Can you feel the Beats? – The Economist (blog)
NEWS broke on May 28th that Apple would buy Beats, a headphone-maker and music platform, for $3 billion. It seems like a high price to pay to hang out with the cool kids. Beats, which is owned by the rapper Andre “Dr. Dre” Young (pictured) and record producer Jimmy Iovine, makes expensive designer headphones. Earlier this year it launched a new streaming platform, where people can play their favourite tunes in exchange for a monthly fee, called Beats Music.
When Apple announced its iTunes Radio offering last year, analysts thought it was only a matter of time before Apple went one step further and launched an “on-demand” streaming service to compete with the likes of Spotify. (Radio services play songs in a certain genre, whereas on-demand services let people select specific songs, and are growing in popularity.) They were right. Instead of launching its own and negotiating deals with individual labels, however, Apple is buying a streaming service that is already mid-song. Beats Music has a distribution deal with AT&T, a mobile operator, which packages the service with some of its plans.
The deal shows how quickly the music industry is moving away from a model of ownership toward one of accessing content. Apple helped save the music industry when it introduced its music download store in 2003 and helped turn the purchasing of portable music files into a business worth billions. Now it is stepping into another musical era. And this time Apple is not leading, but following, the line dance.