Apple confirmed on Wednesday that it is buying headphone maker and streaming music service Beats for $3 billion.
It is the biggest purchase ever for the iconic technology company, which has struggled to maintain growth since the 2011 death of co-founder Steve Jobs.
“Music is such an important part of all of our lives and holds a special place within our hearts at Apple,” Apple’s chief executive Tim Cook said. “That’s why we have kept investing in music and are bringing together these extraordinary teams so we can continue to create the most innovative music products and services in the world.” The $3-billion price tag is some $200 million less than widely reported in early May.
Beats was founded by powerful music industry executive Jimmy Iovine and rap mogul Dr Dre, whose real name is Andre Young, both of whom will now join Apple.
Iovine worked with Jobs in helping Apple gain the music rights to its iTunes service, which helped lay the basis for the company’s spectacular move into smartphones and tablet computing.
“I’ve always known in my heart that Beats belonged with Apple,” Iovine said. “The idea when we started the company was inspired by Apple’s unmatched ability to marry culture and technology.” Wall Street analysts have generally been cool about the deal, which is thought to centre on Beats streaming music service with about 200,000 paying subscribers, compared to more than 4 million Spotify users or Pandora’s 250 million people listening to its streaming radio service.