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Beats deal defenders cite 'humanized' music subscription service as benefit to Apple

post #1 of 243
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Proponents of Apple's rumored interest in Beats Electronics have cited the company's recognizable brand, its dominance of the premium headphone market, and its unique new Beats Music service as positive potential additions for the iPhone maker.


Photo via Paul Stamatiou.


With a rumored price tag of $3.2 billion, the alleged Beats purchase would mark the largest acquisition in Apple's history, easily dwarfing its $404 million buyout of NeXT in 1996. Analyst Amit Daryanani of RBC Capital Markets admitted that the alleged price is a "shocker," but also argued that there is "more logic to the deal than meets the eye."

In particular, he cited consumers' changing music buying behavior, with listeners trending toward subscription services such as Spotify that allow access to content on demand. Beats runs its own music subscription service, and though the contracts for Beats Music are not expected to transfer in the event of an acquisition, the thought is ownership of the Beats brand could give Apple some leverage in negotiations.

Daryanani also sees the Beats deal giving Apple access to designers and engineers who could help develop new products and designs for the emerging wearable technology segment. And he believes that Beats Chief Executive Jimmy Iovine could help run Apple's iTunes music strategy going forward.




Timothy Acuri of Cowen and Company also cited potential in the wearable electronics market for a potential Beats deal. But the analyst said he's more intrigued by the unique "personalization engine" technology that drives the Beats Music subscription service.

Beats Music, which is available for $9.99 per month, is still a nascent offering, but Acuri believes it could complement Apple's iTunes Radio, and offer a new content delivery mechanism that the iPhone maker could leverage.

"Unlike other services, Beats Music doesn't select music/data using what is essentially an Internet search algorithm like the vast majority of other content delivery services," he said. "Rather, it 'humanizes' the data much like a person might create a 'mix tape' (in my day) to reflect a certain mood or physical environment rather than basing song choices on similarities to other songs."

Beats is said to have earned more than $1 billion in revenue in calendar 2013, up from about $500 million in 2012. The company also reportedly captured about 70 percent of the premium headphone market in the U.S.

In Acuri's eyes, the hardware revenues alone help provide justification for Apple's alleged interest in Beats.




Brian White of Cantor Fitzgerald is also intrigued by the addition of Beats Music to Apple's product lineup. Marketed as "the first music service that understands you," it launched in January and has over 20 million tracks with no ads and high-quality streams.

"We believe this feature could also have applications for movies and potentially other media," White said.

The comments from analysts largely align with what media insider Peter Kafka of Re/code has reported, portraying the Beats headphone business as an immediate benefit for Apple, while the Beats Music service may be a more longterm strategic acquisition that's really at the heart of the anticipated deal.

Explanations and even support for Apple's apparent interest in Beats stand in contrast to the largely negative reaction word of the deal has generated among pundits and analysts alike. Detractors say that they don't believe Beats is a good fit for Apple, as the company is largely a brand while Apple typically invests in technology or personnel through its acquisitions.
post #2 of 243
If they earned $1B in 2013, with Apple's muscle that $3.2B outlay won't be long in being recovered.
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post #3 of 243
Quote:
"Unlike other services, Beats Music doesn't select music/data using what is essentially an Internet search algorithm like the vast majority of other content delivery services," he said. "Rather, it 'humanizes' the data much like a person might create a 'mix tape' (in my day) to reflect a certain mood or physical environment rather than basing song choices on similarities to other songs."

They forgot the "mofo" at the end of the quote. Stay classy Apple. You don't need these turds.


Edited by GadgetCanadaV2 - 5/9/14 at 11:21am

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post #4 of 243

The media has been clamoring for a story like this for at least the last two years.

 

Remember the old days when absolutely everyone would jump on something that Apple was not ever, for any reason, going to do? iPhone mini? Apple Television? They were CERTAIN to happen, and so all media outlets reported them as certain, as well as giving their opinions on how this CONFIRMED product would save or destroy Apple…

 

A lot of pent up idiocy is being released over Beats. That’s good; it’ll keep the idiocy away from real future products. 

post #5 of 243
1) So this is about a "humanizing" algorithm? That's at least IP that Apple doesn't have.

2) I keep hearing about their revenue but what about their profits?

3) I would like to see Apple give standard phones to iPhone buyers that I can actually use. Does Iovine have ideas to make Apple's PodPhones better?
Edited by SolipsismX - 5/9/14 at 8:20am

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post #6 of 243
Holy Redundancy Dept of Redundancy Batman. Now we have eight threads where everyone, including me, will be saying the same things.
post #7 of 243
Quote:
Originally Posted by Tallest Skil View Post

Remember the old days when absolutely everyone would jump on something that Apple was not ever, for any reason, going to do? iPhone mini? Apple Television? They were CERTAIN to happen, and so all media outlets reported them as certain, as well as giving their opinions on how this CONFIRMED product would save or destroy Apple….

According to @snova if Apple says nothing it means it's definitely happening. Now where is my iPhone mini* and Apple HDTV?


* The iPhone mini is now funny because it was a tim — not too long ago — when the biggest complaint was the iPhone was too big so Apple needed a smaller version on the market to be successful.
Edited by SolipsismX - 5/9/14 at 12:31pm

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post #8 of 243
Quote:
Originally Posted by SolipsismX View Post

1) So this is about a "humanizing" algorithm? That's at least IP that Apple doesn't have.

2) I keep hearing about their revenue but what about their profits?

3) I would like to see Apple give standard phones to iPhone buyers that I can actually use. Does Iovine have ideas to make Apple's PodPhones better?

They are sure to be a lot better under Tim's control. Not that Jimmy is an idiot for one minute, I am sure they are not bad at all. They did buy themselves back from HTC (unless Apple helped there?) I know nothing about them are they listed or is this a privately held company?
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post #9 of 243

So, Apple paid around 400 million USD for NeXT, which basically got Apple a next gen operating system, which all of their devices are now based on, including all iOS devices, and some "Beats defenders" think that it's smart to pay 3.2 Billion for a "humanized" music subscription service?

 

I still think that this is a terrible idea.

 

Apple's stock sure isn't rising today because of this ridiculous rumor, and surely everybody knows about it by now, because it's all over the damn web.

 

I've been looking for a good entry point to get back into AAPL, maybe this Beats rumor can last for another week or so, and bring the stock down to even cheaper levels, so that I can snatch some up. And then Apple can come out and deny everything. That would be hilarious.

post #10 of 243

I hope this isn't happening.  If it is, what a colossal waste of money.  It will rank with Facebook buying WhatsApp or Google buying Motorolla.

post #11 of 243
Originally Posted by jlandd View Post
Holy Redundancy Dept of Redundancy Batman.

 

I thought it was the Department of Redundancy Department.

This message brought to by the Needless Corrections Bureau.

post #12 of 243
Quote:
Originally Posted by digitalclips View Post

If they earned $1B in 2013, with Apple's muscle that $3.2B outlay won't be long in being recovered.


Depends on Beats's net income.

post #13 of 243

Even if all these things are true how did they come up with a $3.2B valuation? What were their recent profits? I have to at least trust that Tim et al.aren't stupid and know more than any of us commenting and if this turns out to be true they have a very good reason. From the outside looking in it doesn't appear to be a wise buy but we shall see. Beats has a high percentage of the headphone market even though the quality doesn't seem to match the price of their products which Apple would likely address. There are also lots of Beats certified Android devices that would lose that since it would then be an Apple exclusive. I still think Broadcom and Nintendo would offer more synergy and benefits to Apple but Tim knows what he is doing. 

 

P.S. Any fans of HBO series  called "Silicon Valley" think about that show when they read about the "humanized" IP algorithm?

post #14 of 243
Quote:
Originally Posted by SolipsismX View Post

2) I keep hearing about their revenue but what about their profits?
 

 

Profits can't be that good, it takes a lot of R&D to get headphones to sound that bad. :lol:

post #15 of 243
Interview of Iovine with Mossberg: http://live.wsj.com/video/producer-jimmy-iovine-at-d-dive-into-media/B135580F-2DC6-47CD-8BAD-924E07AB6C21.html#!B135580F-2DC6-47CD-8BAD-924E07AB6C21 (video, approx. 40 minutes)


1) He pooh-poohs Apple's included headphones. For that reason alone I'd like to see Apple do anything that will correct that.

2) This makes me think about the previous rumour of high-quality music being sold. Could Iovine be instrumental in getting that to happen?

3) Beats bought MOG earlier this year: http://en.wikipedia.org/wiki/MOG_(online_music)

4) Iovine talks about how Spotify is limited. He makes a lot of good points.

5) That algorithm sounds like it's right up Apple's street.

6) I love what he had to said (starting about 28 minutes in) about how music companies will never get technology right and technology companies will never get curation right. I'm digging this idea of excellent curation and I do want to know what the next song is.
Edited by SolipsismX - 5/9/14 at 8:47am

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post #16 of 243
Smart move using white as the default color for Beats headphones. Made for a natural transition to Apple's lineup. Wonder if the Beats logo will be supplanted by a red apple? Or an apple-shaped "b" with a leaf/stem at the top?
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post #17 of 243
Quote:
Originally Posted by Robin Huber View Post

Smart move using white as the default color for Beats headphones. Made for a natural transition to Apple's lineup. Wonder if the Beats logo will be supplanted by a red apple? Or an apple-shaped "b" with a leaf/stem at the top?
Excuse me while I barf.
post #18 of 243
3.4 B!!!! o_O
I think that Apple should buy other companies like nintendo or Yahoo with a transaction over 1 billion dolars, but because of the Beats it's a terrible idea
post #19 of 243
Quote:
Originally Posted by Robin Huber View Post

Smart move using white as the default color for Beats headphones. Made for a natural transition to Apple's lineup. Wonder if the Beats logo will be supplanted by a red apple? Or an apple-shaped "b" with a leaf/stem at the top?

I will never buy any more Apple products if they ever came with a "beats" logo on it. That's it, I would be done with Apple, and that's saying a lot, coming from me.

 

At least certain "Apple ][" haters on this forum would be happy, because there would be no reason for me to post here again. 

post #20 of 243
If true this is not going to go over well with AAPL investors
post #21 of 243
Quote:
Originally Posted by ScartArt View Post

Profits can't be that good, it takes a lot of R&D to get headphones to sound that bad. lol.gif

Nah, you just stuff a load of accosting dampening material in front of the diaphragm.
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post #22 of 243

Best analysis on this potential buy I have read.

 

Apple Is Acquiring A Fad - Not Quality - And That Is Troubling

post #23 of 243
Quote:
Originally Posted by RalphMouth View Post


Depends on Beats's net income.

Obviously true, the question is what royalties they pay on the music as I don't think the hardware is all that relevant to Apple.
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post #24 of 243
Is this going to be found out as yet another rumour like Apple health ear buds?
 
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post #25 of 243
Apple is doomed

(.)

I guess nothing good can last forever
post #26 of 243
I have never owned a pair of Beats but my friends that have had nothing but problems. Sure they were under warranty but dropping hundreds of dollars on crap. I'd rather not. Bose please.
post #27 of 243
My original iMac had Harmon Kardon speakers I believe built in.
Beats are just trendy junk.
 
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post #28 of 243
Quote:
Originally Posted by gwmac View Post

Best analysis on this potential buy I have read.

Apple Is Acquiring A Fad - Not Quality - And That Is Troubling
This is so sad to me. Apple ruining its brand to get some street cred from young hipsters. 1oyvey.gif
post #29 of 243
Quote:
Originally Posted by maclvr03 View Post

I have never owned a pair of Beats but my friends that have had nothing but problems. Sure they were under warranty but dropping hundreds of dollars on crap. I'd rather not. Bose please.

LOL, Bose is the Beats for old people. Overpriced crap that relies on marketing not quality. Any and I mean any audiophile site will confirm that. Companies like Sennheiser make quality products and also have a lot of IP protecting that. It seems Beats only has design type patents which are useless as trends change. All they did was use cheap Chinese OEM phones and added some bass and a big marketing campaign. 

 

Beats were also valued at only around $1B less than a year ago. What happened in the last 12 months to add another $2B?

post #30 of 243
Quote:
Originally Posted by Tallest Skil View Post

I thought it was the Department of Redundancy Department.
This message brought to by the Needless Corrections Bureau.

Ha ha ha! Right you are. I get a quite a few quotes from that era misremembered. Wonder why? : )
post #31 of 243
Quote:
Originally Posted by Rogifan View Post


This is so sad to me. Apple ruining its brand to get some street cred from young hipsters. 1oyvey.gif

 

The acquisition isn't about the headphones and speakers.  Apple could snap up a thousand companies that do a solid job 

with audio. 

 

What you cannot find easily is a service with good music curation.  I've tried them all.  Spotify sucks, Rdio isn't much better.    All the services let me listen to days and days of music but few really helped me discover new artists.   

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post #32 of 243
Quote:
Originally Posted by hmurchison View Post
 

 

The acquisition isn't about the headphones and speakers.  Apple could snap up a thousand companies that do a solid job 

with audio. 

 

What you cannot find easily is a service with good music curation.  I've tried them all.  Spotify sucks, Rdio isn't much better.    All the services let me listen to days and days of music but few really helped me discover new artists.   

That may very well be true but I find it hard to believe Beats which is a marketing/gimmicky type company reliant on a celebrity managed to come up with a $3B algorithm that Apple and other companies couldn't create on their own or buy far cheaper elsewhere. I am not sure people are all that interested in new artists in any event. When I tune into music while I drive everyday from my iPhone I generally will just pick a station on Pandora and in the last week I have started to use iTunes a bit more and  find myself pulled to the Top hits stations from various genres and decades depending on my mood. 

post #33 of 243
Quote:
Originally Posted by SolipsismX View Post

Interview of Iovine with Mossberg: http://live.wsj.com/video/producer-jimmy-iovine-at-d-dive-into-media/B135580F-2DC6-47CD-8BAD-924E07AB6C21.html#!B135580F-2DC6-47CD-8BAD-924E07AB6C21 (video, approx. 40 minutes)


1) He pooh-poohs Apple's included headphones. For that reason alone I'd like to see Apple do anything that will correct that.

2) This makes me think about the previous rumour of high-quality music being sold. Could Iovine be instrumental in getting that to happen?

3) Beats bought MOG earlier this year: http://en.wikipedia.org/wiki/MOG_(online_music)

4) Iovine talks about how Spotify is limited. He makes a lot of good points.

5) That algorithm sounds like it's right up Apple's street.

6) I love what he had to said (starting about 28 minutes in) about how music companies will never get technology right and technology companies will never get curation right. I'm digging this idea of excellent curation and I do want to know what the next song is.

Thanks just watched that right through.

I wonder if that is the older style earbuds he is slamming. The newer ones are a major step forward. That said I use my Audio-Tenchica studio cans whenever I can (no pun intended).

I even like a radio DJ that tells you what you just heard as well as what's next.
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post #34 of 243
That service is worth $3.5 Billion?

Tim Cook is the next Ballmer. He has no vision! Two years after Jobs' passing he's still sitting on all of the major Apple products.

Will he buy Monster Cables next? How about more audiophool snake oil companies like Beats?

Tim Cook fired the true Steve Jobs successor: Scott Forstall! Scott wouldn't make these idiotic deals that Tim's making.

While Google and Facebook are "skating where the puck is going to be, Apple's skating where the puck was 10 or 100 years ago".
post #35 of 243
Quote:
Originally Posted by hmurchison View Post

The acquisition isn't about the headphones and speakers.  Apple could snap up a thousand companies that do a solid job 
with audio. 

What you cannot find easily is a service with good music curation.  I've tried them all.  Spotify sucks, Rdio isn't much better.    All the services let me listen to days and days of music but few really helped me discover new artists.   
I'm sorry but music curation is not worth $3B. Neither is Jimmy Iovine. On CNBC this morning they said it was all about the headphones. I'm sure Apple retail knows how many beats headphones they sell and Cook and finance know how huge the margins are on them. They're cheap headphones that people are willing to pay lots of $$ for. That's what makes me sad as it seems like this is just a money grab. Or Apple wrongly thinking they need to improve their "cool factor" and that Beats is the way to do it.
post #36 of 243
Quote:
Originally Posted by GadgetCanadaV2 View Post

They forgot the "mo of" at the end of the quote. Stay classy Apple. You don't need these turds.

I can't be the only person who thinks this is a terrible comment. Stay classy GadgetCanadaV2. 1oyvey.gif
post #37 of 243
Quote:
Originally Posted by bighype View Post

That service is worth $3.5 Billion?

Tim Cook is the next Ballmer. He has no vision! Two years after Jobs' passing he's still sitting on all of the major Apple products.

Will he buy Monster Cables next? How about more audiophool snake oil companies like Beats?

Tim Cook fired the true Steve Jobs successor: Scott Forstall! Scott wouldn't make these idiotic deals that Tim's making.

While Google and Facebook are "skating where the puck is going to be, Apple's skating where the puck was 10 or 100 years ago".
Scott Forstall was the true Jobs successor? Excuse me while roll on the floor laughing my ass off.
post #38 of 243
Quote:
Originally Posted by gwmac View Post
 

That may very well be true but I find it hard to believe Beats which is a marketing/gimmicky type company reliant on a celebrity managed to come up with a $3B algorithm that Apple and other companies couldn't create on their own or buy far cheaper elsewhere. I am not sure people are all that interested in new artists in any event. When I tune into music while I drive everyday from my iPhone I generally will just pick a station on Pandora and in the last week I have started to use iTunes a bit more and  find myself pulled to the Top hits stations from various genres and decades depending on my mood. 

 

From what i've read the Beasts Music curation is largely human.  Whatever they've done they are ahead of the competition in quality...for now. 

http://www.digitalmusicnews.com/permalink/2014/01/21/beatsmusic

 

I really need great music curation.   Any service can slam me into the Top-40 stuff.  I want to feel as though i've got my own personal DJ on staff that knows what I like. 

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post #39 of 243
Originally Posted by gwmac View Post
Best analysis on this potential buy I have read.

 

Apple Is Acquiring A Fad - Not Quality - And That Is Troubling

 

I’m not sure how you could call it even a good analysis, as they consider rumor to be fact. They say so right in the first sentence. Why would anyone listen to them after that?

post #40 of 243
Quote:
Originally Posted by hmurchison View Post

What you cannot find easily is a service with good music curation.  I've tried them all.  Spotify sucks, Rdio isn't much better.    All the services let me listen to days and days of music but few really helped me discover new artists.

That's the only thing that makes sense to me but is that really worth billions? Is that something Apple really couldn't create or license?

Quote:
Originally Posted by digitalclips View Post

Thanks just watched that right through.

I wonder if that is the older style earbuds he is slamming. The newer ones are a major step forward. That said I use my Audio-Tenchica studio cans whenever I can (no pun intended).

I even like a radio DJ that tells you what you just heard as well as what's next.

Maybe, but that video is from earlier this year so it's hard to tell. I certainly don't like the new ones. Granted they are much improved over the old ones but I won't use them.

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