Apple Inc is orchestrating a US$3.2 billion acquisition of Beats Electronics LLC, the headphone maker and music streaming distributor founded by hip-hop star Dr Dre and record producer Jimmy Iovine, according to a published report.
Citing people familiar with the negotiations, the Financial Times says Apple could announce the deal as early as next week. In its report posted online on late Thursday, the newspaper warned the talks could still collapse if the two sides cannot agree on some final details.
Both Apple and Beats Electronics declined to comment to The Associated Press.
The potential acquisition would add Beats Electronics’ popular line of headphones and music streaming service to an Apple lineup that already includes digital music players and the iTunes store, the world’s top music retailer.
If the deal is completed, it would be by far the largest purchase in Apple’s 38-year history.
The Cupertino company’s pursuit of Beats Electronics is the latest indication that the company is having trouble generating growth on its own. Apple already sells Beats Electronics gear in its stores, giving the company insights into how much the trendy headphones and other audio equipment appeal to its customers.
The reported talks are also taking place as the music market increasingly tilts toward streaming and away from the downloads that once drove the success of Apple’s iTunes digital music store.
US revenue from downloads dropped 1 percent to US$2.8 billion last year, while streaming music revenue from the likes of Pandora and Spotify soared 39 percent to US$1.4 billion, according to the Recording Industry Association of America.
While downloads still command 40 percent of the market, streaming revenue now accounts for 20 percent of total revenue, up from just 3 percent in 2007.
Beats Electronics was founded in Santa Monica, California, in 2008. Its headphones were manufactured by Monster Cable until the two companies parted ways in 2012.
The headphones have become a bit of status symbol worn by celebrities as well as audiophiles.
In 2012, Beats bought streaming music service MOG, which it transformed and relaunched as Beats Music earlier this year. The launch was fueled by a landmark partnership with AT&T that allowed up to five family members to pay US$15 a month for the service as long as they were AT&T wireless customers. The deal broke the industry mold of charging each person US$10 per month.
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