Why Apple is in talks to buy Beats - TechCentral

Why Apple is in talks to buy Beats

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Apple could be about to splash as much as US$3,2bn on Beats Electronics, the maker of a range of popular headphones. According to a report in the Financial Times, a deal could be announced as early as next week.

But it may be less the headphones than Beats’s new music streaming service that has attracted the interest of Apple CEO Tim Cook. The deal talks, if they’re happening, most likely came about because of Apple’s declining music sales and its dwindling efforts to stay competitive in the music streaming market, which is currently being dominated by rivals.

Other newspapers, including the Wall Street Journal and the New York Times, say they’ve verified the rumours. But Apple and Beats are keeping mum — for now.

Beats was founded by music mogul Jimmy Iovine and rapper Andre Romelle Young (better known by his stage name Dr Dre) in 2008 and, if the Apple deal goes through, it will be the iPhone-maker’s biggest-ever acquisition. In fact, it will be the first time Apple has spent more than $1bn on any company purchase.

It is reported that the deal will give Apple control over the Beats hardware division as well as its music streaming service Beats Music, which was launched in January.

Although sales through Apple’s music download service have been slowing, the company has also not been particularly successful with iTunes Radio, its streaming music service, which it launched in September 2013. According to industry insiders, this is one of the main reasons why Apple is looking at the Beats acquisition.

Beats Music, unlike any of the other streaming services currently available, has not quickly fallen by the wayside — thanks in large part to its creative director and Nine Inch Nails frontman, Trent Reznor, who is responsible for the way in which the service compiles music playlists and recommends new music.

The platform, which was built for mobile devices, allow users access to more than 20m songs across all genres. It also allows them to type a sentence like “I am at the beach and want to listen to party songs” and the software will compile an appropriate playlist.

In an interview with AppleInsider last January, Iovine claimed that he tried to push former Apple CEO Steve Jobs to launch a subscription music service in the early 2000s. “So, I met [Jobs] and we hit it off right away. We were really close,” Iovine said. “We did some great marketing stuff together: 50 Cent, Bono, Jagger, stuff for the iPod — we did a lot of stuff together. But I was always trying to push Steve into subscription. And he wasn’t keen on it right away.”

Reuters reported last year that executives from both Apple and Beats met several times ahead of the Beats Music launch. The meetings included Cook, Iovine and Apple’s iTunes and cloud services chief, Eddy Cue. Apple ultimately went on to launch iTunes Radio a few months later.  — (c) 2014 NewsCentral Media

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