1+1= 3 (Billion Dollars): Why Apple Buying Beats By Dre Is A Steal

When news broke that Apple was purchasing Beats By Dre for a cool $3.2
billion dollars, investors, analysts and consumers were shocked at the
valuation. Apple’s stock sharply dipped the second the news broke in
after hours trading and continued declining all day as the market
opened. Every article it seemed screamed why this deal was bad for
Apple.

Huh? This deal that actually values Beats for less than what i pegged
them to be worth, and Apple actually walks away the true winner in it
in my eyes.Why?

The classic saying that 1+1=3. This is a perfect case of two companies
coming together to make both more powerful together. Beats at its core
is a great brand with brilliant entertainment and music minds behind
it. Apple is the best hardware brand in the world, and has the best
retail store chain in the world. Ironically, Beats By Dre has been one
of the top selling products at Apple stores since it launched, and
Apple has been one of Beats biggest retailers. The combination here
makes so much sense for Apple because now they can own one of their
most successful products at retail, and now don’t have to buy the
product at wholesale- thus leaving a 100% profit margin on sales
moving forward. It also opens up opportunities to launch new or
exclusive Beats products at Apple retailers to keep the stores
momentum growing and cool factor in place.

Next, lets look at the raw numbers. Beats headphones sell over $1
billion in product annually. Many companies and investors value
companies by the 10 times rule- meaning multiply a companies revenue
times 10, and that is its valuation. Although beats has some other
debt and overhead to consider and is in a volatile market, even
cutting this figure in half would value the company at $5 billion from
hardware alone. This is almost half of THAT figure at $3 billion!

So wait, why would Beats do this deal then?

Well, $3 billion is still a lot, and takes the risk out for the
founders who walk away with more money than they’ll ever be able to
spend for generations. However, more importantly for Beats is the fact
that dealing with design, manufacturing, sales, and logistics
originally was never part of the plan. They originally partnered with
Monster Cable to handle this end while they focused on marketing and
branding before the two split ways. Beats picked up the slack here
temporarily in deals with HTC and others before moving it all in
house. That being said, there there is no way they come close to the
experience, knowledge, or backend that Apple has in this field. Add in
Apple’s incredible hardware design team and the product quality,
margins, and the infrastructure for Beats is now scaringly powerful,
and will produce much better margins.

We haven’t even addressed the new streaming service, Beats Music, yet.
With iTunes music sales cutting down, Apple knows the streaming music
service revolution is the next frontier- and its in house iTunes radio
has not taken off as expected. Spotify, Beats Music’s streaming
competitor is valued at over $4 billion dollars itself alone, and
despite having a good head start over Beats in the streaming space,
lacks the muscle and marketing prowess Jimmy Iovine & Dr Dre’s team
have.

What Beats Music was lacking was mass market awareness for the
streaming service, and the fact people still had to find and install
the app, and then register to pay for it. That all changes. With this
deal, I expect to see Beats Music built into every iPhone and iPad and
Apple product from this day forward, and you will be able to pay the
monthly fee with your Apple account- a huge opportunity for Beats
since getting people to enter a credit card number is still one of the
hardest things to do.

As for minds coming together, Jimmy Iovine has slowly been stepping
away from Interscope and the music business for years, realizing it
was a syncing ship, and his prowess has payed off. Silicon Valley has
never really had any figureheads that could mix the the value of music
with technology. With Jimmy & the Beats senior staff now reporting to
tim cook at apple, Apple is now positioned to take advantage of the
greatest marketing tool in the world for its entire brand- music- and
now by default has the best marketing in house at its fingertips. Not
to mention nearly everything Dr. Dre does turns to gold.

In conclusion, the screams from the market are from people who clearly
have no insight or knowledge of what is actually going on, and as I
just explained, Apple actually got a steal. People often get so caught
up in a big number they ignore looking at everything around it and
seeing the full picture. 1+1 truly does equal 3… with 9 zeros behind
it in this case.

SKEE Live: Season 2… Starting Friday May 9th

LOS ANGELES – April 11, 2014 – The hit music performance and interview series SKEE LIVE—hosted by music newsmaker DJ SKEE—returns for a second season on AXS TV, premiering Friday, May 9 at 8pE/5pP. Debuting in an all-new Friday night primetime slot, the unique music-centric program will continue to highlight the biggest names and news in music and entertainment, granting one-of-a-kind unfiltered access to the industry’s hottest artists, athletes, and celebrities.

With unprecedented concert performances and up-close, exclusive interviews, SKEE LIVE is redefining music TV. Season one highlights featured such memorable moments as Kendrick Lamar’s powerful performance of “M.A.A.D. City;” Grammy nominee Wiz Khalifa talking about his experience working with Adele; Chris Brown’s thoughtful insight on handling his public image; Ice Cube confirming “Friday 4;” and Paris Hilton’s playful banter with hip-hop artists Nipsey Hussle and Dom Kennedy.

During the weekly show, DJ Skee—hailed by ‘Forbes’ and ‘Billboard’ as one of the most influential figures in entertainment and pop culture—summons his vast music knowledge and deep industry connections to provide viewers with the ultimate front-row music experience. SKEE LIVE’s fan-favorite segments include exclusive music video premieres, as well as behind-the-scenes features on today’s best and brightest musicians and producers.

“SKEE LIVE enables us to introduce the audience to the latest pop culture trends,” said DJ Skee. “This season we’re bringing the streets to the mainstream, unleashing all-new episodes loaded with marquee performances, insightful interviews and backstage exclusives that viewers have come to expect from SKEE LIVE.”

“SKEE LIVE’s unique blend of high-energy music performances brings an entirely new viewing experience to our network,” said Michele M. Dix, AXS TV Senior Vice President of Programming and Development. “We are looking forward to building out our Friday night line-up with the addition of this series.”

The new season of SKEE LIVE will air weekly on Friday nights, joining AXS TV’s popular mixed martial arts programming block. Long-time AXS TV sports news show INSIDE MMA will follow at 9pE/6pP, with AXS TV FIGHTS’ MMA and Muay Thai events airing at 10pE/7pP.

ABOUT SKEE LIVE

Hosted and curated by DJ SKEEAXS TV’s weekly music program provides insider access to the hottest musical artists, athletes, celebrities, and cultural tastemakers via exclusive interviews and performances. DJ Skee has been hailed as one of the most influential figures in entertainment and pop culture by both Forbes and Billboard. The show airs live every Friday at 8pE/5pP. More information about the show can be found on skeelive.comFacebook andTwitter.

About AXS TV

As TV’s premier destination for live music festival broadcasts, AXS TV delivers relevant, unpredictable and irreverent programming by presenting unfiltered access to today’s top comedians, newsmakers, musical entertainers and their performances. Launched in July 2012 by visionary entrepreneur Mark Cuban, AXS TV is dedicated to providing the best in music programming and festivals, comedy performances, current events and mixed martial arts promotions. Indicative of the network’s dedication to music programming, AXS TV Concerts is the official 2014 TV broadcaster of the prestigious Coachella Valley Music and Arts Festival (April 18-20), Stagecoach Country Music Festival (April 25-27) and New Orleans Jazz & Heritage Festival (May 1-4). AXS TV is a partnership between Mark Cuban, AEG, Ryan Seacrest Media, Creative Artists Agency (CAA) and CBS. The network is available in the United States via AT&T U-verse, Charter, Comcast/Xfinity, DIRECTV, DISH, Suddenlink, Verizon FiOS, and other cable, satellite and telco providers. The network is also distributed in Canada and the Caribbean. For more information, visit the website, www.axs.tv; go to the Facebook page here and follow the company on Twitter, @axstv; on Instagram Tumblr  and YouTube.

SKEExSW: Catch DJ SKEE in Austin at SXSW Here:

Sunday, March 9th
3:30pm - 5:00pm
Building Communities of Purpose with Backplane and DJ SKEE
W Hotel
200 Lavaca St.
Austin, Texas 78701


Lori Anne Wardi, VP of .CO will interview Matt Michelsen and DJ SKEE about their experience building online communities - especially SKEE.CO.

12am - 4am (Early Monday Morning)
Yahoo! After Hours Party with DJ SKEE
Brazos Hall
204 E. 4th St.
Austin, Texas 78701


Come party with DJ SKEE and friends at SXSW’s hottest after-hours spot!  

Monday, March 10th
2pm - 2:50pm
The Unspoken Truth: Social Good as a Catalyst for Innovation
Bungalow
92 Rainey St.
Austin, Texas 78701


The United Nations Foundation and DJ SKEE partner with the SXSW Social Good Hub, an initiative that brings together digital creatives, entrepreneurs, filmmakers, and other SXSW attendees focused on social change.

12am - 4am (Early Tuesday Morning)
Yahoo! After Hours Party with DJ SKEE
Brazos Hall
204 E. 4th St.
Austin, Texas 78701


Come party with DJ SKEE and friends at SXSW’s hottest after-hours spot!  

Wednesday, March 12th
10pm
DJ SKEE and Snoop Dogg Present Respect the West 2014
Trinity Hall
401 East 6th Street
Austin, Texas 78701


Join us for an unforgettable night as DJ SKEE and Snoop Dogg continue the legacy of Respect the West at SXSW.  Get ready to see the one and only showcase that brings out the West Coast’s biggest artists!

Thursday, March 13th
12:30pm - 1:30pm
Paid Dues and SKEE Present the Red Pill/Independence Day Panel
Austin Convention Center
Room 13AB (4th Floor)
500 E Cesar Chavez St.
Austin, Texas 78701

Panelists DJ SKEE, Murs, and representatives from Strange Music, Funk Volume, and Rap Coalition discuss the importance of independent labels in today’s music industry.  

3:30pm - 4:30pm
Panel: YouTube - New Breeding Ground for Music’s Future
Austin Convention Center
Room 16AB
500 E Cesar Chavez St.
Austin, Texas 78701


Entertainment moguls Russell Simmons, Steve Rifkind, and DJ SKEE discuss the power of YouTube and how it plays a pivotal role in the music business.  

7pm
Paid Dues and SKEE Present the Independence Day Showcase
Scoot Inn
1308 E 4th St.
Austin, Texas 78702


Hosted by DJ SKEE, The Independence Day Showcase unites indie hip-hop’s biggest names on one stage.  Catch performances by Tech N9ne, Dom Kennedy, Nipsey Hussle, Trae Tha Truth, Problem and many more!