The Telegraph
Friday , May 30 , 2014
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Apple to buy music brand for $3 billion

Cupertino, May 29: Apple, the company that turned digital music into a mainstream phenomenon, said yesterday that it was buying Beats Electronics, a rising music brand, for $3 billion, in a move that will help it play catch-up with rivals that offer subscription-based music services.

Apple and Beats executives said the companies would work together to give consumers around the world more options to listen to music. The Beats brand will remain separate from Apple’s.

Apple said iTunes, which sells individual songs and albums and offers a streaming radio service, would be offered alongside the Beats music service.

The Beats deal brings Jimmy Iovine, a long-time music executive, and Dr. Dre, the rapper, to work under Eddy Cue, Apple’s executive in charge of Internet services. Dr. Dre and Iovine, who founded Beats in 2006, join a list of prominent executives whom Apple has added to its roster, including Angela Ahrendts, the former chief of Burberry, and Paul Deneve, the former chief of Yves Saint Laurent.

In an interview here at Apple’s headquarters, Timothy D. Cook, Apple’s chief executive, emphasised the talent that Dr. Dre and Iovine would bring to Apple. He praised the Beats music service, which creates playlists for subscribers.

“These guys are really unique,” Cook said. “It’s like finding the precise grain of sand on the beach. They’re rare and very hard to find.”

Apple is paying for the deal with $2.6 billion in cash — hardly a dent in the company’s huge cash pile of more than $150 billion — and $400 million in stock. The company expects the deal to be approved this year.

For Apple, the acquisition of Beats, expected for weeks, largely follows a familiar pattern. Apple has historically bought technology outfits that have resources and talent that it can blend into future devices and online services. Beats fits that criterion.