Apple Reportedly Betting $3.2B on Dre’s Beats

Dr. Dre is already rich, but he may be about to get a lot richer. Apple is reportedly buying his Beats Electronics company for $3.2 billion. Reuters cited EUtwo people with knowledge of the matterEU in its report that suggests the companyEUs are EUhashing out details.EU

Although the deal could still fall through, ReutersEU sources said Apple has been in the market for a subscription-based music service to beef up its iRadio ad-based offering.

Dre launched Beats in 2008 with Jimmy Iovine, chairman of Interscope Geffen A&M Records. Beats Electronics includes Beats by Dre headphones, earphones and speakers, Beats Audio software technology, and a streaming music service called Beats Music.

Dramatic Impact

We caught up with Roger Entner, principal analyst at Recon Analytics, to get his take on the rumored sale. He told us the headset business would be the most attractive -- and important -- part of the buy.

EUBeats Electronics basically transformed the high-end music device business. Before Beats, there was Bose and a couple of small players,EU Entner said.

EUThe industry was struggling to get people to spend $20 on a headset. Dr. DreEUs Beats came along and now everybody wants to spend $200-plus on headsets," he said. "That dramatically expanded the market, and especially for smartphones that have great music.EU

Beats Music, Too

Entner is not as excited about the possibilities for the Beats Music service because Apple could create that type of platform on its own. ItEUs nice to have, he said, but thereEUs nothing revolutionary about programming a subscription service feature or even creating curated music lists from various artists.

Beats Music just launched in January and runs $9.99 a month. The service is available on iOS, Android and Windows Phone and online. Beats Music has a catalogue of 20 million licensed songs from all the major labels, including Universal Music Group,...

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