So apparently Apple's buying Beats. Or trying to. Or thinking about it, depending on which unnamed source you believe this week.
Recode's Kara Swisher broke this last Thursday, Apple in talks to buy Beats Electronics (and Beats Music, the streaming thing that launched, what, six months ago?) for something like $3.2 billion. Nobody at Apple or Beats has actually confirmed a word of it, which hasn't stopped basically every tech outlet I read from running some version of "APPLE TO BUY BEATS" like it's already signed and notarized.
Here's the detail that's stuck with me all weekend though, and it's not really about Apple at all. Dr. Dre posted a video of himself at a party bragging that he's "the first billionaire in hip hop," toasting champagne with what I'm pretty sure was Jimmy Iovine standing next to him looking extremely uncomfortable. And then, within a day, the video was gone. Scrubbed. Because nothing had actually closed. Nothing had even been officially announced. The guy basically leaked his own company's acquisition by being too excited to keep his mouth shut at a party, and I cannot stop thinking about it.
I own a pair of Beats. I'll admit it even though I know what's coming in the comments. They're fine. Not "$200 worth of audio quality" fine, more "looks good on the subway and Dre's face is on the box" fine, and that's a real product category that exists and sells extremely well, whatever the audiophile crowd wants to say about the bass being cranked up to hide cheap drivers.
What I don't get is Apple's angle. Not the headphones part, branding a pair of $300 cans isn't exactly hard R&D. It's the streaming service part that's baffling me. Beats Music has been out since January, it's a decent app, it costs $9.99 a month same as everyone else, and last I saw the subscriber numbers were somewhere in the low hundreds of thousands, which is nothing next to Spotify. If this is about buying a music service, Apple already has iTunes Radio baked into every iOS device on the planet. Paying $3.2 billion to essentially re-acquire a smaller, worse version of a thing you already own seems like a strange move for a company that's usually pretty disciplined about spending.
Unless it's really about Jimmy Iovine and Dre themselves, the relationships, the industry connections, the credibility with actual working musicians, which is a thing Apple has famously never had much of internally. That's the theory I keep landing on. You're not buying headphones, you're buying two guys who know everyone in the music business and can hand Apple back some cultural relevance it's been quietly bleeding since the iPod era wound down.
Funny number too: $3.2 billion is the exact same price tag Google put on Nest back in January. I doubt that's anything but coincidence, but it's the kind of coincidence that makes you wonder if these headline numbers get picked partly because they sound impressive rather than because anyone ran a rigorous valuation model behind closed doors.
Anyway, none of this is confirmed. Apple hasn't said a word publicly, and until they do I'm filing this under rumor, not news, no matter how many "sources familiar with the matter" pieces show up in my feed reader between now and whenever this actually gets announced, if it does. Deals like this fall apart between the leak and the signature more often than people remember. Dre's video staying deleted the way it did tells me there's at least something real happening behind the scenes, though. You don't scrub a party video that fast over absolutely nothing.
Also, separately, and I promise this is unrelated: Twitter's stock is still down from the lockup expiration last week, and every finance blog I read is acting shocked that a bunch of early investors and employees sold shares the literal first day they were legally allowed to. That's not a scandal. That's just what a lockup expiration is. I genuinely don't understand why this keeps getting written up like some kind of vote of no confidence in the company.
I'll believe the Beats deal when there's an actual press release with actual numbers in it. Until then it's just a very expensive game of telephone with a leaked champagne toast in the middle of it.