Apple Paid Less Than $500 Million for Beats Streaming Service

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A breakdown of Apple-Beats acquisition shows that the Beats Music streaming service was worth just under $500 million of the $3 billion sale price. Beats Electronics got the bulk of the cash, or $2.5 billion. The breakdown gives some insight into what Apple is planning for Beats's future under the iUmbrella. 

Sources told The Wall Street Journal, "the breakdown of the purchase price was largely an accounting issue, because the two Beats units are backed by different investors." 

Beats Music, the streaming service, started off as Mog in 2012. Beats purchased that company for $14 million and rebranded it as Beats Music in January. Mog will be discontinued in June. The service is currently $10 per month and has around 250,000 paying subscribers. Spotify blows it out of the water with 10 million subscribers, but the Journal reports that Apple never reached out to Spotify about a deal.

It looks like Apple is concerned more with branding power of beats (particularly the company's two leaders, Jimmy Iovine and Dr. Dre) and their existing audience than they are with the streaming product — although Tim Cook did say that Beats Music is a "better service than Spotify and Pandora Media because it uses humans to help pick which songs to stream. Other services mostly rely on computer algorithms." 

Considering Apple's major conference is around the corner, we can expect to learn more about their plans early next week.

This article is from the archive of our partner The Wire.