Apple Buying Beats: A Three-for-One Deal

The news flew through my Twitter feed faster than Game of Thrones spoilers: Apple was buying Beats. The fledgling streaming service and powerhouse electronics brand would be the latest addition to Cupertino's ranks. It would also be the largest: shelling out a cool $3.2 billion for the deal, Apple made Dr. Dre hip-hop's first billionaire.

And then came the speculation. Why did they do it? Was Apple betting big (really big) on a service to topple Spotify? Were they drawn in by the earbud-killing headphones? Or were they, as the Verge suggests, buying Beats' particular brand of "cool"?

The answer, of course, is all of the above. Apple saw a golden opportunity in Beats, a chance to tackle several growth areas at once. With the recent addition of Angela Ahrendts to the company's exec team, Apple has made it clear that they're trying to reinvigorate retail. Beats Electronics could become a vital component of this transformation; its estimated revenue is around $1.5 billion, and those signature headphones are already immensely popular in Apple stores.

Bringing on Ahrendts also suggests they know something we know: Apple is losing its luster. Once the pinnacle of hip, the company's cool factor has dwindled since iPhones became commonplace and MacBook Airs infiltrated the world's coffee shops. Ahrendts has a proven track record for transformation, having turned the stodgy Burberry brand on its head during her tenure as CEO. Meanwhile, Beats already oozes cool: between Dr. Dre, legendary producer Jimmy Iovine, and Chief Creative Officer Trent Reznor, the Beats executive team has won nearly a dozen Grammys. That's not something you can say about most corporate boardrooms.

So Apple didn't just buy the headphones—or rather, they didn't buy just any headphones. But they didn't just buy a streaming service, either.

If they'd wanted a streaming service, they should have bought Rdio. Like Beats, which reportedly has around 100,000 users, Rdio has a small but passionate following. Certainly neither company can touch the behemoth that is Spotify, which boasts 24 million active users, but Rdio has come much closer than Beats or Spotify when it comes to figuring out how to make music social. Apple has struggled with this question before, with the misstep that was Ping; Rdio could have bridged the gap between Apple's sleek design sense and their clunky attempts to conquer post-download era music discovery.

That said, Apple is absolutely right to acquire Beats. Beats is more than its individual components: audiophiles know their headphones aren't the best, while Beats Music is still a largely untested Spotify alternative. It's the combination of these things, along with the company's formidable 'it' factor, that makes the purchase worthwhile. And with the music industry on the brink of massive change, it's the perfect time for Beats to adopt Apple's motto: "think different." Streaming needs to be shaken up—maybe the time is right for Apple to change the game yet again.

Photo: Karlis Dambrans / Flickr