Apple is in talks to buy Beats Audio for $3.2 billion dollars and integrate their technology into future iPhone and iPad products. This will boost the overall sound performance and give the company new headphones, speakers, docking stations and ear buds to sell.
The acquisition of Beats Audio makes sense for Apple. Earlier in the year Beats launched the Beats Music service, which is a competitor of Spotify, Pandora and Apple’s own iTunes Radio. Beats Music is, however, a subscription-based on-demand service, which could bolster Apple’s free station-based iTunes Radio service.
Apple has been talking about revising their entire iTunes experience to address declining media sales. Billboard reports that sales of tracks declined 5.7 percent, to 1.34 billion units, while album sales fell 0.1 percent, to 117.6 million. The Beats infrastructure would allow Apple to revamp iTunes without building a new one from scratch.
There is a ton of synergy between Beats and Apples streaming music services. Beats Music, which is available to subscribers for $9.99 per month, focuses heavily on curation. The company has hired music experts from popular radio stations around the country to create stations and playlists from the service’s 20 million song catalog. Apple has their own editorial team, and it would make sense to combine forces to dominate customized playlists. The two sides would dominate streaming radio service and put other companies like Tunein on notice.
HTC Corp. used to own a 51 percent stake in Beats, a controlling stake that it purchased for about $300 million. The company sold back 25 percent of Beats in 2012. In September, Carlyle Group LP bought a minority stake in the company.