AEM 147 Apple and Beats Deal Response Kyle Kubicek
A Deal Worth Billions
The Defiant Ones follows the story of how Dr. Dre and Jimmy Iovine developed, marketed and executed one of the greatest deals in the entertainment industry. In august of 2014, Beats by Dr. Dre was sold to apple for 3 billion dollars. The deal included the headphones, celebrity endorsements, the co-founder Jimmy Iovine and a streaming service that would give apple an edge among upcoming competitors. With Pandora and Spotify on the rise and the sales on iTunes on the decline, the deal came at the perfect time. Usually apple takes on little-known companies with talent or technology that can translate into new features for Apple’s core products. But the Beats deal was clearly different, adding an existing line of successful headphones into Apple’s product line and bringing music industry stars like Beats co-founders Jimmy Iovine and Dr. Dre into the Apple family. Both companies had the base and by joining forces they were able to grow Apple’s cult like following by bringing in new members. The headphone industry generated revenues of $8.4 billion in 2014, with steady growth predicted through at least 2018, according to a report by Futuresource Consulting. Beats controls more than 50 percent of the market on headphones costing more than $99 in retail, according to marketing research firm NPD Group. The beats streaming service has played a key role in what could be called now as Apple Music. Apple needed the pair and their products, then and there because they didn’t have the time to develop a streaming service that was ready to out sell Spotify and Pandora. It was an expensive buy in that now seems like a minor cost to this major league player. Beats headphones are better than the cheap ones sold with your your phone, so this gives apple the edge and ability to expand its products line and bring in cash flow from its loyal customers. Apple was able to take these ideas and put them to use in their world, without the pain, pressure and lack of time to create their own.
What Should Change
In regards to the deal and the execution the whole process seemed to be flawless with a perfect plan. Beats had everything Apple needed to gain an edge and the deal was a win-win for both parties. There was an incident that I would say needed to be taken control of and never should have happened in the first place. On May 9, 2014, R&B singer Tyrese Gibson posted a video on Facebook, shot in a music studio, in which Dre seemingly confirms the transaction that was reported by the Financial...