Apple has decided that instead of putting a dent in all that cash by buying back stock and increasing their dividends that instead they will instead make it's largest acquisition ever by acquiring Beats Electronics. Last year Beats Electronics revenue was estimated to be around $1.3 billion so with the $3.0 billion price tag for the acquisition Apple definitely paid up for the company.
Many of the critics of these move question why Apple would target Beats over other music companies such as Pandora. From my perspective though, I completely understand the move and I think they will generate a positive return on their investment. I view Apple as a marketing company that masquerades as a technology company. When it comes to the headphone market Beats does not produce quality headphones according to the experts, but no one can deny that they have not done an excellent job of marketing. The person behind that marketing vision is the music mogul, Jimmy Lovine, who is the number 2 at Beats Electronics. Apple and Steve Jobs has always had a love affair with music and with Jobs gone Lovine could become that guy who brings in a great new marketing vision that surrounds the music side of Apple's business.
So they paid $3 billion all to acquire Lovine? Of course not, but I think that played a major factor in targeting the acquisition of Beats. In the future I can envision Lovine completely gutting the current iTunes and iRadio platforms. With Apple's revenues sliding downward every quarter on the music side they need a visionary to come in and figure out how to market Apple's music to compete with the likes of Spotify, Pandora and to a lesser extent last.fm.
As far as what other benefits from a marketing perspective this acquisition can provide Apple is as follows:
- Selling the stylish headphones in the store pairs nicely with the equally as stylish Apple products.
- Including the beats headphones in all future iPhone sales, or providing a premium iPhone package that includes the headphones at a discounted rate.
- Capturing the enormous profit margins that the headphones generate.
When it comes to social media you cannot explore and actively use every new company, platform, app, etc. I like to think though that I do a pretty good job of staying up on the most popular or the ones that seem the most beneficial to me. One of latest social media platforms, SoundCloud, is one that I have not used yet but I've heard about it, read articles about it and seen many friends tying their Facebook accounts to their SoundCloud accounts.
So, what exactly is SoundCloud? At it's core it's a social media platform similar to Instagram for playing mp3 audio files. At first thought, you think there has to be something that already fills this niche. The reality is though that there really isn't which is surprising that the niche stayed unoccupied for so long. With SoundCloud artists, particularly Indie and upcoming artists, upload new songs, jam sessions, songs their actively working on, etc to the news feed. Similar to other social media platforms you can follow the artists or non-artists who are uploading mp3's based on your musical preferences. You can also be a passive user, meaning you can just follow other users and not post anything.
With over 250 million users this is the largest music platform of it's kind. Personally, I'm a huge music fan and listen to 3-4 hours worth of music per day. I'm actually embarrassed that I'm not one of the 250 million users because clearly their is some significant value being gained from all that are apart of it. The reality is though sometimes you don't start using a new social media platform simply because of the limited time you have available. Even though I've heard of SoundCloud now for close to a year I'm a loyal and paying subscriber of Spotify.
After doing some research on SoundCloud for this blog post I certainly can see the value in this and it's a different value that Spotify currently provides. The primary reasons being that it's a free service to use and being first to find new artists/songs is something I take pride in. Of course, I listen to the mainstream stuff as well but finding new songs and groups takes work and that music becomes more special to you. If this new platform helps me become more efficient and effective in fulfilling what music does for me then I think they just may have a new loyal user. 250,000,001 users it is!
