Apple is expected to announce its Beats acquisition this week, the New York Post has learned, and the iPhone maker will apparently acquire Dr. Dre’s company for less than initially expected. Apparently leaks in the press – not related to Dre’s acknowledgement of the deal recorded on video – convinced Apple lawyers to re-evaluate the purchase, and offer Beats “just” $3 billion, down $200 million from the previous offer.
Apple’s bid is lower than initially rumor because of Beats’ low number of Beats Music subscribers. A recent report revealed the company only has 111,000 paying customers, which is far lower than similar competitors – Spotify for example has 10 million paying subscribers, or roughly one in four Spotify users.
“Apple hadn’t even begun its due diligence process when news of the number [of subscribers] came out,” one source close to the talks told the publication, although that’s certainly surprising for a giant company like Apple, which calculates its every move.
While some speculated that Apple’s real interest with Beats is its new music streaming business, a source also told the Post that Apple may be interested in both Beats’ hardware and software businesses, with the former one being a profitable endeavor. “Apple doesn’t have a streaming music business so it would be a nice instant get, but the hardware is the profitable business,” a source said.
Dre, who owns 20% to 25% of Beats, could walk away with $750 million on a $3 billion purchase that would help him become hip-hop’s first billionaire, as he stated in a video posted on Facebook, which is how he confirmed the Apple deal.