Earlier this year, Jimmy Iovine, who founded headphones giant Beats Electronics with rapper Dr. Dre, gave a clue as to what Apple was missing in its computer empire. He recalled that when iPods first came out more than a decade ago, they were linked to white earbuds with tinny sound, providing room for Beats to make a less flimsy product. “Apple wasn’t focused on sound,” Iovine said at the time. “They were selling an iPod.”
If Apple buys Beats for $3.2 billion, as some reports have suggested, the iconic computer company will suddenly have the high-level sound hardware to go with its numerous music products, from iTunes to the iPod to the iPhone.
Although Beats is the best-selling headphones maker, bringing in more than $500 million in revenue in 2012, one of the most important facets of the deal could be the company’s launch of Beats Music in January. The subscription service, which charges a $10 monthly fee and competes with Spotify, Rhapsody, Rdio and Deezer, would give Apple a powerful foothold in a part of the music industry that is slowly becoming dominant. Sales of both albums and tracks have plunged over the past two years — including those sold via iTunes, the top music retailer — and on-demand subscription services are growing.
According to reports, the Beats executive team would report to Tim Cook, Apple’s chief executive. This would put Iovine, who still moonlights as the head of Interscope Records, home of Eminem and U2, in an interesting position — an Apple executive who remains part of the record industry.
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Neither Beats nor Apple would comment on the reports.