“Music is such an important part of all of our lives and holds a special place within our hearts at Apple,” said Apple CEO Tim Cook, . “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.”
In Beats Electronics, Apple will get the popular Beats by Dre headphones and speakers. In Beats Music, they will finally move into the music streaming business. They will also receive the services of Dr. Dre and co-founder Jimmy Iovine, both of whom were called “sound pioneers” by Apple.
The most noticeable discrepancy between the deal as first reported and the one that appears to be coming to fruition, is the purchase price. The purchase price was originally thought to be $3.2 billion, but the actual amount appears to be $3 billion even. Apple will pay $2.6 billion in cash, with the other $400 million coming in equity.
The reduction in price is said to be due to Apple failing to do their due diligence prior to the news of the potential sale becoming public. The major contributing factor is said to be the relatively low number of subscribers to Beats’ streaming service. Beats music reportedly has 110,000 paid subscribers; while competitor Spotify has 10 million.
Even at the reduced price, this will be the biggest acquisition in the history of Apple. That being said, keeping Dre and Iovine on board makes it clear that it was done with an eye towards the future.
“They’re going to be coming up with ways of features that blow your mind,” said Cook. “And products you haven’t thought of yet, and seeing around the next corner to articulate the way to take music to an even higher level than it is now.”
Dre, Iovine and Cook are all expected to be in attendance at Apple’s Worldwide Developer’s Conference on June 2.