Apple has sealed its biggest ever acquisition with the $3bn purchase of Beats Electronics, a deal that reshapes the music landscape and gives the company new heft in digital streaming.
News of the deal stunned music and technology watchers when it was first reported earlier this month by the Financial Times, because it broke with Apple’s long-standing convention of developing its technology in-house.
However, Tim Cook, Apple’s chief executive, stressed the importance of music to a company that was revived by the success of the iPod.
“It’s all about music,” Mr Cook told the FT at an interview in the company’s Cupertino headquarters, adding that Beats co-founders Jimmy Iovine, the music producer, and Dr Dre, the hip-hop legend, were “kindred spirits”. Mr Iovine and Dr Dre will join Apple as part of the deal.
The deal is made up of $2.6bn in cash and about $400m in Apple stock, which will vest over time, and is expected to be completed by the end of September 2014, pending regulatory approval.
Mr Cook stressed the significance to the deal of Beats’ streaming service. Beats launched its subscription service in January with an emphasis on personal music “curation”, rather than on playlists that are selected by using algorithms.
“We’ve got a streaming service that we believe is the first to get it right,” Mr Cook told the FT. “They had the insight that human curation was very important?.?.?.?we think they’ve done an A plus job.”
Beats was superior to rival streaming services, he added. “Some of them are no more than a random set of songs put together.”
Founded in 2008, Beats makes most of its money from its speakers and premium-priced headphones, which are beloved by musicians and sports stars, generating revenues in 2013 of $1.1bn.
The deal has been hailed by the music industry because of the boost it gives to the streaming business model.
“It is the most significant platform transformation that we have had for 30 years,” said Lucian Grainge, chairman and chief executive of Universal Music Group, the world’s largest music company. Subscription streaming generates “high quality, recurring income”, he added.
Will.i.am, the recording artist and entrepreneur, told the FT the deal was “transformational?.?.?.?it redefines our industry”.
Apple now has more than $150bn in its cash reserves but faces slowing revenue growth. The purchase represents a huge premium over the $1.8bn valuation of Beats less than a year ago, and marks a swift return for Carlyle, the private equity firm which invested about $500m for a 30 per cent stake, said one person familiar with that deal.
Beats的耳机业务将向苹果营销主管菲尔?席勒(Phil Schiller)汇报。它的音乐业务将向苹果互联网软件和服务部门高级副总裁艾迪?库伊(Eddy Cue)汇报。
全球最大音乐公司环球音乐(Universal Music Group)董事长兼首席执行官卢西恩?格兰奇(Lucian Grainge)表示：“这是30年来最为重大的平台改革。”他补充称，流媒体订阅服务将带来“高质量和源源不断的收入”。
黑眼豆豆(Black Eyed Peas)成员、企业家Will.i.am告诉英国《金融时报》，这笔交易“具有变革意义……它将重新界定我们的行业”。