Apple buys Beats for $3 billion: all the news on the not-so secret acquisition

Just days before the launch of iTunes Radio in 2013, Apple was still trying to make last-minute deals with record labels to get the service off the ground. That happened, of course, but put into question whether the service would be ready to go in time for Apple's annual developers conference. Now the same thing is said to be happening in Apple's effort to revamp its streaming music services in time for its 2015 Worldwide Developer Conference, which is a little more than a month away. Citing sources, Billboard reports that Apple is having troubles getting deals signed with record labels, and that getting everything lined up in time "is going down to the wire."

It's unclear how many of the labels are holding up the process; last time around it was Sony Music, which was a lone holdout. A source tells The Verge that Apple has not yet signed a deal with Universal Music Group. On Universal's labels are Taylor Swift, Maroon 5, Katy Perry, and countless others.

Beats officially became part of Apple today, and the companies are celebrating with a strange new ad in which no one gets to celebrate at all. In the 30-second spot posted to Twitter, Siri overhears two Beats spokes-speakers happily discussing the news about their new corporate owners. Siri's disembodied voice lets them know that Beats founder Dr. Dre is hosting a party tonight, leading to much rejoicing. "I gotta go get my hair and nails done," shouts the lady Pill, who is named Tina and has a Twitter account. The man Pill asks for directions, but Siri shoots him down. "Sorry, Mikey and Tina," Siri says, not sounding sorry at all. "Dre's party is invitation only." The Pills get sad. They're out of luck. Fade to logos!

Apple has frequently made a sport out of not inviting people to things — ask the press — but now there's finally an ad about it. So welcome to Apple, Beats. Dre is in Cupertino now, and you can't come to his parties any more. Ain't nothin' but a M&A thing.

Beats Electronics is now part of Apple's family. Both companies today published statements on their respective websites essentially confirming that the $3 billion acquisition announced in May is already complete. "Music has always held a special place in our hearts, and we’re thrilled to join forces with a group of people who love it as much as we do," Apple said. "Beats cofounders Jimmy Iovine and Dr. Dre have created beautiful products that have helped millions of people deepen their connection to music." CEO Tim Cook took to Twitter with his own messaging welcoming Dre, Iovine, Luke Wood, Ian Rogers, and other Beats employees to Apple.

Back in the 1970s and 80s, before he helped found Beats Electronics, Jimmy Iovine was a record producer working on albums like Bruce Springsteen’s Born to Run and Tom Petty’s Damn the Torpedoes. To help him craft hits, Iovine had a radio tower built into the A&M studio on the Charlie Chaplin lot. At the end of each session, he would take the day’s mix and broadcast it over the airwaves. Then he would get in his car and drive around so he could hear the music the same way most fans would experience it for the first time, a form of field testing that helped him perfect the final sound.

Fast-forward a few decades and the headphone company created by Iovine and fellow record producer Dr. Dre has conquered the market and been acquired by Apple for a whopping $3 billion. How did they do it? There were plenty of high-end headphones on the market before Beats showed up, but they were mostly aimed at a niche audience of audiophiles. According to data from the NPD Group, prior to 2012 premium units made up less than a third of the revenue generated from headphone sales. For the average consumer, a $20 pair of Apple’s earbuds would do just fine. “I get this question all the time. Okay, headphones. But headphones have been around for so long,” TJ Grewal, Beats' head of product, told The Verge. “Why now? Why did it happen? Why Beats?”

Onstage at the Code Conference last night, Apple's Eddy Cue and Beats' Jimmy Iovine answered some questions about the marriage of their two companies. Beats is best known for its headphones, the product that built its brand and accounts for most of its revenues. But Cue made it clear that hardware was the less important part of the equation. "You just heard why we did this deal — it's about music," he told the crowd. Beats Music, he said, was the "the first music subscription service done right."

Beats co-founder Jimmy Iovine isn't a fan of Apple's iconic white earbuds. On stage at Code Conference minutes ago, Iovine had harsh words for the pack-ins, saying that Apple — the company he will soon work for — makes them simply "to make sure the machine [iPhone] works." But he wasn't done there. "You listen to Apocalypse Now, and the helicopter sounds like a mosquito," he added. Iovine thinks Beats has done better than Apple (and every other headphone manufacturer) in this department. "We turned an entire generation on to audio," he proudly proclaimed. Putting sound quality aside, Beats' sales numbers and the prevalence of red headphone cables on every street corner both suggest he's not wrong.

Apple SVP Eddy Cue, who also appeared on stage, almost seemed to agree with Iovine's take. "We make the best headphones that come in the box," he jokingly confessed. "When you want to make incredible sound, it costs more money." The white earbuds that accompanied iPods and early iPhones for years were admittedly terrible, but the company did improve things somewhat with the EarPods introduced alongside the iPhone 5 in 2012. It even showcased them with a dedicated video, complete with a grandiose Jony Ive voiceover. "Sound is so important to the way you experience an Apple product," the design chief said then. What was Ive most proud of? Their "rich, powerful bass." In other words, the exact same thing Beats headphones are known for.

The same day its acquisition by Apple was announced, Beats Music has lowered its annual subscription fee. The service now costs $99.99 for a year, down from $119.88 — there was previously no saving on paying the regular $9.99 price every month. That monthly fee remains the same, but Beats has also extended the free trial period from 7 to 14 days. AT&T customers still get a three-month trial.

The pricing revision means that Beats effectively gives you two more months of service than its main competitors, Spotify and Rdio, if you're committed to spending $100 on streaming music. Both rival platforms do offer $5-a-month plans, but Rdio's doesn't include mobile streaming and Spotify's is limited to students. Beats has no free tier, however, and is reportedly struggling to gain subscribers.

Apple's purchase of Beats is the company's largest acquisition ever, so it only makes sense that CEO Tim Cook had an enthusiastic statement prepared for his employees. Cook says that taking ownership of Beats will ultimately improve Apple's product line and extend its ecosystem. "Bringing our companies together paves the way for amazing developments which our customers will love."

Once the buyout is finalized, Beats Music's staff will report to Eddy Cue, who currently leads Apple's various digital storefronts (including iTunes and the App Store) and web services like iCloud. "Both Apple and Beats believe that a great music service requires a strong editorial and curation team, and we will continue to expand what we do in those areas," Cook said. Marketing chief Phil Schiller will oversee the headphones, speakers, and other products coming from Beats Electronics. Those details seem to confirm that Dr. Dre and Jimmy Iovine will focus their attention elsewhere — and on Apple's future — once they become official employees. Cook's entire letter to Apple's workforce follows below, courtesy of 9to5Mac.

Now Apple says Beats Music will live on, at least for now. In an interview with the Financial Times, Apple CEO Tim Cook confirmed that apps on both platforms would remain, saying "It's all about the music."

Apple's purchase of Beats is finally confirmed, and we know for sure that Jimmy Iovine and Dr. Dre will be joining the company as well. Unfortunately, their new titles at Apple aren't helping us figure out exactly what they'll be working on — according to The Wall Street Journal, Iovine and Dr. Dre's titles will simply be "Jimmy and Dre." (It's probably safe to assume they'll continue working on Beats projects, as it sounds like the brand and its products will live on with an identity separate from Apple.) We're not certain, but this is probably the first time anyone at Apple has had a one-word title that echoes his name. Just imagine the business cards!

Apple has just confirmed plans to purchase Beats Electronics for $3 billion. The acquisition ranks as the largest that Apple has ever made and will see it take ownership of an enormously successful and profitable line of consumer headphones as well as a burgeoning subscription music service. Beats co-founders Jimmy Iovine and Dr. Dre will also join Apple as part of the acquisition, which it will pay for with $2.6 billion in cash and $400 million in stock.

Apple sees Beats' focus on music as complementary to its own, and it'll have Iovine and Dre working with it on future music offerings. "They’re going to be coming up with [features] that blow your mind," Apple CEO Tim Cook tells The New York Times, "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."

Over three weeks ago, rumors from multiple sources rocked the tech world and made it seem that Apple would almost certainly purchase headphone maker Beats Electronics for some $3.2 billion. But since then, there's been nary a peep from Apple. Of course, the deal was only in "advanced stages" according to those early reports, and it seems something may be causing negotiations to drag on longer than expected. Billboard has spoken with multiple sources close to the discussions who've provided some details on what may be causing the delay.

According to Billboard, Apple may introduce both Dr. Dre and Jimmy Iovine in their new high-up executive roles at the company's Worldwide Developers Conference event next month. Apple is reportedly pursuing an acquisition of Beats Electronics for $3.2 billion, though neither company has gone on record about the deal since it was first publicized last week. The Financial Times originally reported that Apple and Beats could announce the buyout as early as this week, so the companies may choose to wait until the purchase is formally completed before they share more about any influence Dre and Iovine will hold at Apple moving forward. What we know right now is that Dre will be made very rich if the acquisition gets done, though its less clear what his exact duties at Apple will be.

Nobody knows why Apple is buying Beats, but many are taking a guess. Business reporters and financial analysts are keen to tell you about all the known pieces of Beats that kind of, sort of, probably add up to a good reason to buy a company. But what if we’re all missing the point? What if Apple isn’t buying Beats for a known quantity, but for a product that hasn’t been announced?

Imagine if tomorrow, Apple announced a smartwatch. Imagine how Beats could help.

"The human ear is so unique. No two are alike. Making one headphone to fit everyone's ears would be like making one pair of shoes to fit everyone's feet. It's impossible." — Jony Ive, SVP Design, Apple

Beats Electronics looks set to become part of Apple's vast electronics empire. A flurry of overnight reports were today corroborated by Dr. Dre in an impromptu video where he describes himself as "the first billionaire in hip hop." While the music mogul that co-founded Beats back in 2008 doesn't openly confirm his company has been acquired, his words suggest the rumored $3.2 billion deal is now all but completed.

Throughout its short history, the Beats brand has always been polarizing: its headphones are as often derided for their exaggerated bass and gaudy looks as they are appreciated by celebrity endorsers. LeBron James, Cesc Fàbregas, and Colin Kaepernick are just some of the myriad sports stars to have associated their names with Beats products, and artists like Pharrell, Lady Gaga, and Nicki Minaj have also added to its notoriety. Here's our look at some of the most significant moments in the company's history so far.

All that was missing was the sound of a record needle scratch: Apple is doing what? But the original Financial Times report in early May that broke the news Apple was planning to buy Beats Electronics — giving it a billion-dollar electronics brand and a functional Spotify competitor — was soon followed by weeks of an impending deal, even some rumors buoyed by Dr. Dre himself. Now Apple has officially confirmed its purchase of Beats for $3 billion, its biggest acquisition to date. So, what exactly is it buying?

Last night was highlighted by reports from multiple sources that Apple is nearing a $3.2 billion deal to acquire Beats Electronics, the company co-founded by hip-hop producer Dr. Dre. While all that commotion was going on, Dre was apparently in his studio celebrating, as evidenced by a video briefly posted on actor Tyrese Gibson's Facebook page. Gibson reiterates the $3.2 billion figure in his blurb for the clip and urges Forbes to revise its list of the world's richest people because Dr. Dre has now joined the "billionaire boys club." In the video, Dr. Dre describes himself as "the first billionaire in hip hop" and echoes Gibson's excitement. Though the hip hop mogul doesn't explicitly confirm the Apple acquisition, the implication that the deal has already been completed is there. You can watch the full video below, though be forewarned that it's rich on expletives right from the start.

Update May 9th, 7:57AM: Tyrese's Facebook post has since been pulled. His original caption read as follows: