Apple paid $500 million for Beats Music, $2.5 billion for Beats Electronics

Apple Inc. is currently in a media frenzy covering interviews and discussing the future of Beats, the company they just acquired for $3 billion. We now have some more information on how the deal was split, with $500 million going to the music streaming service Beats Music and $2.5 billion going to the audio hardware brand Beats Electronics.

It is not surprising that the lump sum went over to Beats Electronics, considering this is the core business and where Beats has made most of their money in the past few years. It is also what most consumers think of when they hear Beats, since the music streaming service is new and just recently got renamed to Beats Music.

The $500 million for Beats Music seems about right, Beats Electronics acquired the service in 2012 for a small $14 million. Since then, Beats has worked on getting rid of the MOG brand and replacing it with Beats Music. Apple might see some power in having a large streaming catalogue and the talent working for Beats Music.

If the deal was split into two parts, it makes us wonder why Apple bothered with one of the halves. Right now, we don’t know exactly what Apple wanted from the deal, whether the audio hardware brand was the main reason or they just wanted an actual music streaming service.

Once Apple starts changing Beats Electronics and making it integrate with Apple, we will see what Cupertino was really after. If it was only the Beats Music service, then we wonder why Apple decided to pay $2.5 billion for the additional audio hardware part, unless Beats wouldn’t part ways without Apple acquiring both.

Apple might have some use for Beats in the near future, having the audio technology on their MacBooks, iPhones and iPads should make it more desirable, considering HTC and HP have both been partners with Beats and had excellent praise for their audio.

Source: WSJ.