Apple Doesn't Give a Damn if Analysts Understand What It Does

NEW YORK (TheStreet) -- The reaction to the Apple (AAPL)/Beats news exposed much of the financial and tech media for the intellectually incapacitated nitwits they are. Almost categorically, these people skewered the deal, largely on the premise of If my friends and I can't understand it, it must not be good.

As a Twitter (TWTR) buddy of mine noted in a direct message Friday:

It's been very one sided today. These analysts would make terrible chess players, they can't think more than one move ahead.

Bingo. The analysts aren't very good at visioning and considering the broad implications and possibilities of a development they can only conceive in here-and-now concrete terms. Beats Music isn't very good right now. So the deal's bad. A sizable chunk of people apply the same criticisms to Beats headphones as Apple haters do to Apple products (it's all about the marketing!), so the analysts pan the deal as "bad," "difficult to make sense of" and "not easy to understand."

But -- from the Wall Street population to the media echo chamber -- remember who these people are ...

For nearly three years we endured faux Pandora (P) killer after faux Pandora killer. Each and every time it was supposed to die, Pandora staved off seemingly competitive salvos as investors hastily and misguidedly sold off its stock. Now, when Pandora suddenly finds itself in a situation where it is vulnerable and the things that happen around it matter, its stock didn't crash, but actually went up on the Apple/Beats news. To clarify, it wasn't the mere news of the deal that impacted the stock, it was the reaction from the aforementioned nincompoops that provided Pandora shares support.

This is all beyond the height of inanity. And the Pandora illustration only begins to scratch the surface of Apple/Beats-related double cheeseburger inanity.

On Page Two ... like Paul Harvey always did, I start digging deeper.

You can see my very initial reaction to the Apple/Beats news in Tim Cook Is a Stinking Genius If Apple Buys Beats.

I sort of predicted something like this could happen.

When it was being conceived I was a big fan of the notion of Beats Music, largely because of what Jimmy Iovine had to say about the relationship between data, the music industry and musicians (see the last link). When Beats Music came to be, I jumped off the bandwagon. I don't think it's been well-executed. I was so down on Beats Music last month that I wrote:

If they're not already, Beats will soon be begging anybody who will listen -- Google (GOOG), Facebook (FB), etc. -- to buy them.

Make no mistake about it -- Apple's saving Beats Music here. I assume the headphone business would have been fine with or without Apple (though Apple can certainly enhance it and do things with it Beats probably could not do on its own). In addition, this is absolutely a play to, in some respects maintain and, in others, regain digital music dominance by Apple.

By buying Beats, Apple gives Beats Music breathing room to operate. There was no way Beats Music could have survived on its own. But now it doesn't matter how much money Beats Music loses with Apple subsidizing it. Beats Music has the power of hundreds of millions of iOS devices and MacBooks behind it. Though the positioning and level of which remains to be seen, Apple receives considerable exposure, via Beats, on Android and other competing platforms.

If I'm Apple I relegate iTunes Radio as a separate button in the old iTunes platform. I make Beats Music the primary music app across the ecosystem and I jettison Pandora from the App Store.

That's the streaming music part of it, but the data part is more important.

In this deal, Apple receives friends of the music industry, particularly Jimmy Iovine and Beats Music CEO Ian Rogers.

Record labels and such trust and are willing to openly deal with these guys more than they do tech companies. Expect Apple to make the most of the opportunity Pandora decided not to seize -- the data opportunity. Iovine and Rogers understand the power of data with respect to how help it can help the music industry, musicians, songwriters and brands. And they will conceive ways to make everybody happy -- the aforementioned as they attempt to monetize music beyond royalties and Apple as it looks to juice its laggard mobile advertising business.

Iovine's history is well-chronicled. He helped make Springsteen's Born to Run for goodness sake. Rogers' history -- not so well-chronicled. But he's the real deal with respect to maximizing the power of music for the industry, musicians and brands. If you want to understand what Apple gets with Rogers (I can't imagine him not being part of the deal) just read the Wikipedia entry on his claim to fame -- Topspin Media. He was banging out the future of the music business seven years ago.

I expect Apple -- with Beats in the fold -- will almost singlehandedly reenergize the music industry. It's an industry that can't seem to find its way in a digital world, but has more potential to nurture multiple dynamic revenue streams than it ever has before. And it's all because of the power of Internet radio and the data the platforms produce.

I don't completely understand the Apple/Beats hookup either, but I can make enough sense of it to "see more than one move ahead," even if I don't know -- with precision -- exactly what that move will be.

I'm going to spend some time this coming week at TheStreet speculating as to what the next move(s) might be. I have some exciting ideas as I am certain Iovine, Rogers and Tim Cook do, otherwise they never would have agreed to marry.

--Written by Rocco Pendola in Santa Monica, Calif.

Rocco Pendola is a full-time columnist for TheStreet. He lives in Santa Monica. Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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