Thursday, May 29, 2014, 04:13 pm PT (07:13 pm ET)
Apple's paid less than $500M for Beats Music, $2.5B for Beats ElectronicsAs part of its $3 billion acquisition of Beats, Apple is paying less than $500 million for the Beats Music streaming service and more than $2.5 billion for the firm's hardware arm, one report says.
Following Apple's announcement of a blockbuster $3 billion Beats buyout on Wednesday, The Wall Street Journal reports most of the money is going toward Beats Electronics, which is responsible for headphones, speakers and other audio equipment.
A source familiar with Beats' operations said the firm's sales totaled nearly $1.5 billion in 2013, all of which came from the hardware division as Beats Music launched in January of 2014. However, the amount allotted to Beats Music is perhaps more interesting considering its status as a fledgling streaming service with a relatively low subscribership.
Judging by Beats co-founder Jimmy Iovine's statement that Beats Music amassed 250,000 subscribers in three months, Apple is either overpaying or has bigger plans for the streaming service.
By comparison, competing streaming music provider Spotify recently raised $250 million on a valuation of $4 billion. With 10 million subscribers worldwide, the numbers represent roughly $400 per subscriber. Applying those same metrics to Beats Music, the soon-to-be Apple subsidiary is worth $100 million.
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