

The $3.2B Reason Why Apple is Buying Beats - nrose
https://medium.com/p/c0bd3e89f1a7

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asimpletune
I just want to go on record with an entirely different idea as to why Apple is
buying beats. They're going to make a label.

Why Apple doesn't do streaming: Apple hates committing to something unless
it's absolutely perfect. There are numerous examples, but NFC technology is a
good one that comes to mind. Granted, they've made mistakes, like Mobile Me,
but that was due to poor implementation, rather than immature technology and
infrastructure.

A similar problem has been in their way as far music streaming goes. The
obstacle in their path to connecting consumers to content are labels (the same
applies to cable companies and iTV, but that's a different story). Labels are
greedy, difficult to deal with, and a general nuisance who provide little or
no value. Meanwhile, the actual content providers, i.e. songwriters and
performers, view labels as a necessary evil, but no one believes for a second
that needing them is ideal.

The vision: The idea is that Apple is looking to buy Beats to start their own
label so they can cut out the label, who is an unnecessary middleman. My
reasoning behind this is that Beats is a very strong brand, mainly because
it's been run by two very savvy music industry veterans who know how to
"produce", in every sense of the word. They're more of a household name than
any other headphone maker can claim. If any company had the power, skill, and
recognition to pull off disrupting the record industry, it would be beats. The
only problem is they don't have enough money, do you know who does? Boom. It's
as simple as that.

Just take a look at this [http://cdn.macrumors.com/article-new/2014/05/beats-
royalty-s...](http://cdn.macrumors.com/article-new/2014/05/beats-royalty-
sheet.jpg) and tell me, from Apple's perspective, what the problem is with a
music streaming service? The labels get all the money and the artists get
none. All Beats has to do is say, "Boom, we're starting a label and we own the
streaming service, so you can have a 30% cut per play and we'll keep 70%". If
you were an artist and you could literally improve your earnings by 10x
wouldn't you? $248K vs $22K is criminal.

Just imagine, from Apple's perspective, what this would open up? Essentially,
it's total vertical integration, a pipe from artist to audience, unadulterated
by stupid bullshit. For example they could have complete coordination of
everything from the original recording quality of an album to specialized
super high end digital to analog converters in the hardware - from lossless
media formats that were recorded especially for that format to headphones that
are tuned to provide optimal performance.

This is a complete bargain and no ones talking about it. It will serve as a
prototype for what Apple would love to do to the television industry (think
Apple acquires HBO, a win win for both), and they're doing right under
everyone's noses because no one can think big enough. Apple would never, in a
million years, purchase a company like that for so much money if they didn't
have a very good idea of how it would pay off 10x.

And remember, this is the same company that seriously considered becoming a
carrier, in order to launch the iPhone.

