Innovation
Apple agrees to buy Irish tax-linked Beats for $3bn
By Michael Hennigan, Finfacts founder and editor
May 29, 2014 - 9:34 AM

Jimmy Iovine, Tim Cook, Dr. Dre, the rapper, and Eddy Cue of Apple, Cupertino, May 28, 2014

Apple announced Wednesday that 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. As part of the acquisition, Beats co-founders Jimmy Iovine and Dr. Dre will join Apple. Apple is acquiring the two companies for a total of $3bn, consisting of a purchase price of approximately $2.6bn and approximately $400m that will vest over time -  - the international operations of Beats are owned by a mailbox Irish offshore holding company that is tax-resident in Jersey, the Channel Islands. 

“Music is such an important part of all of our lives and holds a special place within our hearts at Apple,” said Tim Cook, Apple’s CEO. “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.”

“I’ve always known in my heart that Beats belonged with Apple,” said Jimmy Iovine. “The idea when we started the company was inspired by Apple’s unmatched ability to marry culture and technology. Apple’s deep commitment to music fans, artists, songwriters and the music industry is something special.”

Apple said Iovine has been at the forefront of innovation in the music industry for decades, and he has been an instrumental partner for Apple and iTunes for more than a decade. He has produced or collaborated with some of the most successful artists in the history of the iTunes Store, helping make it the world’s number one music retailer. Iovine and Dr. Dre are sound pioneers, artists and entrepreneurs.

The electronics giant said Beats Electronics has brought the energy, emotion and excitement of playback in the recording studio back to the listening experience and has introduced an entirely new generation to premium sound entertainment. Beats Music was developed by a team of people who have each spent their entire career in music and provides music fans with an incredible curated listening experience.

The Wall Street Journal says US sales of single downloads slid 6% to 1.3bn tracks last year, while album downloads were flat at 118m. Pandora's free, ad-supported service has more than 70m active users and it had 3.3m paying subscribers in March. Spotify, which entered the U.S. in 2011, now counts 10m paying subscribers world-wide.

Apple launched its own free music-streaming service, iTunes Radio, last September. It counts 40m US users, but has yet to make much of a competitive dent. Beats started its $9.99-per-month subscription music-streaming service in January and has 250,000 paying subscribers so far, according to Apple.