Apple is in talks to buy Beats Electronics for $3.2 billion, according to several news reports. But if the deal does actually happen, Apple soon may be singing Dr. Dre's "I Need A Doctor."
The Financial Times first reported Thursday that Apple is closing in on a purchase of the high-end headphones and streaming music service founded by rapper Dr. Dre and music producer Jimmy Iovine. It would be Apple's largest acquisition ever -- by a long shot. (Apple's biggest purchase to date was Steve Jobs' NeXT, for $400 million).
The question, of course, isn't whether Apple can afford Beats. Apple has nearly $160 billion in cash. It could buy 50 Beats-sized companies. On the surface, an Apple deal for Beats makes sense. Apple could use a boost in the music department. Even though iTunes remains the largest music store in the world, the overall trend of slowing digital music sales is a concern for Apple. The company tried to jump on the streaming music bandwagon with iTunes Radio in June 2013, but customer adoption has been tepid. Only 1% to 2% of iTunes Radio listeners actually end up buying music from the service, according to Billboard. Beats claims to be "the first music service that understands you," because it uses an algorithm that plays music to suit your mood. A better playlist could potentially help Apple grow its music sales.
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