Former eMusic CEO Adam Klein took to Bloomberg last week to give his take on the rumored Apple/Beats Electronics acquisition. Echoing what many industry watchers have speculated, Klein believes that the proposed deal has everything to do with Beats' new streaming service, which is essentially like Spotify albeit with professionally curated playlists to boot.
[Apple's] gotta be at the party, and it's late, and this is the quickest way to get there. So I think that's what you're seeing there. They're getting in. They have to have a forceful streaming presence. It's the dominant format, it's the drawing format. It's the only format that's growing. Certainly from the label's point of view, [in terms of] revenue generation. And for them to build it would just take too long.
The notion that Apple attempting to do this themselves would take too long is certainly worth highlighting, especially considering that Apple historically prefers to develop technologies and services in-house as often as possible.
The music industry, though, is changing rapidly. Digital downloads are on the decline, while streaming is on the rise. Meanwhile, iTunes Radio has seemingly done little to slow down the momentum of either Pandora or Spotify.
If the Beats acquisition ultimately goes through, it stands to reason that Apple is keen on getting a streaming subscription service up and running as quickly as possible as opposed to developing one on its own. Further, on-demand streaming rights are different from the rights associated with music recommendation services like Pandora, and the last thing Apple wants or needs is to get mired down in negotiations with music labels. From this vantage point, Beats Music makes for an attractive target as it would reportedly bring music mogul, noted wheeler and dealer, and otherwise musical tour de force Jimmy Iovine onto the Apple team.
As for Beats streaming itself, we reported earlier this week that Apple became interested in the service after learning how quickly it was able to transform casual listeners into paid subscribers. And while the rumored $3.2 billion purchase price admittedly seems odd given Apple's propensity not to make large monetary acquisitions, $3.2 billion as a percentage of Apple's current bank balance is less than what the company used when it acquired NeXT.