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Jimmy Iovine Dr. Dre
Music industry entrepreneur Jimmy Iovine, left, and hip-hop mogul Dr. Dre at a Grammy Party in Los Angeles on Feb. 10, 2013. Todd Williamson—Invision/AP

Apple Reportedly in Talks to Buy Beats for $3.2 Billion

May 08, 2014

Apple is reportedly trying to buy Beats Electronics—the headphones maker founded by music producer Jimmy Iovine and hip-hop artist Dr. Dre—for $3.2 billion, the Financial Times reports citing unnamed sources.

The deal, if the details are hammered out, could be announced as early as next week. Apple would acquire Beats' streaming music service that launched this year as well as its high-end audio equipment. Dr. Dre has said that he was inspired to create Beats by the poor sound quality in many headphones.

But the streaming service is perhaps the most valuable to Apple as more customers sign up for subscription streaming music services like Pandora and Spotify, and iTunes becomes less popular. Subscription services are growing faster than any other area of the music industry: revenue increased 50 percent to $1.1 billion in 2013, according to a report by IFPI, the global music industry association. Downloads, by contrast, fell two percent that year, the first annual drop since Apple launched the iTunes store in 2003.

Historically, Apple has not pursued high-profile acquisitions. Such a move would distinguish Apple CEO Tim Cook from his predecessor, the late Steve Jobs. Cook said in April that Apple was “on the prowl” for more acquisitions; it has already purchased buying 24 companies in just 18 months.

[FT]

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