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Apple is officially buying Beats, the headphone maker and streaming music service, for $US3 billion.
The deal, first reported by Re/Code, will close by the end of September.
Beats Electronics cofounders Jimmy Iovine and Dr. Dre will join the company as full-time employees. Beats Music CEO Ian Rogers will report to Eddy Cue, according to Re/Code.
The acquisition seems to suggest that Apple is getting way more serious about the music business. Last year, revenues from permanent digital downloads, like albums and songs you can purchase on iTunes, declined 1% last year to $US2.8 billion.
When rumours of the deal first surfaced, a lot of people were baffled as to why Apple wanted to buy the company. After all, Beats makes headphones whose sound quality is panned by critics, and they have no unique technological advantage.
The consensus for why Apple is interested in Beats seems to have settled on the following: Apple gets a high margin headphone business, a streaming music service, and the talents of executives Iovine and Rogers. The last bit is the part that many people in technology don’t seem to appreciate.
“I know Jimmy and Ian pretty well, and I think the more creative talent they can get in there — given their history and what people look to them for — they will be not only in music but in other areas like television and video,” tech pundit and Re/Code cofounder Walt Mossberg recently told Business Insider. “I guess that’s my gut reaction as to why they might be doing this.”
Iovine (pronounced “Eye-o-veen”), expected to become a senior Apple employee, is the cofounder of Interscope Records, chairman at Interscope Geffen A&M, and cofounder and chairman at Beats. Iovine has had his hands in the music business for four decades. He could be just the right person to help reignite Apple’s efforts in the music business.
Before getting into the production side of the business, Iovine worked alongside musical greats like John Lennon and Bruce Springsteen as a recording engineer. Springsteen even gave Iovine a shout-out in his song “Ain’t Good Enough for You,” in which he sings, “Hitting cool just like Jimmy Iovine.”
In 1990, Iovine cofounded Interscope Records. Over the years, Iovine has been involved with the production of more than 250 albums. Interscope has been home to artists like Dr. Dre, No Doubt, 50 Cent, Lady Gaga, Nine Inch Nails, Kendrick Lamar, Mary J. Blige, Ellie Goulding, and Azaelia Banks.
In fact, Lady Gaga owes much of her success to Iovine. Iovine was the one to sign her to Streamline/Interscope. Lady Gaga has repeatedly thanked Iovine in her acceptance speeches, as has rapper Eminem. R&B artist Mary J Blige is also a big proponent of Iovine.
“Jimmy is not afraid to say what he likes and doesn’t like,” Blige said on the red carpet of the 2012 Grammy Awards Producers & Engineers Event. “He’s not afraid to be honest. He is a musician himself.”
“Jimmy is a renaissance man and we’ve known each other a long time,” Portnow said. “But when you look at the body of work that he created when he was an engineer and producer, when you look at the contributions he’s made through the labels he’s founded or run, the artists that he’s brought to the picture and helped nurture and develop, and now, as entrepreneur focused on sound and sonic excellence. When you add that all up, you really have someone special that we are so delighted to honour tonight.”
From 2011 to 2013, Iovine was a mentor on Fox’s American Idol. Iovine also coproduced the Academy-Award winning movie “8 mile.”
Given his close relationship with Dr. Dre, Iovine and Dre cofounded Beats By Dr. Dre in 2006. The duo launched it with the goal of providing premium audio to people.
“Apple was selling $US400 iPods with $US1 earbuds,” Iovine previously told Inc. “They’re making a beautiful white object with all the music in the world in it . . . I’m going to make a beautiful black object that will play it back.”
Earlier this year, Iovine extended the Beats brand with the launch of Beats Music, with former Topspin exec Ian Rogers at the helm. “There’s a sea of music out there but there’s no curation for it,” Iovine told Walt Mossberg last year at the D conference.
Rogers, the CEO of Beats Music, is the 40-something-year-old skater who got his big break in 1993, when he created an unofficial fan page for the Beastie Boys. Impressed with his work, the Beastie Boys eventually invited Rogers to go on tour with them. Rogers eventually became a full-time webmaster for the Beastie Boys, and was tasked with teaching the band how to use the internet.
Rogers later wound up as the head of Yahoo Music. Rogers worked at Yahoo for a little over four years before leaving for Topsin.
“I was fighting with executives over music-video rights,” Rogers told Wired back in 2012. “It was depressing.”
In 2008, Rogers became the chief executive at Topspin, a music platform designed to connect artists and fans over the internet. He officially joined Beats Music in January 2013.
As CEO of Beats Music, Rogers is responsible for changing the way we interact with and discover new digital music.
“The first thing you’ll notice when you’re in the service is catalogue cleanliness,” Rogers said in an interview earlier this year with Billboard. “We don’t present music as a database list. We treat it as discographies, as artists’ careers and as ways to tell the story of the artist. We’re presenting their work several different ways — in chronological order so you can see the progression of their work, we have selected tracks for our Essentials lists and we’ve disambiguated versions of the same song, so that the listener isn’t given 10 versions of the same recording.”
The duo may be tasked with reinventing iTunes at first, but Iovine could also be incredibly beneficial to Apple when it’s time to make content deals for the much-rumoured Apple TV, given his expertise in Hollywood.
“iTunes was great, but it needs to step forward now,” Iovine said last year. “Most technology companies are culturally inept. They’re never going to get curation right.”
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