Maybe next week: Apple’s acquisition of Beats is delayed further

It’s been now over two weeks since Re/Code broke the news that Apple was in the process of acquiring Beats Electronics and Beats Music at a valuation of $3.2 billion.

So far, nothing has been confirmed and it appears like - as Billboard reports - it may be another week before the deal is finalised, if indeed it happens at all.

Apple is said to be particularly outraged by the video of Dre - that appeared just two days after the Re/Code article - talking about how he’s going to be the first billionaire in hip hop. The video shows there being a pretty significant cultural divide between Dre and Apple which could make it harder for the latter to assign him a permanent senior strategic role in the company.

As far as how Beats Music will be integrated within iTunes, TechCrunch reports that Cupertino may actually be interested in keeping the two services separate to begin with. Apple is said to have developed a fully functional internal iTunes streaming service, but its release could cause a catastrophic nosedive in download sales. This would not necessarily hurt Apple, but would put the entire music industry in a very difficult position.

Acquiring Beats Music means that Apple would be actively involved in a streaming service without having to jump all-in. In that scenario the integration could happen more gradually as the decline of downloads becomes sharper across markets like the US and the UK.

Valuation may also be an issue for Beats Music, its leaked subscriber numbers are less-than-stellar given the company’s marketing spend as well as the additional platform offered by AT&T: the mobile carrier pushed the service hard in its own stores. As Beats Electronics and Beats Music were rumoured to be selling for $3.2 billion, how much is each company worth?

Apple may not have a lot of choice though: Spotify’s valuation is skyrocketing and the company is more interested in an IPO than an acquisition, Rdio’s main investors are already billionaires and Rhapsody is not exactly a ‘sexy’ brand.

All-in-all it looks like a messy picture and far from the clean deal it would have been had the news not leaked so early in the process.
It’s going to be at least a few more days before we find out if Apple’s largest ever acquisition is really going to happen.


(Andrea Leonelli)