TIME Companies

Everything You Need to Know About the Very Ugly Monster-Beats Lawsuit

Apple Said To Be In Talks To Purchase Beats Headphones Company
Beats headphones are sold in an Apple store on May 9, 2014 in New York City. Andrew Burton—Getty Images

Monster is suing because it says Beats duped it out of its fair share of the headphone empire

A former partner of Beats Electronics is suing the company and phone manufacturer HTC for “deliberate acts of corporate betrayal.” Monster, which was involved in the design and development of the original Beats headphones, is alleging that Beats founders Jimmy Iovine and Dr. Dre conned Monster out of its stake in the headphone empire through a series of unscrupulous business maneuvers. Now Monster is seeking punitive damages from Beats, which Apple bought last spring for $3 billion.

In its 64-page complaint, Monster unloads a barrage of allegations against Beats, particularly against Iovine. (Beats did not respond to an email seeking comment). Here are the key points you need to understand about the contentious relationship between the two companies that helped grow luxury headphones into a billion-dollar market.

Monster Prototyped and Manufactured the Original Beats

According to Monster’s complaint, Monster CEO Noel Lee and his son Kevin originally pitched the idea of high-end headphones to Iovine and Dr. Dre, who had been considering launching a speaker line, in late 2005. Eventually, Beats and Monster entered into a licensing agreement in early 2008—Monster would handle the engineering, production and distribution of the headphones, and Beats would offer the “Beats by Dre” branding and leverage the clout of Iovine and Dr. Dre to market them to sports and hip-hop fans. Monster says it financed the engineering of the original headphone line and developed at least 30 protoptypes. The combo of headphones of at least decent quality with extremely slick marketing and packaging was an immediate smash hit. Between 2008 and 2012, Beats by Dre products generated $1.5 billion in revenue, according to Monster.

Monster and Beats Cozy Up

As the premium headphones began to gain traction, Monster took a few actions to strengthen its relationship with Beats that the company now says led to its “betrayal.” In August 2009, Noel Lee bought a 5% stake in Beats (at the time, Iovine and Dr. Dre each had a 15% stake, according to Monster). That same year, Monster amended its licensing agreement to stipulate that Beats could terminate its licensing agreement with Monster if there was a transaction that resulted in a “bona fide change in control,” such as someone buying a majority stake in Beats.

An HTC Investment Ends Monster-Beats Partnership

In August 2011, phone manufacturer HTC bought a 51% controlling stake in Beats Electronics. According to Monster, this sale was the “bona fide change in control” that Beats needed to terminate its licensing agreement with Monster. The end of the Monster-Beats partnership was formally announced in January 2012, and Monster says it was “strong-armed” into providing information about its retailer and logistics networks to Beats quickly in exchange for getting to sell Beats-branded products for a slightly longer period.

Iovine and Dr. Dre Buy Beats Right Back

Less than a year after the HTC investment, Beats Electronics bought back half of HTC’s shares in the company, granting Iovine and Dr. Dre a 75% controlling stake in Beats. HTC had also provided Beats with a $225 million loan before the Beats founders bought back a portion of the company. At the time, HTC said the financial decisions were meant to give Beats “more flexibility for global expansion while maintaining HTC’s major stake and commercial exclusivity in mobile.” Monster, meanwhile, believes the entire HTC investment was a “sham” aimed at giving complete control of Beats to Dr. Dre and Iovine. “If the contractual arrangements between Beats and Monster terminated without a change of control, Beats would not have gained control of Monster’s pioneering engineering efforts, as well as Monster’s distribution and sales networks,” Monster wrote in its complaint. Beats bought out the rest of HTC’s stake in the company in 2013.

Monster Misses the Apple Payday

Monster’s Lee had reduced his stake in Beats from 5% to 1.25% following the end of the Monster-Beats partnership. As he was deciding whether to offload his Beats stake entirely in September 2013, Lee claims that he talked to multiple Beats officials who told him that Beats had no liquidity event coming “in the next year or two.” Lee sold his stake back to Beats at a price of $5.5 million. Eight months later, Apple bought Beats for $3 billion. Lee’s stake would have been worth about $100 million.

TIME Mexico

Mexican Town’s Police Force Detained Over Journalist’s Disappearance

Moisés Sánchez Cerezo has been missing since Friday

A Mexican town’s police force was questioned by state prosecutors, following the disappearance of a local journalist.

Three dozen people in the Medellín de Bravo police department were asked to give statements related to disappearance of journalist Moisés Sánchez Cerezo, a social activist who went missing Friday, the Guardian reports. Three of the officers were still detained on Monday.

Sánchez was removed from his home last week by armed men, who reportedly confiscated his computer, camera and telephones, according to family members who witnessed the incident, the Associated Press reported. His brother, Juan Carlos Sánchez, claims that the missing journalist was threatened by town mayor Omar Cruz, though Cruz has denied being involved in the situation.

Medellín de Bravo is located in the state of Veracruz, an particularly dangerous area in Mexico for members of the press. Since 2011, three journalists have been killed while working in the state.

[The Guardian]

TIME Media

This Is the Craziest New Feature YouTube Has Added in Years

Gangnam Style Psy Breaks YouTube Counter
South Korean singer Park Jae-Sang, also known as Psy, speaks during a press conference after returning from a US trip, in Seoul on September 25, 2012. Kim Jae-Hwan—AFP/Getty Images

A totally new way to watch stuff may be on its way

Online video is about to become a lot more immersive. YouTube has plans to add 360-degree videos in the coming weeks, according to Gizmodo. The Google-owned video site isn’t yet divulging details on how the videos will work, but 360-degree videos on other sites operate similarly to panoramic photographs, allowing the user to click and drag across an image to pivot the camera angle as the video plays.

No word yet on whether this new feature will be compatible with the growing number of virtual reality devices headed to market. Google has its own low-tech VR device called Google Cardboard that could help YouTube’s 360-degree videos spring to life.

[Gizmodo]

TIME Currency

Hackers Steal $5 Million From Bitcoin Exchange

Breach follows massive hack of Mt. Gox in 2014

A European Bitcoin exchange had about $5 million worth of the cryptocurrency stolen by hackers over the weekend.

The Slovenia-based Bitstamp announced the breach on its website Monday and shut down services temporarily Tuesday in order to investigate the hack. The theft totaled about 19,000 Bitcoin, but hackers were only able to access a small portion of the exchange’s total assets. While some Bitcoins are stored online, many more are kept on local hard drives in what Bitcoin users call “cold storage.”

Bitstamp wrote on its website that it would ensure users’ account balances were “honored in full” despite the breach.

The hack comes less than a year after the collapse of Mt. Gox, the once-massive Bitcoin exchange that lost more than $450 million worth of Bitcoin and then filed for bankruptcy. Bitcoin lost half of its value after Mt. Gox imploded. So far, though, the Bitstamp breach doesn’t seem to have negatively influenced the price of the currency.

TIME Turkey

Suicide Bomber Attacks Istanbul Police Station

Police officers stand guard at the scene of a bomb blast in Istanbul
Police officers stand guard at the scene of a bomb blast in Istanbul, Turkey on Jan. 6, 2015. Osman Orsal—Reuters

She injured two police officers

A female suicide bomber injured two police officers when she detonated herself inside a police station in Istanbul, Turkey on Tuesday.

The woman walked into the station in a tourist-friendly area of the city, told officers she had misplaced her wallet, then blew herself up, the BBC reports. She died following the explosion. One officer is in the hospital in critical condition while the other sustained only mild injuries.

So far officials have not identified any group as being responsible for the attack. It was the second attack against police within a week in the city. On New Year’s Day, a man lobbed grenades at officers in an attack near the prime minister’s office.

[BBC]

TIME Dieting

DASH Diet Named Best Diet of the Year

Diet eschews gimmicks for straightforward healthy eating

The well-balanced DASH Diet was named the best overall diet for the fifth straight year by U.S. News & World Report. The DASH Diet focuses on a healthy mixture of whole grains and vegetables and is more focused on improving nutrition and heart health than losing weight (through strict adherence should still help dieters shed some pounds). While a lot of gimmicky diets have come and gone, the rules of the DASH diet are pretty intuitive: eat from the healthy food groups, avoid red meat and sweets, and cut back on salt.

For dieters more speciifcally focused on weight loss, U.S. News & World Report selected Weight Watchers as the best diet. IT was also picked as the easiest diet to follow. Meanwhile, the DASH diet received accolades as the best diet for people with diabetes and the best diet for healthy eating.

[U.S. News & World Report]

TIME Media

CNBC Drops Nielsen Ratings for Daytime Shows

Business network will survey investors and financial advisers instead

Business network CNBC is dropping the use of Nielsen ratings for its daytime programming, eliminating the long-held standard for measuring the popularity of television shows in the U.S. The channel will instead use a research firm called Cogent Reports at Market Strategies International, which will survey more than 1,000 investors and financial advisers once a week to determine CNBC’s ratings.

The move is emblematic of a growing frustration among network operators that Nielsen, which focuses on tracking viewing at home on traditional TV sets, does not properly capture their full audience. CNBC says it also wants to tally viewers who watch its shows at the office or at airports, the Wall Street Journal reports. Meanwhile, Viacom’s CEO criticized Nielsen in November for failing to comprehensively track the viewing of shows on mobile devices and gaming consoles. Nielsen has pledged to deliver comprehensive measurement metrics as consumers’ viewing habits rapidly change.

Nielsen will continue to track evening programming on CNBC.

[WSJ]

TIME New Mexico

$500,000 Winning Lottery Ticket Deemed a ‘Misprint’

It's a classic rags-to-riches story. Only without the riches

A New Mexico resident believes he is owed $500,000 for what appears to be a winning lottery ticket. However, the New Mexico Lottery says the ticket was a misprint so it doesn’t have to be honored.

John Wines purchased the scratch-off ticket in Roswell, New Mexico in December. The ticket showed two winning numbers for $250,000 each, even though the maximum prize for a single scratch-off card is supposed to be $250,000. Some of the winning numbers are also obscured on the ticket. When Wines returned to the gas station where he bought the ticket, to claim his prize, he was told that the card was a misprint. New Mexico Lottery also refused to validate the ticket when he contacted them by email.

Wines believes dismissing the ticket as a misprint is unfair. “It’s like I told them, I didn’t misprint it,” he told KFOR. “I bought the ticket in good faith thinking if I won I was going to get my money.”

As a consolation prize, New Mexico Lottery offered Wines $100—in free lottery tickets.

[KFOR]

TIME Media

Local Councilman Threatens Newspaper for Using His Name

City leader promises legal action if newspaper uses his name "unauthorized" again

A councilman in Frederick County, Maryland has threatened legal action against a local newspaper for including his name in an article.

Councilman Kirby Delauter complained in a Facebook post Saturday that a reporter for the Frederick News-Post used his name in an “unauthorized form” in a story about councilmen’s parking spaces.

“Do not contact me and do not use my name or reference me in an unauthorized form in the future,” Delauter wrote on Facebook, according to the Frederick News-Post.

A reporter for the newspaper, Bethany Rodgers, shot back at Delauter on Facebook, pointing out that she didn’t need to get authorization to include a person’s name in a story. “It is not just our right but our responsibility to report on people like you, who occupy positions of trust in our government, and I make no apologies for doing that,” Rodgers wrote.

Still, Delauter said Rodgers would be “paying for an Attorney” if she tried to use his name again in an unauthorized way. No word yet on whether the councilman has followed through on his threat.

[Frederick News-Post]

TIME movies

X-Men Spinoff Gambit Finally Has a Release Date

Fox also unveiled release date for Fantastic Four 2, even though the first movie hasn't come out yet

Gambit, the action movie about the card-wielding member of the X-Men, will debut next fall, Fox announced Monday.

The upcoming film, which will star Channing Tatum as the titular Cajun and is the latest in a very long line of X-Men movies by 20th Century Fox, will premiere Oct. 7, 2016, Vulture reports.

In addition to Gambit, the movie studio revealed the release dates for some other highly anticipating projects, including Fantastic Four 2 — we already knew the first movie was being released on Aug.7 this year —an untitled followup to Planet of the Apes, and a movie based on the video game franchise Assassin’s Creed. Here’s the full list of dates:

  • Mike & Dave Need Wedding Dates: July 29, 2016
  • Gambit: October 7, 2016
  • Assassin’s Creed: December 21, 2016
  • The Greatest Showman on Earth: December 25, 2016
  • The Mountain Between Us: February 10, 2017
  • Fantastic Four 2: June 2, 2017
  • Planet of the Apes sequel: July 14, 2017

[Vulture]

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