Apple’s acquisition of Beats left many feeling puzzled as to why Apple would even consider the buy, but chief executive Tim Cook did not hesitate to say he scored “big time” in being able to bring Iovine and Dre on board. Cook sees the intangible visionary value these two bring to the table. The dynamic duo of Apple-Beats has set the music industry abuzz.
Daniel Glass, owner of Mumford and Sons’ label Glassnote Records, says perception is value and with this acquisition, “everybody wins” in the music industry. According to Glass, the copyright value just went up, which he declared to be a fact, and said it meant that a master just went up a lot more. Glass is saying that this valuation increased because of the amount of hands that it will be in, and because of how streaming will vastly increase the flow of music.
Confusion was created when music consumers struggled between their comfortable place of buying music and transitioning to a place of renting music, as it is with streaming. In the transition, music seemed to lose its power. Yinka Adegoke, deputy editor with Billboard, said that Apple would not have been built the way it is now without iPod and iTunes. Adegoke went on to say that Apple-Beats is a great business move and calls this deal a real game changer, bringing even greater value to the music industry. They are teaching people as they go and those folks are now getting on board, seeing the value of what is ahead. Adegoke does not see it being about how many records can be sold anymore, but about building relationships in business, which is what Dre and Iovine have been doing all along.
Doc McGhee, manager for Kiss and Darius Rucker, said this move is like turning a 700-foot ship, which is no small feat and has to be done slowly, and that is how to change the mind of label makers–slowly. He went on to say that Apple is the Tiger Woods of tech, meaning they have the goods to fine tune what they are aiming at. Adegoke pointed out that Apple’s new venture will make streaming go mainstream because of numbers. Apple has access to 800 million credit card accounts and hundreds of millions of devices, likening it to the IOS ecosystem.
McGhee’s current concern with the streaming industry is that revenues paid out to the artists are too low. Glass concurs, but believes Apple, simply by entering the market, will pressure the competition and force “fair pay” to the artists, which is a sign of healthy competition. Scoring “big time” with this Apple acquisition means “game on” in the music industry.
PrivCo, a financial intelligence company, reviewed Beats legal and financial documents and came to the conclusion that Apple is what Beats needed in the realm of supply-chain operations and management. It will enable them to improve their operating margins and find new untapped potential for their brand. Since Beats is more savvy with industry relations, product concepts and marketing, this will be a priceless asset for Apple. Fiscally speaking, there was no justifiable valuation for Apple to purchase Beats, except for the “untapped potential” of a desirable opportunity that has superior leadership.
PrivcCo agrees with Glass that Apple-Beats is a win-win for all, and added that visionaries do not come cheap. Eddy Cue, Apple’s senior VP of Internet software and services, affirmed that the music lineup with Beats will only get better. Cook boasted of the decade-long relationship, remarking they had dated, gone steady, and now it is time for marriage. Apple executives Cook and Cue cannot stop smiling over scoring their “big time” acquisition.
By Jill Boyer-Adriance