What’s On

Will the Beat go on? And if so, why?

When I first heard of the ‘Apple to Buy Beats’ deal, I did scratch my head for a brief moment – and then started thinking about the reasons why? Why? Why, would such a hugely successful product-orientated company like Apple with so many options, choose this particular one?

I didn’t have to wait long to see the flood of comments from industry experts, informing ‘insiders’ and random consumers speculate as to the possible reasons, strategic or otherwise.

Probably most controversially, a lot of backchat was triggered by the apparent ‘happyness high’ that Dr Dre seemed to be enjoying whilst basking in the reflected glory of potentially becoming the World’s first ‘Billionaire rapper’. Some off-the-cuff one-upmanship that reminded me of ‘zeitgeist’ Jay-Z entertainingly escalating the Bling stakes in his recent ‘Picasso Baby’ track.

But, if I was perhaps looking for an even more controversial statement, I wouldn’t have needed to go further than find some key points outlined by outspoken music ‘blogger’ Bob Leftsitz. His take was not for the fainthearted in the corporate communications office at Cupertino.

“Tim Cook is an operations guy, he’s clueless, the company has no vision and this is evidence of it. Steve Jobs was famous for saying one thing and doing another, decrying this and then doing exactly that. Anybody with a brain knew that streaming was eclipsing downloads. Except at Apple, where they were adhering to Jobs’s philosophy. But it turns out Apple had no Plan B, no streaming service ready to be launched when necessary.”

His abiding summary being that the purchase was motivated primarily for the Beats International streaming service.

When the news itself hit Facebook, I was also interested in what the people thought and swiftly got a dose of outlandish vitriol that in many ways gave the downside of social media creating ‘breaking news’ announcements prematurely and in an unguarded fashion.

Just to capture some of the funniest from people best described as ‘totally not’ being in the Apple ‘fanboy’ camp: “Apple Hipsters love a nice, polished turd and that’s exactly what Beats products are…” Although, someone else explained it with a Randy Jackson-esque illustration… “Yo Dawg! I put your overhyped, overpriced and technologically inferior yet stylish company, inside another over hyped, overpriced, technologically inferior yet stylish company!”

Can things be really this partisan on the question of ‘Why buy Beats’? And given that passions are running high, has the sheer volume of socially stated opinions started to drown out the actual elements of the deal? Yes, the Court of Public Opinion remains in session. Another blog, The AWL, covered a swath of intrigue and tried to harness the social media outcomes, but focused first and foremost on the inherent topic of Racism, big business and misplaced attempts to grab headlines.

When the M&A news ‘blew up’ on-or-around May 9, 2014 I was conveniently perched on my couch to see the hastily arranged interview CNBC did with the cofounder of Monster Cable Products, Noel Lee (he being the accredited inventor of the original tech ‘smarts’ behind Beats headphones) and whilst he couldn’t shed much light on the terms of the deal itself, he knew he had missed out on a big pay day, having sold his stake to HTC several years ago.

The focus of the interview though, was perhaps more shocking in that the premise was basically along the lines that Apple had been paying close attention to Beats’ marketing successes – and urgently required a #Trending transplant to somehow maintain relevance with the younger generation of affluent American adults seeking branded digital wear-ability.

The ultimate benefit of the transaction therefore coming in the form of Jimmy Iovine sitting on the Board. The same Iovine, I had only seen up-close on TV criticising, sorry mentoring, singers on the American Idol, season 12. Was he (and additionally the culturally impactful Dr Dre) in fact an acqui-hire and informally, but crucially, was Iovine addressable as the new Steve Jobs? Drumroll please.

Overall, and having read at least 50 articles, interviews and blog-posts on this sensitive subject, the consensus seems to agree that the deal was going to be done on the basis that the headphones couldn’t be ‘consciously uncoupled’ from its dynamic new streaming service. And I quote: “Timothy Acuri of Cowen and Company also cited potential in the wearable electronics market for a potential Beats deal. But the analyst said he’s more intrigued by the unique “personalisation engine” technology that drives the Beats Music subscription service.”

That Jimmy Iovine would also come along for the ride, giving him a famous leg up in the pantheon of global music influencers, and arguably helping to guide Apple back in to the centre of many consumers musical behaviour management – especially given the waning appetite for downloads being replaced by streaming propositions– was somewhat handy too.

But wait, hasn’t Dr Dre’s premature outburst put the mockers on the deal. To a degree, but even as the doubt is surfacing in certain quarters; the spin doctors are hard at work and the deal plays on.

For industry observers like myself, who’ve been watching the effect of digitisation and broadband access on music for nearly 20 years, it’s like a watershed moment; wearable music that can be streamed from the so-called Jukebox in the sky, makes perfect sense and puts a real slant on the term ‘surround sound’.

From a business perspective, and I speak as someone who works for a company pioneering the distribution of streaming music services the world over, it helps set a sizeable benchmark for value that we can use. In this case, conceivably valuing InternetQ’s social music streaming service Akazoo at around USD 320 million. That in itself, is not a bad answer to the reason why such a deal might finally be done – and the key people will acquiesce, actually 3.2 billion reasons.

Colin Miles

The author, Colin Miles, is the Global Marketing lead for InternetQ