NEW YORK (TheStreet) -- The bandwagon jumpers in the tech and financial media have loaded their echo chambers with Apple (AAPL) wants Beats because it wants Jimmy Iovine. That's what one scribe and talking head after another continues to regurgitate. While technically accurate, it's a surface scratch. But let's forge ahead for a deeper feel for what I think is really going on.
If Apple loved Jimmy Iovine so much, it would have offered him a trillion dollars in cash and stock to leave Beats. Pretty simple. There's no reason or logic behind Apple making a $3.2 billion acquisition just to obtain one -- or even a few individuals. It's intellectually lazy (and lacking) to latch onto the notion of an Apple takeout of Beats being an acui-hire.
Here's the deal as I have pieced it together via my own noodling as well as on-the-record conversations with people in the know and off-the-record winks and nods with other people also in the know ...
- Yes, Apple wants Beats' headphone business. It makes money. And Apple can integrate and enhance it nicely. We've already established that.
- Yes, Apple wants Beats Music, which, as even I have failed to realize, is an extension of Beats Electronics. So the profitable parent company (so to speak) bankrolled those Super Bowl commercials (and other marketing crash bang) to brand Beats Music as said extension of Beats Electronics. Beats Music is part of the trajectorial (my word) vision of the people behind Beats headphones.
- Clearly, music is the central focus of the overall Beats strategy, be it headphones or streaming media. Apple believes music can be and should be a central focus of its wide-ranging ecosystem which drives hardware sales and it's now relatively underwhelming mobile advertising business.
- It's not simply that Apple wants Iovine. It's deeper than that. Each of the folks at Beats stand for something strategically. And it's all quite coherent as it comes together.
- For example, Trent Reznor, as much as I don't care for his approach, is the musician obsessed with giving musicians control over their brand across the Web. Nobody does that yet. MySpace came closest, but that's as good as gone. Beats wants to assume and perfect that function.
- Jimmy Iovine is not only the marketing mastermind with rock solid music industry footholds and relationships, he's also the guy who believes he -- along with the entire team at Beats Music -- can change behavior. He can get people, including young people, to buy streaming muisc subscriptions. Tall order, but that's what Beats aspires to do -- complete the transition from the death of downloads to the birth of buying as much music as you want in the cloud for ten bucks a month.
Now that that's established on to Page Two to pull it all together ...
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