Apple Reportedly Buys Beats Music for $3.2 Billion, Making Dr. Dre Hip-Hop's Richest Man
ByApple has reportedly completed the largest acquisition in its company's history, purchasing Beats by Dre for $3.2 billion.
First reported by the Financial Times, the deal has not been confirmed by either side, but unnamed sources say it will be announced early next week. One of the headphone maker's founders, rapper/producer Dr. Dre, may have already confirmed the deal.
Tyrese Gibson posted a video on his Facebook page of himself and Dr. Dre celebrating, declaring the Beats owner had become "hip-hop's first billionaire." Watch the video here, but be warned of its strong language.
Gibson was not technically correct, because Dr. Dre owns about a quarter of Beats and his share has an estimated value of $2 billion pre-tax. Gibson also stated, "the Forbes list just changed," which is an entirely accurate statement.
Forbes has several lists, but the deal makes Dr. Dre the wealthiest man in hip-hop, surpassing Sean "Diddy" Combs. After taxes, Forbes estimated Dr. Dre's net worth is $800 million.
Diddy now trails in second place with $700 million, followed by Shawn "Jay Z" Carter with $520 million.
Bloomberg News reported Friday morning the deal between Beats and Apple is still "close" but not completed. Still, as numerous reports suggest, the deal will be official by next weekend.
Apple is most likely trying to compete in the online music streaming service, which Beats, also co-owned by Interscope Record co-founder Jimmy Iovine, just launched. Like Netflix, Spotify and other pay-for-play streaming services, subscribers pay $10 a month for unlimited access to Beats' library of music, accessible through a mobile device or computer.
With music being one of Apple's most important aspects, the company needs to stay at the forefront of the latest trends.
"They are buying into the future and the future is going to be streaming and subscription," Jon Irwin, the former president of rival music service Rhapsody International Inc., told Bloomberg News. "Revenue from streaming and subscription is growing. Files and downloads are shrinking. Everyone has to engage in streaming and subscription."