A source confirmed to TechCrunch today that Apple’s Beats deal is in fact happening. But Apple doesn’t want beats for its technology; it wants Beats because of the talent.
“They want Jimmy and they want Dre,” the source tells TechCrunch. “He’s got fashion and culture completely locked up.”
Jimmy Iovine is a founder of Beats, and reportedly owns 25% of the company.
The rumour that Apple is in talks to buy Beats for $US3.2 billion has had everyone scratching their heads the last few weeks. Nobody could understand why Apple would want to buy a company whose hardware doesn’t always get the best reviews. Initially, people thought that the deal might be because of Beats Music, a streaming-music service.
Apple analyst Gene Munster called it, though, saying that the Beats deal would actually be an “acquihire,” with Apple going after Jimmy Iovine. (An acquihire is when a company buys another company just to get employees.) Other reports said that Iovine would be hired as a special adviser to Tim Cook.
As TechCrunch points out:
… [Beats] is valuable for the ‘record-label-in-a-box’ the Iovine and Dre relationship affords. Iovine is known as a pit bull in the realm of media negotiations and this move will give Apple youth cachet thanks to the brand and business chops with the Iovine/Dre mix. Iovine will be most valuable in negotiations with record labels in iTunes acquisitions. The move, it seems, is far more than just a hardware acquisition.
According to TechCrunch’s source, the deal almost fell through several times, but said with “70% certainty” that the deal will go through as planned.
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