The Beats Thing

13 May 14

I’ve been wading through a lot of speculation on the why/how/huh of the proposed Apple purchase of Beats Audio. There’s little point to going back though all the various scenarios people have thought up, so feel free to check those out on your own time.

If this Beats acquisition is correct, then it may be as simple as this: Music, at Apple, was Steve Jobs’s passion. Without Steve, they need to get that enthusiasm back. He was at the helm when Apple purchased a cute little program called SoundJam MP and turned it into iTunes. He then drove the iPod project into a becoming a real product. Apple expanded iTunes to become a music retailer under Jobs’s supervision, and it was Jobs who went after many acts that he thought were crucial to making the store successful, such as U2. He even had Apple subsume the Apple trademark from the Beatles. Apple was betting heavily on music before the iPhone era began, and this was all because of the passion Steve had for music.

With Steve gone, that side of the business has gone stale. iTunes is a dinosaur, and the entire method of music retailing that Apple pioneered has changed to the point where that part of the business is in jeopardy. iPods don’t sell particularly well and kind of feel ornamental in Apple’s product line. They also are now competing with multiple music services. Streaming radio isn’t the imminent threat some make it out to be, but it is on a slow and steady rise in usage. All this is happening without a real sense of purpose for Apple. Without Steve’s involvement, and without his passion, there’s been no real fundamental movement in the music business at Apple.

Thats where Beats comes in. It’s not the headphones, brand, or the “street cred” that Apple is after, they’re going after the passion and focus for music they don’t have anymore. That’s not to say Apple execs don’t love music, but they’re working hard in other areas of the business. Eddy Cue, who had been in control of iTunes is now in control of iCloud, a crucial part of Apple’s future. One could assume that his ability to work on music is quite diminished.

By acquiring Beats, they’re getting an executive team that is all about music, and has shown nothing but focus and attention to detail when it comes to audio. They’re buying the passion. With Beats’ CEO Jimmy Iovine, a deeply rooted music executive who was closely tied to both Apple and Steve Jobs, they get someone who knows Apple and can take that part of Apple’s business to the next stage in it’s development. What could that be? It’s hard to speculate. He’s known to have pitched Apple on streaming music well before there even was streaming music, and that concept may have been refined and expanded to the point where they can innovate and come up with the next generation of music distribution.

Now, the streaming service that Beats offers today may not be as impressive as other offerings, but combined with Apple’s clout and market power, they could take streaming music to a new level and re-write the rules on how digital music works. Apple has also been recently rumored to be working with Shazam on song identification, and that may be related.

So it comes down to Apple needing a new direction in music, and someone with the passion to drive it. They also are a product-driven company, and Beats may have a new music product that makes sense for Apple. Both considerations would point to Beats making sense for Apple. Talent and product. The usual reasons Apple buys companies.

Of course, if they just want Beats for the headphones, that’s crazy.