Apple has announced that it has bought Beats for $2.6 billion in cash and $400 million in equity in a deal that is expected to clear regulators by the fall.
The equity was designed as an incentive to keep Dr. Drea (Andre Young) involved with the future development of Beats’ streaming music service. Apple made the acquisition as it began to saw sales of downloads erode while online streaming service with paid monthly subscriptions become more popular.
The deal almost didn’t happen after Dr. Dea made a comment that he would be the first rap/hip-hop billionaire, ruffling Apple’s feathers, who is used to doing business in private and releasing information on its terms.
Pandora and Spotify have made significant inroads in the way people get their music, and Beats launched its own streaming service in January and has already signed up 250,000 paid monthly subscribers.
NetFlix is another streaming service, though for television shows and movies, and it too has eroded Apple’s dominant position with iTunes.