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Beats Electronics LLC (commonly known as Beats by Dr. Dre or Beats by Dre) is a Culver City, California-based consumer audio device company. Dr. Dre, a music producer, and Jimmy Iovine, a record business executive, created the firm. It has been an Apple subsidiary since 2014.
Headphones and speakers are the mainstays of the subsidiary’s product portfolio. The company’s first product line was created in collaboration with Monster Cable Products, a manufacturer of AV equipment. After its contract with the firm expired, Beats decided to develop its products in-house. The firm entered the internet music industry in 2014 by introducing Beats Music, a subscription-based streaming service.
In 2011, the NPD Group estimated that Beats had a 64 percent market share in the United States for headphones costing more than $100, and the company was valued at $1 billion in September 2013.
HTC, a Taiwanese smartphone manufacturer, controlled the firm for a while. In 2012, the business decreased its share to 25% and sold it back to the company in 2013. In late 2013, Carlyle Group, along with Dr. Dre and Iovine, replaced HTC as a minority shareholder. Apple purchased Beats for $3 billion in cash and shares on August 1, 2014, making it the company’s biggest acquisition ever.
Dr. Dre, a music producer, and Jimmy Iovine, a record industry executive, founded Beats in 2006. Iovine saw two major issues in the music industry: the effect of piracy on music sales and the poor audio quality of Apple’s plastic earphones. Iovine remembers Dre telling him: “People stealing my music is one thing, but it’s another. It’s one thing to ruin the vibe of something I’ve worked on.”
During the early stages of creation, Iovine solicited the advice of musicians with “excellent taste,” such as MIA, Pharrell Williams, will.i.am, and Gwen Stefani. To manufacture and develop the first Beats-branded goods, Beats collaborated with Monster Cable, an audio and video component manufacturer located in Brisbane, California, and unveiled its first product, Beats, by Dr. Dre Studio headphones, on July 25, 2008.
Beats largely depended on pop and hip-hop music artists’ endorsements and product placement inside music videos and partnerships with musicians and other celebrities to produce co-branded items to market its products. Beats’ use of musician endorsements aided the company’s aggressive targeting of the young adult audience.
HTC purchased a 50.1 percent majority stake in Beats for $309 million in August 2010. The purchase gave HTC the right to produce smartphones with Beats-branded audio systems, allowing HTC to compete with other cellphone manufacturers by associating themselves with the Beats brand.
Despite HTC’s controlling ownership, Beats was permitted to function independently. Luke Wood, who became President of Beats in May 2014, began his career at the firm in January 2010, when it was still a “licensing business.” Wood had previously worked at Interscope Records under Iovine.
BusinessWeek stated on January 19, 2012, that Beats and Monster will not extend their production deal and that their relationship would terminate at the end of 2012. Dre and Iovine then chose to take over the company’s whole business, from production to R&D, to increase the company’s staff to about 300 people. The monster would eventually launch its rival brand of high-end headphones geared at an older audience.
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