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Apple bought Beats headphones. Now what?

Dan Gorenstein May 29, 2014
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Apple has two new employees on board after deciding to buy music brand Beats Electronics yesterday for $3 billion dollars. One of them you probably know — rapper Dr. Dre, the other probably not.

Music executive Jimmy Iovine is less of a name and more of a music visionary — or at least that’s what Apple hopes. What Iovine brings to the company first and foremost is that he’s a music industry superstar. He’s worked with Bruce Springsteen, John Lennon, U2 and 50 Cent. He knows people and people know him. He’s got a reputation in the industry as a business guy who can relate to artists and creative types. And the thinking is that he will help Apple hammer out new deals.

He’s also seen as innovative. He helped launch the Interscope Records label that promoted gangster rap in the late 80’s and early 90’s. Iovine also got artists to market clothes and electronics — the Beats headphones with Dr. Dre is a perfect example.

One important question is what Iovine can do to help Apple make more of a name for itself in the online music subscription service world dominated by the likes of Spotify and Pandora. Beats does bring with it a music streaming service, with 250,000 subscribers. Of course that’s modest compared to Spotify’s 10 million.

Jackdaw analyst Jan Dawson says, really, what Apple is buying is someone who has a natural gift for understanding what consumers want.

“Steve Jobs had great instincts in that area too. But obviously since his departure that’s fallen to other people and Apple has a very capable set of executives but they don’t have somebody with that same instinctive relationship with music who can really understand what it is that people want and how they are going to buy it,” he says.

Apple is betting if you match Iovine with Apple’s resources, they’ll find some way to make beautiful music together.

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