Originally Posted by Rogifan
And solid future profits?
What I've read is that the electronics portion of Beats (headphones) makes a decent profit, but the Beats Music (subscription service) is losing money as they were looking for $100 Million more for the Beats Music division, which doesn't surprise me.
If you look at the Net Profits to Gross Revenue for any content subscription, movie rental (NetFlix), Digital Download (Amazon), etc. it's a VERY low profit margin business.
Apple just needs to negotiate deals to offer a subscription service, but I don't think they NEED to at this time. Several reasons why I feel this way.
1. They can't get the entire catalogs from the record distributors to allow for subscription based music downloads as they simply don't let companies offer the entire catalog.
2. No one has proven that it's profitable. Apple's iTunes, is the largest download site and they don't run off of large Net Profit margin, as it's more offered as a convenience (and to help fend off illegal downloads) to Apple iPod customers as that what it was originally designed for. I just think it's more of getting Beats out of the picture instead of Google, Microsoft, etc. from buying them out.
Whether this happens or not, if Apple simply walked away from the deal, it would probably make Beats less valuable and less attractive to someone else buying them out as it would signal lots of questions behind them bailing on the deal.
I wish I had more answers than that, but since Cook & Co. have been tight lipped on it, who knows what the reality is behind this deal. Maybe Cook finally got exposed to things that changes the deal after the YouTube video that Dr. Dre released with his drinking buddies. I'm sure that might have some impact on this since it was prematurely released that the deal was signed and sealed and official. I'm sure that didn't go over well in Cupertino.