Apple announced today that it will purchase Beats Electronics—the headphone maker and the parent company of the Beats Music streaming service—for $3 billion. It’s confirmation of a deal that had been rumored since The Financial Times reported on it in early May. Beats co-founders Dr. Dre and Jimmy Iovine will become Apple executives in the deal. Speaking to The New York Times, Apple CEO Tim Cook said that adding Dr. Dre and Iovine to his team is “like finding the precise grain of sand on the beach,” but it’s not clear yet what Apple intends to do with the most expensive grain of sand in world history. Significantly, Apple’s press release mentions the Beats Music subsidiary before Beats Electronics, suggesting that the streaming service is Cupertino’s main focus. But in the New York Times interview, Cook took a broader view of the deal, saying, “It’s not one thing that excites us here. It’s the people. It’s the service.”
The three weeks between the initial report of the deal and today’s confirmation allowed speculation among Apple watchers to reach a level of lunacy that would be outlandish for any other company but is familiar territory in the house that Jobs built. One of the more entertaining theories posited that Apple might scuttle a $3 billion deal because Tyrese Gibson posted a video on Facebook in which Dre referred to himself as the “first billionaire in hip-hop”:
Billboard, perhaps frustrated that it had to add a question mark to its Apple/Beats merger logo, was among the outlets that singled out this video as evidence of a potentially doomed deal:
In the video [Dre and Gibson] share, in language perhaps unsuitable for a family blog, how Dre will be hip-hop’s first billionaire and other nice things about Compton. People often forget that despite Apple being this company that makes sexy products, with sexy profit margins, and sexy retail outlets…it is not in fact a very sexy company. It is a conservative company, particularly without the leadership of its guiding light Steve Jobs who would shake things up massively on a daily basis. This is not the kind of thing Apple is used to.
Indeed, while the acquisition was still in doubt, it was accepted consensus among Apple commentators that whatever decision Cook made on the Beats deal, it is not what Steve Jobs would have done.