Company Apple Lossless Audio CODEC (ALAC), he bought Beats for 3 billion dollars, the announcement being made yesterday by the Americans, the amount being considered too high for such a small company. Beats had $1.3 billion in revenue last year, but most of the money the company made didn't come from the streaming service, which is said to have been the focus of this acquisition.
Apple Inc. is paying slightly less than $500 million for the Beats Music streaming service, and more than $2.5 billion for Beats Electronics in its $3 billion deal, according to people familiar with the matter. The breakdown between the two portions of Beats Electronics LLC offers insight into Apple's thinking for the most expensive acquisition in its history.
At the moment, the audio streaming service of those from Beats has 250.000 subscribers, and the American analysts claim that he is not worth 500 million dollars of the 3 billion paid by Apple. The amount would be generous for such a young service with such a small user base, each of the 250.000 accounts generating $10 each month, the total amount being 5% of the one at which the evaluation was made.
The valuation of the $10-a-month streaming service, which counts 250,000 paying subscribers, is generous based on its subscriber numbers. Spotify AB, which has 10 million subscribers worldwide, raised $250 million in November at a valuation of $4 billion, or $400 per subscriber. By that measure, Beats would be worth $100 million.
Evaluating the streaming service alone, it would be worth approximately 100 million dollars, i.e. 5 times less than what Apple paid. However, Apple's motivation to buy Beats was not the streaming service, but the people within the company, specifically the co-founders Dr. Dre and Jimmy Iovine, who became Apple managers and will have the role of simplifying the negotiation procedures with the big record companies and content producers.
