Talking tech since 2003

Late last week the Financial Times reported that Apple is close to finalizing a $3.2 billion deal to acquire Beats Electronics.  The deal, which could be announced as early as this week, didn’t make sense to me at first.

Why would Apple want to buy a mediocre-yet-expensive headphones company?  If Apple wanted to sell expensive headphones, couldn’t they just design their own?  The same thought process went through my head about the recently launched Beats Music service, couldn’t Apple just bring that functionality into iTunes if it really wanted to?  Plus, there’s been speculation that the Beats Music subscriber numbers aren’t as good as anticipated.

And then, it dawned on me.  The key to the whole deal is Iovine.  He’s the $3.2 billion dollar man.

Jimmy Iovine is one of, if not the most, most connected man in Hollywood, with an accomplished history as a music executive and producer, who has worked with Bruce Springsteen, Lady Gaga, U2, Tom Petty, and John Lennon. Iovine has also produced films, documentaries, and TV shows, giving him rare insight into all phases of the entertainment industry.  In fact, Iovine co-produced the Academy Award–winning movie 8 Mile, starring Eminem.  There aren’t many people who could achieve the same success in the entertainment industry as Iovine.

While we don’t know the exact role he will be playing at Apple, you can bet he will be deeply involved in all music, TV, movie, and other creative ventures.  His deep connections to Hollywood and the entertainment industry also lead me to believe that Iovine will play a crucial role in negotiating content deals for Apple and its rumored iTV.  The entertainment industry is built on relationships — something Iovine has a lot of.

Honestly, this acquisition is probably more of a acqui-hire than anything else, an expensive one at that.

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