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Reports: Apple Could Buy Beats Electronics for $3.2 Billion

Jason O. Gilbert
Technology Editor
May 8, 2014

The rapper Lil Wayne wears Beats headphones. (Getty Images)

Apple is close to acquiring Beats Electronics, the Dr. Dre-associated company most well known for its premium headphones, for $3.2 billion, according to multiple reports. If the acquisition goes through, it would be Apple’s largest purchase of all time. 

The acquisition was first reported by Financial Times. The New York Times, Bloomberg News, and the Wall Street Journal all later chimed in. Dr. Dre also apparently confirmed the acquisition in a Facebook video posted late Thursday night, in which he celebrates becoming a billionaire from the Apple deal.

The deal, however, is not done, nor is it public. The FT and NYT both expect the acquisition, if it goes through, to be announced next week.

Beats Electronics was founded by rapper Dr. Dre and music mogul Jimmy Iovine in 2008, and is currently the largest maker of high-end headphones in America. Beats is most famous for its “Beats by Dre” over-the-ear headphones, which are popular with rappers and celebrities, and which typically go for around $300 per pair. Beats also makes in-ear headphones and a Bluetooth speaker, Beats Pill.

It’s not clear which part of Beats that Apple might covet. Recently, Beats introduced a streaming music service, Beats Music, to compete with Spotify, Rdio, and iTunes, after acquiring the MOG streaming service in 2012. Though critics applauded the design of Beats Music, it has reportedly been slow to pick up subscribers

For Apple, meanwhile, a Beats acquisition could help it continue to dominate in digital music, where it has reigned supreme since its launch of iTunes in 2001. Digital sales on iTunes have been declining steadily in recent years, and Apple has long been rumored to want an all-you-can-listen streaming music service, similar to those offered by upstarts Spotify and Rdio.

Spotify, Rdio, and Beats Music all offer the same basic service: Stream all the music you want on any device for $9.99 per month. Apple does not have a directly competing service: Listeners can pay by the song or album in the iTunes Store, and a new service called iTunes Match lets them listen to any of their downloaded songs on any device for $25 per year. 

In 2012, the phone manufacturer HTC bought a 51 percent stake in Beats for $300 million, though it later sold back 25 percent of its share. In 2013, HTC installed Beats-manufactured speakers in its HTC One smartphone. That phone won plaudits from critics for its audio quality. Beats speakers could also hypothetically be worked into future iPhones and iPads. 

Corrections: We misidentified “iTunes Match” as “iTunes Radio,” which is a different, distinct service. And we initially stated that Beats headphones “start at” $300 per pair; there are cheaper sets. The most iconic pair of Beats, the Studio, sells for $300.

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