It's been some time now since word broke that tech giant Apple (NASDAQ:AAPL) was in advanced negotiations to purchase high-end headphone and budding music power Beats Electronics for a whopping $3.2 billion.

Fast-forward to today, and an Apple-Beats deal appears as elusive as ever, although negotiations are undoubtedly still under way behind the scenes.

Beats Music On Ios

Source: Beats.

However, this deal, which isn't an obvious home run especially given its steep price tag, still isn't done. So let's examine a few of the issues that could make this deal DOA for Apple and its investors.

Beats Audio: a service worth betting on?
Although it's dwarfed by the larger headphone division, Beats' budding audio service, Beats Music, has long been rumored to be the crown jewel driving Apple's acquisition attention. However, there's certainly a case to be made that Beats Audio might not be the subscription music silver bullet that Apple needs.

For starters, although apparently a free-to-paid conversion monster, Beats Music appears to lack the kind of massive user growth that Apple would be willing to pay up for, despite having the deck stacked hugely in its favor since it launched this past January.

According to recently leaked documents, Beats Music had just over 110,000 paid subscribers as of March, certainly nothing to sneeze for a three-month-old service. However, those same leaked documents also show that roughly 61,000, or about 56%, of Beats Music's total subscribers entered the service through the family-plan promotion that Beats struck with AT&T. To me, this at least partly calls into question the extent of Beats Music's true appeal among consumers.

The fair counterargument would be that Beats Music's impressive start, even if leaning a bit heavily on AT&T, could turn into a true force to be reckoned with in the music space when combined with Apple's own music muscle. But given that the dollar figures Apple is reported to be discussing sit in the billions rather than the millions, I want to be darned sure that the streaming music service sitting at the heart of this deal is a pony worth betting on.

Can Dr. Dre and Jimmy Iovine "Think Different"? 
According to many of these same reports, the other major attractors in this deal are Beats' two key star executives, hip-hop legend Dr. Dre and music industry veteran Jimmy Iovine.

Rumor has it that Apple would like to give the two executives ample responsibility to help navigate Apple's digital music strategy through a decline in album sales and digital downloads and safely into the on-demand era. However, it remains unclear just how well both executives might fit within Apple's notoriously insular corporate culture.

Beats Music Logo

Source: Beats

Apple's executive team was reportedly infuriated when a video of Dr. Dre and actor/model Tyrese surfaced bragging that Dr. Dre had just become the first hip-hop billionaire and was on camera "drunk off of Heinekens." And while this kind of move was easily dismissed as dumb fun by the masses, it's also likely led to plenty of discussions about whether the executives Apple will be "acqui-hiring" would be an acceptable fit within as secretive a company as Apple.

Rumors have swirled lately that some combination of the Dre-Iovine dynamic duo could be kept at arm's length as "permanent consultants"  to receiving as much responsibility as running strategy for the entirety of Apple's content. Either way, especially in light of some recent events, there are certainly some unresolved questions about just how well this marriage of corporate cultures and executive teams might work in practice.

A deal to be done
One of the problems in getting a complete sense of how good a deal Apple will be getting if, or when, it buys Beats Audio is that we're not privy to the exact financials for Beats' two respective product lines.

In terms of dollar figures and historical significance, this deal holds massive implications for Apple broadly and CEO Tim Cook specifically. As Apple's biggest acquisition ever and what will undoubtedly become a defining moment for Cook himself, the stakes are about as high as they get for Apple.

As an Apple shareholder myself, I have a lot of faith in Cook, who's deftly navigated the world's largest publicly traded company in the shadow of one of modern business' most admired leaders. However, with the stakes so high and issues like those highlighted here, it's fair to see how Apple investors could be getting cold feet about the probable deal between Apple and Beats.

Leaked: Apple's next smart device (warning -- it may shock you)
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Andrew Tonner owns shares of Apple. The Motley Fool recommends and owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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