Local Current Blog

Apple reportedly to purchase Beats by Dre for $3.2 billion

A pair of Dre's earbuds got presciently cozy with an iPhone in a photo posted to Beats' Facebook page last month.

Ten years ago, Apple’s famous silhouette iPod ads defined what was cool in the popular music scene. Now, Beats by Dre‘s animated “pill” speakers follow 2014’s most charismatic superstar, Pharrell Williams, around in an ad soundtracked by his smash hit “Happy.” According to a news report in the Financial Times, Apple is in negotiations to purchase Dr. Dre’s über-hip speaker and headphone company—along with its streaming music service—for a whopping $3.2 billion.

The purchase comes in response to Apple’s waning product sales, especially in music. According to Nielsen SoundScan, iTunes album sales are down 14.2%, and song sales are down by 12.5%. iPod sales, similarly, have been plummeting since peaking in 2008. In contrast, Beats’ slick, distinctive headphones and speakers are a hit with young, smartphone-wielding music fans. Across the music industry, streaming services are increasingly replacing purchases of both physical media and downloads; Apple has been dipping a toe into this realm with the debut of iTunes Radio.

Reactions to the news have varied widely. Slate’s Jordan Weissmann argues that Apple needed to take “drastic” measures to avoid losing further market share in the online-music world, and that the Beats deal makes sense when seen from that perspective. Micah Singleton at the Daily Dot thinks the deal is worth it for the connections it buys to tastemakers such as Jimmy Iovine, and notes that it strengthens Apple’s cachet with African-American consumers. Forbes‘s Eric Jackson adds that the deal will strengthen Apple’s play for listeners who are using Androids instead of iPhones. Also on Forbes, though, Gordon Kelly argues that Apple is squandering billions for a mere “fashion statement”; a position underlined by the belief of some audiophiles that Beats’ popular hardware is “extraordinarily bad.”

The multi-billion dollar purchase would make Dr. Dre the richest man in hip-hop, and though the deal apparently isn’t final yet, Dre isn’t being shy about calling himself the genre’s first billionaire. When The Chronic came out in 1992, which would have seemed less likely: that Dre would become a billionaire business mogul in two decades’ time, or that his buddy Snoop would be enjoying a public “bromance” with Larry King?

KT Lindemann is a senior at the University of Minnesota, Morris, pursuing studio art and Spanish. She is a native of the Twin Cities and is a wannabe musician, artist, and music writer.