On Wednesday Apple announced that it will acquire Beats Electronics for $2.6 billion and approximately $400 million over time in a move that will help to bolster Apple’s online music subscription service and allow the company to better compete against key rivals Pandora and Spotify that are increasingly becoming a driving force in the streaming music business.
“Music is such an important part of all of our lives and holds a special place within our hearts at Apple,” said Tim Cook, Apple’s CEO following the announcement. “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” Cook added.
The acquisition is Apple’s largest and signals a willingness for the technology hardware company to spend billions to re-establish itself on the cutting edge of the music business as it had successfully done under former Apple CEO Steve Jobs in 2002 when he helped to transform the music industry by convincing music executives to sell their music online one song at a time through iTunes.
Initially, the popularity of iTunes shot through the roof and motivated other companies like Pandora and Spotify to stream music through a subscription service model.
But in recent times iTunes has been losing market share to Pandora and Spotify.
Pandora has over 250 million registered users and reported 73.4-million active users in January.
Spotify announced on May 21,2014 that it has 10 million paying subscribers and more than 40 million active users across 56 markets.
Beats Electronics, co-founded by respected music industry producers Johnny Iovine and Dr. Dre in 2006, has 500,000 active subscribers.
But in March there were reports that Beats Music had just 111,000 subscribers to its streaming service.
Across the U.S., iTunes remains the leader of digital music downloads while iTunes Radio is number three for streaming music, following Pandora and iHeart Radio.
Stylish Beats Headphone
Beats Headphones are high quality stylish headphones that start around $100 and jump up to $450.00 for higher end models which suits Apple users who tend to have more disposable income to purchase high end technology products.
Beats has formed strategic partnerships in the past with Chrysler Group and Hewlett Packard.
“I’ve always known in my heart that Beats belonged with Apple,” said Beats co-founder Jimmy Iovine.
“The idea when we started the company was inspired by Apple’s unmatched ability to marry culture and technology. Apple’s deep commitment to music fans, artists, songwriters and the music industry is something special” added Iovine.