Apple today confirmed that it has purchased Beats Electronics, maker of the Beats by Dr. Dre line of headphones and speakers, as well as the Beats Music subscription music streaming application. Combined, the purchase will cost Apple $3 billion, which according to the company’s statement consists “of a purchase price of approximately $2.6 billion and approximately $400 million that will vest over time.” Notably, this is less than the $3.2 billion price originally reported in early May, but the price matches a recent New York Post report. Beats co-founders Jimmy Iovine and Dr. Dre will join Apple as part of the acquisition. The transaction is expected to close in the fiscal fourth quarter, subject to regulatory approvals.
“Music is such an important part of all of our lives and holds a special place within our hearts at Apple,” Apple CEO Tim Cook announced in the statement. “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.”
“I’ve always known in my heart that Beats belonged with Apple,” Iovine said in the statement. “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.”
Initially reported by The Financial Times as a deal in progress, the acquisition was seemingly a certainty after Dr. Dre appeared alongside actor Tyrese Gibson in a Facebook video, describing himself as the “first billionaire in hip hop.” Some analysts and commentators have questioned the wisdom of the deal for Apple, while others have cited Beats’ strong following in the African-American community as a potential customer base for Apple, and suggested that Beats Music will increase Apple’s footprint in the subscription streaming music category.
Update: “We could build about anything that you could dream of. But that’s not the question,” Cook told Re/code. “The thing that Beats provides us is a head start, and it provides us with incredible people, kindred spirits.” It’s also noted that Apple will keep both the Beats hardware and Beats Music streaming service brands intact.
In a separate story from the AP, Cook said of Iovine and Dre: “We’ve dated, we’ve gone steady and now we are getting married. This relationship started a decade ago, so we know there is an incredible cultural fit. These two guys have a very rare set of skills. It’s like finding a particular grain of sand on the beach. It’s that rare.”