Apple in late-stage talks to buy Beats Electronics for US$3.2bn

9 May 2014

Technology giant Apple is in late-stage talks to acquire headphone and streaming player Beats Electronics for an estimated US$3.2bn.

According to the Financial Times, the deal could be concluded as early as next week.

The move will give Apple a new edge on audio, not to mention the potential for a much-needed makeover of its increasingly jaded iTunes music platform, which now competes with more agile offerings from Spotify and Pandora.

Music producer Jimmy Iovine and hip-hop artist Dr Dre are the founders of Beats Electronics.

It is expected that Iovine, who is also chairman of Universal Music Group’s Interscope, Geffen and A&M labels – home to Eminem and Lady Gaga, to name a few – will join Apple’s executive team as a special adviser to Apple CEO Tim Cook.

Sonic booming

The deal would be Apple’s largest acquisition of another company to date. However, the US$3.2bn would be just a fraction of the massive US$150.6bn warchest the Californian hardware maker has amassed in recent years.

Music is a critical cornerstone of Apple’s business, having paved the way forward with services such as iTunes and devices like the iPod.

However, iPod sales have been declining rapidly in recent years, as its function already exists on more popular devices, such as the iPhone, and iTunes downloads have been struggling in the face of nimble subscription services.

Beats, for example, earlier this year unveiled a US$9.99 music subscription service providing unlimited access to songs in its catalogue, alongside playlists by popular DJs.

Apple has tried to turn the tables with its iTunes Radio streaming service but needs to do something more definitive and edgy.

According to NPD Group, Apple had 63pc of the paid download market last year.

It’s a bet on the future. By tying future streaming products with advances in its hardware, perhaps Apple will make the kind of sonic boom it hopes to.

DJ image via Shutterstock

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years