Apple and Beats: it ain't about the headphones

Betting on streaming: a few billion is chump change to Apple.

When I first read about the Apple/Beats Audio rumour, I was as flabbergasted as everybody else: such a deal is very un-Apple, and acquiring Beats headphones seems to make as much sense as, say, putting a guy from JB Hi-Fi in charge of Apple retail.

The case for the prosecution is pretty damning. The deal can't be about the existing headphones, because as many audiophiles will tell you (often loudly and at great length), Beats headphones aren't very good.

It can't be to get Beats' design smarts, because its designs are outsourced.

It can't be about the streaming service, because with around 200,000 subscribers, Beats Music is hardly doing big numbers.

And it can't be about the licensing deals, because they'll have clauses that force termination or renegotiation in the event of Beats coming under new management.

A few weeks ago, the idea of Apple buying Beats was an April Fool in a music business newsletter. Now it's apparently a multi-billion dollar reality.

Has Apple gone mad?

The internet certainly thinks Apple - and in particular Tim Cook - has lost the plot. Steve Jobs would never have considered such a thing, they say, forgetting that Jobs met with Beats founder Jimmy Iovine to discuss a streaming music service "in 2002, 2003".

Iovine met with Apple's Cook and Eddy Cue again last year, so whatever's going on here is hardly an impulse buy.

What it looks like is a talent acquisition. iTunes Radio has been rather underwhelming, both as a service and in terms of its ability to get contracts signed (which is why it's still only available in the US and Australia, for example).

Getting Beats' Jimmy Iovine, a music industry legend, into the Apple camp boosts its negotiating position considerably; getting Beats' engineers and experts to give iTunes and iTunes Radio a well-deserved kicking makes sense too. It wouldn't be the first time that Apple had bought in iTunes expertise: the iTunes app we know and occasionally love started life as SoundJam MP, a third-party app Apple bought back in 2000.

In a 2013 interview, Iovine expressed his shock at "how culturally inept most consumer electronics companies are" and claimed that they can't do subscription services. "Tech guys can't do that," he said. "They don't even know who to hire."

Iovine reckons he can do a better job than Spotify, Rdio, Deezer and the rest - and Tim Cook apparently thinks that's worth betting a couple of billion on.

Carrie Marshall

Writer, broadcaster, musician and kitchen gadget obsessive Carrie Marshall (Twitter) has been writing about tech since 1998, contributing sage advice and odd opinions to all kinds of magazines and websites as well as writing more than a dozen books. Her memoir, Carrie Kills A Man, is on sale now. She is the singer in Glaswegian rock band HAVR.