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Apple's $3 Billion Beats Buy: Searching for Its Lost Music Soul

In the following video, tech analyst Eric Bleeker and Max Macaluso discuss Apple's (NASDAQ: AAPL  ) $3 billion buyout of Beats. The deal was formally announced last Wednesday and has left Wall Street analysts and Apple observers scratching their heads. It was Apple's largest purchase ever by almost an order of magnitude, and it wasn't one that had been heavily speculated on before news of the impending deal leaked. 
Focusing ion why Apple felt compelled to purchase Beats, Eric discusses an interview with Tim Cook hosted at the CODE conference the day the deal was announced. In the interview, Cook discussed how music had always been a huge component of Apple's identity, and that the deal was focused on ensuring it hired musical talent like producer and Beats co-founder Jimmy Iovine and Dr. Dre. 
iTunes is increasingly becoming irrelevant in the music space. Digital music track sales were down 6% last year. The future of music looks less and less dependent on songs users have purchased a la carte and instead is shifting to a monthly service where listeners pay for a wider selection. So while Beats headphones racked up an impressive $1.3 billion in sales last year according to The Wall Street Journal, Eric believes the best way to look at the deal is ensuring Apple stays relevant in music both from the talent it acquired -- Iovine and Dr. Dre -- and by purchasing a streaming service that has already cut deals with major labels. 
To see Eric and Max's full thoughts, watch the video. 

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  • Report this Comment On June 01, 2014, at 2:32 PM, MightyMinnow wrote:

    Its a red herring probing to see how spending foreign money over seas will influence government policy/public opinion on repatriating money. Repatriation is the only present that isn't already under the tree and, if the pay-off starts to erode, the public is going to want uncle Sam to get while the getting is good.

    Minnow thinks : A repatriation deal is a good bet because Sanction saturation will frighten governments into pulling some foreign assets homes. I see a one and done 20% (probably much better) tax offered (by the White house) by the election.

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Eric Bleeker

Eric started at The Motley Fool in 2008 working in the Tech & Telecom sector. Today, he's the General Manager of You can follow him on Twitter to stay up to date with his tech industry analysis.

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