is a music service and it already streams. This means that they don't need to start from scratch, they have know-how and infrastructure in place to make it happen.



How so? They are all new applications that Apple acquired.

Are you serious?
I'm the one who said they don't need to start from scratch. Not you.

You simply don't seem to understand that Apple buys up technologies and then molds them into, or integrates them into, their own products.
Where have you been?

edit: If it helps, do some research on BeatsMusic, and the technologies behind that service.
Or just wait and see what Apple does with it. THAT will then be your answer.

 

[l0renz]

Does this mean beats audio speakers on the iPhone 7?

 

[subsonix]

Are you serious?
I'm the one who said they don't need to start from scratch. Not you.

Exactly, you made some assumptions, which was what the fuzz was about, I just quoted what you said earlier. So, yes you said that. Correct.

You simply don't seem to understand that Apple buys up technologies and then molds them into, or integrates them into, their own products.
Where have you been?

I do understand that. I don't see how Beats fits into the type of companies they usually buy, which is what this discussion is about.

 

[MowingDevil]

I don't know abo their other services but Beats headphones are not high quality & completely overpriced imo.

Flash & gloss behind a big brand, seems fitting for Apple's recent trends.

$3.2b also seems like a grotesque overpayment which is apropos.

 

[dan110]

Bad Idea

I can't help but feel like the is a bad idea. Unless, there's something both companies know about that is not public knowledge.

 

[thermodynamic]

Why not just buy Pandora or Spotify?

Because competition is a good thing and if there's no competition, prices will skyrocket.

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I don't know abo their other services but Beats headphones are not high quality & completely overpriced imo.

Flash & gloss behind a big brand, seems fitting for Apple's recent trends.

$3.2b also seems like a grotesque overpayment which is apropos.

That's common knowledge, about Beats - and most flashy glossy things in general. Unfortunately, that's also the for Apple, since there are a lot of irate 2011MBP owners right now experiencing big problems with their GPUs failing, rending $2000+ laptops into items not worth $0.02, despite being sold on the notion of "higher quality"...

I've not read up on newer models, though the 2012 Retina version, despite not being user-upgradeable (ugh), has air vents and an improved cooling system. Apple probably won't do any service to previous model owners, but the revamp is proof they did something about the problem. Even if it took years and a different CEO to greenlight it, since the unibody MBP has always produced dangerous amounts of heat. (My 2009 and 2011 models easily get over 90C under load (yes, some of us do need some power), and the 2010MBP was reported by macworld and others to auto-shutdown due to getting over 105C. MBPs are the only laptops I've had that get over 70C under load, and higher temperatures = lowered lifespan and greater chance of problems. Computers and chips are NOT designed to run at higher temperatures for any length of time and remain usable. I personally want a laptop to last 5 years and, temperature issue aside, most of what Apple has done is good - especially with the battery (though the 2011 models do throttle due to lack of wattage under high workloads). And the 2012 model improves on all these areas, and I'd bet the 2013 and 2014 models do as well. I'll wait for the reviews but chances are very high I'll stay with the MBP come 2015, though I will miss the expandability...)

 

[afsnyder]

This 3b+ is nothing compared to the 19b purchase of WhatsApp.... seriously guys, this is nothing.

 

[donhaupt]

Apple Beats HOAX

This is a copy of the email I sent to the Wall Street Journal writers who did a story on this:
Before you write any more articles on the “Apple-Beats deal.” I would urge you to look at Bob Lefsetz’ newsletter of April 1 2014 to avoid further embarrassment. Look at that date again. Think “April Fools Day.” Now read the article (Google ‘Bob Lefsetz'). In the article, Mr. Lefsetz, a delightful music/entertainment analyst, outlines all the “synergies" of such a deal (the only difference is he prices it at a mere $1 Billion). It was a terrific April fools joke…had me going for a minute. Evidently had a LOT of experienced investment analysts and writers going for longer than that (my guess is that the Facebook leak by an ACTOR fueled it today).
Now maybe you want to do an article on the similarities between financial analysts and lemmings? I suggest you read Mackay’s classic, “Extraordinary Popular Delusions and the Madness of Crowds.”
And if, by chance I’m wrong, maybe you should do an article on how life imitates art!

Sincerely

Don Haupt, MD

 

[bigchrisfgb]

People keep knocking this purchase but I've came up with some pretty good reasons as to why Apple may have bought Beats.

1. Headphone Hardware:
The most logical reason, Beats is world renowned brand in headphones, rate them or not, like them or not they are strong sellers. They have an estimate of 40% of the headphone market. Apple owning this is a major revenue in take for them.

2. Streaming services:
Beats currently have streaming services in the USA, and Australia. Bringing this under the iTunes brand could help Apple regain revenue that has been lost because of content streaming instead of iTunes purchases.

3. Contacts:
The owners of Beats have a good level of contacts in the music industry. Apple could leverage these contacts in future in order to negotiate content deals for iTunes. Probably not the major reason but certainly it is an added plus in the takeover.

4. iDevices:
Beats speakers on the HTC M7 and M8 are said to be the best speakers out there for mobile devices. Packard Bell also have a deal with Beats for using Beats speakers in their computers. Apple could implements these speakers into their iDevices and possibly their Mac line ups, improving their speakers in said devices which would take away a huge selling point in the other manufacturers devices, particularly HTC.

5. Car play:
Beats are set to be bringing out their own brand of car entertainment systems and speakers. In fact the Fiat 500 now has a Beats edition. Apple could use this to help implement Car play into the Beats entertainment systems. Beats hardware, with Apple's software.

 

[springsup]

Why not just buy Pandora or Spotify?

This is absolutely what Apple should do. I really can't understand why Apple always make such half-hearted acquisitions. Google and Facebook buy world leaders like Youtube and WhatsApp - Apple buy companies like Lala and Beats.

Apple have the money, and they don't have the creepiness factor that Google or Facebook do that drives people away after acquisitions. Spotify is a much-loved brand and if Apple don't acquire them, this new iTunes streaming service is going to be competing with them. That's a battle Apple is unlikely to win.

By going all-in and buying the leader in this space, Apple will cement iTunes as part of peoples' lives well in to the future. You need to pick your battles - and in this case, buying Beats and battling Spotify looks like a losing strategy. It would be much better to buy Spotify and battle Beats.

It's about negotiating contracts. Prices and terms can vary greatly. Spotify has never been profitable, despite the hype, but Beats certainly is. And with his industry influence and contacts, Iovine is very valuable.

Iovine, a guy whose contract with Beats is up at the end of the year, isn't worth that much. It's not like he's the most or only influential person in the industry. Also, regardless of how influential this guy is, you know what's more influential? Money.

Beats' hardware business is useless to Apple; the headphone business isn't going to make a meaningful contribution to the company and they can't make them iOS-only in order to drive sales of actually useful things (like iPhones). Why does Apple need to acquire that part of the business? They can continue operating as a standalone company and it wouldn't hurt Apple at all.

If Spotify really is unprofitable, it's surely going to be an easier acquisition target. Investors still remember the Facebook IPO, so this rumoured $6-8Bn IPO may in fact turn out to give them significantly less than that. Apple could pay them $5-6Bn up front and let them walk away with a very nice guaranteed return.

If the labels really have been pressuring Apple to get in to the streaming market, they shouldn't put up much of a fight if Apple wants to integrate Spotify's terms in to its existing deals (assuming Apple would even need new deals to do this - who knows what options are in their existing agreements?).

Still if Apple put 3 billion on the table, I am sure the music labels would be extremely happy to sign the deal.

Unless Beats' music label deals are for eternity and beyond, I see no reason why it would worth 3 Billion.

Absolutely right. Apple is one of the companies who could most seamlessly acquire Spotify.

 

[RicD]

When I want to hear music I turn on the radio.

Years ago I quit purchasing music. After putting the unspent money in savings it amazed me the amount of money I saved, money that is now used for more pleasurable activities. Though I enjoy listening to music I do not have any reason to own a music library.

 

[Zerilos]

He certainly wouldn't have bought Beats tho, Apple will loose so much over this, it looks like they have idea what they are doing - a panic buy!

You realize that you're just stating your opinion and then pretending that ghost Jobs agrees with you right?

 

[springsup]

People keep knocking this purchase but I've came up with some pretty good reasons as to why Apple may have bought Beats.

1. Headphone Hardware:
The most logical reason, Beats is world renowned brand in headphones, rate them or not, like them or not they are strong sellers. They have an estimate of 40% of the headphone market. Apple owning this is a major revenue in take for them.

Have you seen Apple's revenue figures? They couldn't care less about the pittance Beats makes.

2. Streaming services:
Beats currently have streaming services in the USA, and Australia. Bringing this under the iTunes brand could help Apple regain revenue that has been lost because of content streaming instead of iTunes purchases.

USA and AU are the easiest markets to crack apparently, because iTunes Radio is also in both of those markets. Spotify also has deals covering most of Europe.

3. Contacts:
The owners of Beats have a good level of contacts in the music industry. Apple could leverage these contacts in future in order to negotiate content deals for iTunes. Probably not the major reason but certainly it is an added plus in the takeover.

Iovine is leaving at the end of the year, and even so Apple have their own good contacts (e.g. Eddy Cue). They can hire this guy away from Beats if it absolutely must be him, but the record industry is bursting with "insiders".

4. iDevices:
Beats speakers on the HTC M7 and M8 are said to be the best speakers out there for mobile devices. Packard Bell also have a deal with Beats for using Beats speakers in their computers. Apple could implements these speakers into their iDevices and possibly their Mac line ups, improving their speakers in said devices which would take away a huge selling point in the other manufacturers devices, particularly HTC.

HTC have ended their deal with Beats IIRC. Apple could hire engineers to improve speaker quality for cheaper than $3.2Bn.

5. Car play:
Beats are set to be bringing out their own brand of car entertainment systems and speakers. In fact the Fiat 500 now has a Beats edition. Apple could use this to help implement Car play into the Beats entertainment systems. Beats hardware, with Apple's software.

I doubt competition with Beats in the automotive space scares Apple one jolt. Customers will demand CarPlay, and the automotive people will have to figure out how to deliver that to them. Nobody is going to sacrifice CarPlay for Beats if they had a choice of one or the other.

Responses in bold.

 

[Zerilos]

This is a copy of the email I sent to the Wall Street Journal writers who did a story on this:
Before you write any more articles on the “Apple-Beats deal.” I would urge you to look at Bob Lefsetz’ newsletter of April 1 2014 to avoid further embarrassment. Look at that date again. Think “April Fools Day.” Now read the article (Google ‘Bob Lefsetz'). In the article, Mr. Lefsetz, a delightful music/entertainment analyst, outlines all the “synergies" of such a deal (the only difference is he prices it at a mere $1 Billion). It was a terrific April fools joke…had me going for a minute. Evidently had a LOT of experienced investment analysts and writers going for longer than that (my guess is that the Facebook leak by an ACTOR fueled it today).
Now maybe you want to do an article on the similarities between financial analysts and lemmings? I suggest you read Mackay’s classic, “Extraordinary Popular Delusions and the Madness of Crowds.”
And if, by chance I’m wrong, maybe you should do an article on how life imitates art!

Sincerely

Don Haupt, MD

Good job. I'm sure he'll be issuing a retraction any second now. Thanks for putting this to rest.

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I don't know abo their other services but Beats headphones are not high quality & completely overpriced imo.

Flash & gloss behind a big brand, seems fitting for Apple's recent trends.

$3.2b also seems like a grotesque overpayment which is apropos.

I don't use their headphones (or plan to), but they did make around $400 million in profit last year on headphone sales. If that continues, then this deal will have paid for itself in less than 10 years.

----------

There are hundreds of millions of iPhones out there, as well as a whole lot more iPod Touches, all with access to iTunes. And apparently they're not buying it.

That said, I use iTunes radio occasionally - but normally I listen to my music.

Nearly 8 out of 10 smartphones sold are Android and not one of them can use iTunes Radio. Even then, iTunes Radio is the 3rd largest free music streaming service (way way way behind Pandora).

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Weak proposition when you can listen to full albums on demand with Spotify, Deezer, and similar services.

I only listen to full albums on them. If there's any unavailable track in an album, I skip the whole thing.

And I never stream. I always listen offline.

iTunes Radio was not designed to be a subscription based service like Spotify or Beats. That was clearly a mistake that Apple wants to correct.

 

[donhaupt]

Apple Beats Hoax

Thank you Zerilos for being the first one to actually read my post. I'd urge others to check out the Bob Lefsetz newsletter and realize there's a strong likelihood that someone at financial times stumbled on this a was too busy getting away for the weekend to fact check. There's a reason the original Facebook post was removed, and besides, the guy who made it was an ACTOR and friend of Dre, who is probably still lecturing the boob on stock manipulation laws.
All of you, PLEAE read the Lefsetz joke article. Either the guy is spookily prescient, or wrote an excellent, detailed mock analysis of this "transaction" over a month ago

 

[Romy90210]

surely there are lots of smart people working in apple, why can't they come up with their own system.

Because they would have to spend more money that way.. Securing new deal with record labels and the what not.... It'd deff cost apple more than the 3.2 billions they plan to pay for Beats...

There is a reason why apple still number 1.... They know what they are doing and just because a few apple fans doesn't like BEATS doesn't mean apple isn't going to make a fortune our of this deal.. Clearly someones know what they are doing....

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I can't help but feel like the is a bad idea. Unless, there's something both companies know about that is not public knowledge.

How about BEATS making more money than any other headphones company in the USA if not the whole world..... Bet you didn't know that.... ?

 

[Drunken Master]

Let them push, its going back to the old model and bad for consumers!!! You have to subscribe to get one song.

Everything is going to subscription from Games, to Music, to Software, etc and its bad for consumers!!!

People need to stop buying into these subscription based models or they will just keep coming!

Agreed, subscriptions suck. I can't believe people keep getting suckered into them.

 

[MacAddict1978]

The thing is launching a music subscription service is technically not difficult, and since music labels are already "pushing" for it, I see no reason Apple can't roll their own for much much less than 30 million.

Because you don't have the business acumen, nor do the majority of people who post on these sites that are computer geeks (i'm one too) and tech nerds, but not business people.

Beats headphones are up to $1.5 billion a year.

Like the article mentions, Apple has 800 MILLION iTunes accounts. That 14% decline last quarter in iTunes sales.... are people spending those dollars on subscription services.

There is no logic in your assumption apple could do this for $30 million. They could create their own service for far less. They already have foundations to launch such a service on. To apple, it would be like using the change under the cushions.

Buying Beats gives them a hardware revenue stream from a profitable company, not a risky startup... and a streaming service that is alrady taking off very well and gives them a mean of pushing hundreds of millions of subscriptions (making Spotify and the others look like desolate waste lands).

There is a reason Apple has billions in the bank, and we don't. This is a great business move. Not only can they expand the streaming service, the hardware is golden. Good bye crap speakers in the macbook line.... hello beats audio.

Sound bars.... tv.... they have lots of room to grow that brand. Add the Apple marketing machine to the mix....