Beats Breakdown: Apple Paying $2.5B for Beats Electronics, $500M for Beats Music

Apple yesterday announced plans to acquire both Beats Electronics and Beats Music for a combined total of $3 billion, but a new report from The Wall Street Journal breaks those numbers down further.

As it turns out, Apple is paying slightly less than $500 million for the Beats Music streaming service, with the bulk of the money ($2.5B) going towards the purchase of Beats Electronics, which includes the company's popular line of headphones and speakers.

applebeats
At yesterday's Code Conference, Beats co-founder Jimmy Iovine revealed that the service has 250,000 subscribers in the United States, a small number compared to Spotify's 10 million worldwide listeners. Beats Music's relatively modest size explains why it was so much cheaper than the company's Electronics division, which pulled in $1.5 billion in sales in 2013 according to a source that spoke to The Wall Street Journal.

Leveraging iTunes and iTunes Radio, Apple may be able to grow Beats Music significantly in the coming months. Apple's existing streaming music service, iTunes Radio, has a total of 40 million listeners and via iTunes, Apple has sold 35 billion songs. The company also has more than 800 million iTunes accounts, most with credit cards attached, along with a wealth of data on customer listening habits.

"We think all of those things, when you put them all together, it's on steroids with us together," said iTunes Chief Eddy Cue.

Under the terms of the deal, Beats co-founders Jimmy Iovine and Dr. Dre will both be joining Apple to work under Cue, while marketing head Phil Schiller will oversee the Beats headphone business. Apple CEO Tim Cook has called Iovine and Dre's talent and skills "really unique" and "very hard to find." He also stated that Apple felt Beats Music was the first music service to "get it right" through the use of human curation.

Following regulatory approval, Apple's purchase of Beats is expected to close during the fiscal fourth quarter.

Top Rated Comments

(View all)
Avatar
80 months ago
Somehow I feel this marriage isn't going to last.
Score: 19 Votes (Like | Disagree)
Avatar
80 months ago
Doubters are proven wrong once again. Congrats Dre! :apple:

Score: 14 Votes (Like | Disagree)
Avatar
80 months ago
So much for all the comments (too numerous to list) about how

"Dude, it's NOT about the headphones!"
Score: 13 Votes (Like | Disagree)
Avatar
80 months ago
It was the hardware.

Kudos Beats, you just found the richest sucker to purchase your overpriced headphones, and the silly suckers are smiling like they got a good deal :)

And most of well played Dr Dre , YOUR mega rich! And damn lucky cook is running the show.

So apple bought a headphone company that is renowned for having poor sound quality. Given apple in house headphones are nothing to call home about, they are basically not going to improve the sound quality going forward as a result of this spend.

I hope this is not a stupid attempt to be cooler than Samsung ...... Given how much money Samsung is throwing into marketing .
Score: 12 Votes (Like | Disagree)
Avatar
80 months ago
These prices are based on individual valuations not on what Apple 'wanted'. Beats Electronics is far more valuable than Beats Music.
Score: 9 Votes (Like | Disagree)
Avatar
80 months ago
Looks like it WAS for the hardware then.
Score: 9 Votes (Like | Disagree)

Top Stories

Apple Warns Against Closing MacBooks With a Cover Over the Camera

Friday July 10, 2020 11:12 am PDT by
Apple this month published a support document that warns customers against closing their Mac notebooks with a cover over the camera as it can lead to display damage. Image via Reddit Apple says that the clearance between the display and the keyboard is designed to very tight tolerances, which can be problematic. Covering the camera can also cause issues with automatic brightness and True Tone....

iPhone Users Who Experienced 'Batterygate' Can Now File to Receive Around $25 Settlement From Apple

Monday July 13, 2020 6:50 am PDT by
Earlier this year, Apple agreed to settle a U.S. class action lawsuit that accused the company of "secretly throttling" older iPhone models. Now, eligible iPhone owners are beginning to be notified about their legal rights and options. Under the proposed settlement, Apple will provide a cash payment of approximately $25 to each eligible iPhone owner who submits a claim, with its total payout ...

Possible 'iPhone 12' Battery Certifications Suggest Lower Capacities Than iPhone 11 Series

Monday July 13, 2020 4:22 am PDT by
MySmartPrice has spotted certifications for three new Apple batteries that it believes could be for the upcoming iPhone 12 lineup, despite them being less capacitive than the batteries in the current iPhone 11 series. The batteries are identified with the model numbers A2471, A2431, and A2466, and appear on Safety Korea, China's 3C, and the Danish agency UL Demko. Apple is expected to...

Google to 'Dramatically' Improve Chrome Impact on Mac Battery Life

Sunday July 12, 2020 1:56 pm PDT by
Google will address long-standing battery life issues, particularly on Mac devices, reports The Wall Street Journal. Chrome will improve "tab throttling" by better prioritizing active tabs and limiting resource drain from tabs open in the background. This is said to have a "dramatic impact on battery and performance." Google has reportedly been performing early tests on Mac laptops in...

Arm-Intel-PowerPC Universal Binaries Are Possible

Saturday July 11, 2020 1:42 pm PDT by
Casual MacRumors visitors may not realize that we have a very active PowerPC forum where users discuss issues related to PowerPC Macs that have not been produced since 2006. Threads range from hardware upgrades and software options to nostalgia: Photo by AphoticD Apple's recently announced transition to Apple Silicon (Arm) based Macs raised some interesting questions about future support...

Apple Pays Samsung an Estimated $950 Million for Missing OLED Panel Purchase Targets

Monday July 13, 2020 10:03 am PDT by
Apple in the second quarter of 2020 paid Samsung approximately $950 million for not meeting OLED panel purchase goals established in agreements between the two companies, according to display analysts at Display Supply Chain Consultants. Samsung last week shared guidance on revenue and operating profit for the second quarter of 2020, which included a one-time gain related to its display...

Apple Shares Humorous 'Working-From-Home Thing' Video

Monday July 13, 2020 9:31 am PDT by
Apple today shared a funny video focused on the problems that people working from home have to deal with, including noisy children, chaotic schedules, communication issues, and more. The video focuses on showing off Apple products and their capabilities that can be useful when working from home, such as the ability to scan a document with an iPhone, mark up a PDF, Siri Reminders, and more.The...

SoftBank Considering Possible Sale of Arm Holdings as Apple Gears Up for Arm-Based Macs

Monday July 13, 2020 2:00 pm PDT by
SoftBank, the company that owns chip designer Arm Holdings, is exploring options that include a full or partial sale or a public offering, reports The Wall Street Journal. SoftBank is working with Goldman Sachs Group as an advisor, and the explorations are at an early stage. The Wall Street Journal says that it's unknown how much interest there would be in Arm from financial or industry...

Rumor Suggests New Apple App for Windows Could Be Coming Soon

Tuesday July 14, 2020 1:54 am PDT by
Apple could be working towards the release of a new app for Windows 10, according to a report this week from an Italian website. The blog Aggiornamenti Lumia suggests that an app from Apple is "coming soon" to the Microsoft Store, but stops short of providing additional details. Apple still maintains a Windows version of the iTunes app, which has been discontinued on Mac and replaced by...

Deals: Amazon Taking $400 Off 16-Inch MacBook Pro, Starting at New Low Price of $1,999.99 for 512GB

Monday July 13, 2020 5:34 am PDT by
Amazon has introduced a new low price on Apple's 16-inch MacBook Pro today, including both 512GB and 1TB models. Starting with the 512GB model (2.6GHz 6-Core, 16GB RAM), you can get this notebook for $1,999.99, down from $2,399.00. Note: MacRumors is an affiliate partner with Amazon. When you click a link and make a purchase, we may receive a small payment, which helps us keep the site running....