Apple acquires Beats

beats audio and apple finally 520wEnding its exercise in delayed gratification, Apple turned rumor into reality by acquiring Beats Electronics for $3-billion.

Tellingly, for the many pundits who wondered whether Apple was in it for the electronics or the Beats Music service, Apple’s press release leads with the streaming music service. “Apple today announced it has agreed to acquire the critically acclaimed subscription streaming music service Beats Music, and Beats Electronics, which makes the popular Beats headphones, speakers and audio software.”

Answering another question, Beats Music co-founders Jimmy Iovine (an unabashed fan of Apple music products) and rapper Dr. Dre will join the Cupertino tech giant in unspecified executive roles. “I’ve always known in my heart that Beats belonged with Apple,” said Iovine.

Eddie Cue, who runs the Internet Software and Services division at Apple, outlined the three-legged stool of Apple’s future music services: “The addition of Beats will make our music lineup even better, from free streaming with iTunes Radio to a world-class subscription service in Beats, and of course buying music from the iTunes Store as customers have loved to do for years.”

Most observers view the acquisition of Beats Music as a shortcut to interactive music streaming after years of neglecting its growing importance. Steve Jobs, late and ex-CEO of Apple, famously believed that music consumers wanted to own music, not access it. That was true ten yearsw ago, and remained tru during the majestic rise of the iTunes Music Store to the apex of music retailing. In the last two years, declining music-product sales (CDs and downloads) have accelerated as the marketplace shifted to free and low-cost access to enormous cloud-music catalogs.

Leaked details of this deal started emerging May 9, with an expected quick announcement seemingly delayed by rumored events behind the scenes.

The merger is expected to close by the end of Apple’s fiscal Q2, which is calendar Q3 (September). It is the largest acquisition in Apple’s history.

Brad Hill