Beats Electronics

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Beats Electronics LLC
Type Limited liability company
Industry Audio, Consumer electronics, online music
Founded 2008[1]
Headquarters Santa Monica, California
Area served Global
Key people Dr. Dre (Founder)
Jimmy Iovine (CEO & Co-Founder)
Luke Wood (President)
Matthew Costello (COO)
Scott Henry (Chief Financial Officer & Vice President)
Matthew Frederick (Vice President)
Revenue US$350 million (2011)[2]
Owner(s) Dr. Dre, Jimmy Iovine
Employees 300
Subsidiaries MOG
Beats Music
Website beatsbydre.com beatsmusic.com

Beats Electronics, LLC is an American producer of audio products and equipment headquartered in Santa Monica, California.[1] The company was founded by rapper and hip-hop producer Andre "Dr. Dre" Young and Interscope-Geffen-A&M Records chairman Jimmy Iovine and primarily produces products under the brand "Beats by Dr. Dre". The company has also licensed audio technology to other companies for use in their own products, and also acquired MOG in 2012 to expand into the online music market.

From 2009 to 2012, its products were exclusively manufactured by the consumer electronics company Monster Cable. Following the expiration of its contract, Beats began to self-manufacture its products.

History[edit]

The company was formally established in 2008,[1] and debuted its first product, Beats by Dr. Dre Studio headphones, in late 2008. Monster Cable was granted exclusive rights under a 5-year contract to manufacture and develop the first Beats-branded products. To promote its products, Beats primarily relied on endorsements by pop and hip-hop music performers, product placement within music videos, and partnering with musicians and other celebrities to develop co-branded products.[3][4][5]

In August 2011, mobile phone manufacturer HTC acquired a 50.1% majority share in Beats for $309 million. The purchase was intended to allow HTC to compete with other cellphone makers by associating themselves with the Beats brand,[6] as the purchase also granted HTC exclusive rights to manufacture smartphones with Beats-branded audio systems.[7] Despite its majority acquisition, HTC would still allow Beats to operate as an autonomous company.[7]

On January 12, 2012, BusinessWeek reported that Beats and Monster would not renew their production contract and would be ending their partnership by the end of 2012. As a result, Beats took its manufacturing operations in-house, and aimed to double its workforce to around 300 employees. Monster would ultimately begin marketing its own competing line of premium headphones aimed towards an older demographic.[3] In October 2012, Beats unveiled its first two self-developed products; Iovine believed that the company would now have to "control [its] own destiny" in order to continue its growth. Iovine also commented on how other headphone makers had attempted to emulate Beats' business model of celebrity endorsements (including Monster themselves, who unveiled Earth, Wind and Fire and Miles Davis-themed headphones at that year's Consumer Electronics Show),[3] stating that "some of our competitors are cheap engineers who have never been to a recording studio. You can't just stick someone's name on a headphone that doesn't know anything about sound."[3][8][9]

In July 2012, HTC sold back half of its stake in Beats for $150 million, remaining the largest shareholder with 25.1 percent.[10] The sale was intended to provide "flexibility for global expansion while maintaining HTC’s major stake and commercial exclusivity in mobile."[6] In August 2013, reports surfaced that Beats' founders planned to buy back HTC's remaining minority stake in the company, and pursue a new, unspecified partner for a future investment.[11][12] On September 27, 2013, HTC confirmed its plan to sell its remaining 24.84% stake in Beats back to the company for $265 million, with the deal expected to close by the end of the year. Concurrently, Beats announced that the Carlyle Group would make a minority investment in the company.[13] The sale helped HTC turn a net profit of US$10.3 million for the fourth quarter of 2013, following the company's first quarterly loss in company history.[14]

The appointment of a new chief operating officer (COO) was announced in early November 2013. Matthew Costello, formerly of Ikea and HTC, will report to the company's president, who had also been acting as COO prior to the appointment.[15]

On January 21, 2014, the company launched Beats Music, a subscription-based online music streaming service.[16]

Products[edit]

Personal audio[edit]

Beats' original product line were Beats by Dr. Dre headphones. In promotional materials, Dr. Dre outlined the line's advantages by alleging that listeners were not able to hear "all" of the music with most headphones, and that Beats would allow people to "hear what the artists hear, and listen to the music the way they should: the way I do." In comparison to most headphones, Beats products were characterized by an emphasis towards producing larger amounts of bass, and are particularly optimized towards hip-hop and pop music.[17][18][19] In October 2012, Beats unveiled its first two self-developed products, the Beats Executive noise-cancelling headphones (to compete with similar offerings by Bose and Sennheiser) and the Beats Pill portable speaker.[3][9]

BeatsAudio[edit]

The company has also licensed the Beats brand, under the name Beats Audio, and technology to other manufacturers. In 2011, HP began to offer personal computers equipped with Beats Audio systems. The system features a software equalizer with a preset that HP marketed as being optimized for higher quality sound output.[20] Originally reserved for its premium Envy line of laptops, HP now offers the system in nearly all of its consumer-oriented personal computers.

Following its acquisition of a stake in the company, most new HTC smartphones began to be released with Beats Audio software, beginning with the HTC Sensation XE/XL with Beats Audio in September 2011.[21] The software was to be included in most new HTC devices, such as the One series.[22][23] The Sensation XE and Rezound were also bundled with Beats by Dre earbuds, but HTC abandoned the practice on future devices. An HTC product executive claimed that despite the prominence of the Beats brand, "an accessory like the headphone doesn't factor in when someone is buying a smartphone."[24]

Car audio[edit]

In 2011, Beats reached a deal with Chrysler LLC to feature Beats-branded audio systems in its vehicles. The first vehicle under the partnership was its 2012 Chrysler 300S luxury vehicle, which included a 10-speaker Beats by Dr. Dre sound-system.[12][25] BeatsAudio also may incorporate their speakers into Fiat and Dodge cars.

Beats Music[edit]

On July 2, 2012, Beats announced it had acquired the online music service MOG, in a purchase reported to have been between $10 million to $16 million. Beats stated that the acquisition was part of the company's goal to develop a "truly end-to-end music experience." The acquisition did not include the company's blog and advertising network, the MOG Music Network,[26][27] which was sold in a separate transaction to the broadcasting company Townsquare Media in August 2012.[28]

While MOG indicated that it would continue to operate independently with no immediate change in service,[27] Beats subsequently announced a new, subscription-based online music service known as Beats Music, which launched in January 2014. In comparison to its competitors, such as Spotify and Google Play Music, the service emphasizes recommendations by music professionals alongside algorithmic recommendations.[29][16]

See also[edit]

References[edit]

  1. ^ a b c [1] beatsbydre.com About us section. Retrieved 2013-12-26)
  2. ^ Ong, Janet (2011-08-11). "HTC to Acquire Control of Dr. Dre’s Beats Headphone Maker for $300 Million". Bloomberg. Retrieved 2014-03-30. 
  3. ^ a b c d e Cliff Edwards (January 12, 2012). "Beats Electronics Is Breaking Up with Monster". Business Week. Retrieved 13 January 2012. 
  4. ^ "From Lemmy to Snooki, celebs are desperate to sell you headphones". BBC. 10 January 2013. Retrieved 27 August 2013. 
  5. ^ "How Dr. Dre Made $300 Headphones a Must-Have Accessory". Time. 16 January 2013. Retrieved 27 August 2013. 
  6. ^ a b Sisario, Ben (23 July 2012). "After HTC Sale, Dr. Dre and Jimmy Iovine Gain Control of Beats Headphones". Media Decoder (The New York Times). Retrieved 26 July 2012. 
  7. ^ a b Sandoval, Greg. "HTC to acquire majority stake in Dr. Dre's Beats". CNET. Retrieved 20 March 2012. 
  8. ^ "Jimmy Iovine on Beats by Dre Parting With Monster: 'We Have to Control Our Own Destiny'". Billboard. Retrieved 27 August 2013. 
  9. ^ a b "Beats By Dre Debuts First Post-Monster Cable Products". Billboard. Retrieved 27 August 2013. 
  10. ^ Jonathan Standing & Clare Jim (24 July 2012). "HTC Just Sold Back Half Of Its Holdings In Beats Electronics". Reuters. Retrieved 21 November 2012. 
  11. ^ "Dr Dre's Beats to pull plug on HTC in favour of new business partner". The Guardian. Retrieved 27 August 2013. 
  12. ^ a b "Straight Outta HTC: Beats Audio May Have a New Solo Project". Bloomberg Businessweek. Retrieved 27 August 2013. 
  13. ^ Yu-Huay Sun; Edmond Lococo (27 September 2013). "HTC to Sell Back Stake in Beats Electronics for $265 Million". Bloomberg. Retrieved 29 September 2013. 
  14. ^ "HTC narrowly avoids second quarterly loss by selling Beats stake". The Verge. Retrieved 24 January 2014. 
  15. ^ Natalie Jarvey (6 November 2013). "Beats Electronics Names COO". Los Angeles Business Journal. Los Angeles Business Journal. Retrieved 8 November 2013. 
  16. ^ a b "Beats Music arrives January 21st, family plan exclusive to AT&T customers". The Verge. Retrieved 12 January 2014. 
  17. ^ "Are Beats by Dr. Dre headphones worth the money?". Consumer Reports. Retrieved 29 November 2013. 
  18. ^ "How Beats by Dre knocked out better headphones". The Age (Melbourne). Retrieved 29 November 2013. 
  19. ^ Evans, Joel. "Review: Beats by Dr. Dre headphones". Geek.com. Retrieved 23 May 2012. 
  20. ^ "HP Envy 14: Plenty of Power in a Stylish Package". PC World. Retrieved 2012-03-20. 
  21. ^ Amar Toor (September 14, 2011). "HTC Sensation XE gets official, packing 1.5GHz dual-core CPU and Beats Audio". Engadget. Retrieved January 13, 2012. 
  22. ^ Segan, Sascha (February 26, 2012). "Hands On With the HTC One X, S, and One V". PC Magazine. Retrieved February 26, 2012. 
  23. ^ Velazco, Chris (September 19, 2012). "HTC Officially Reveals The 8X: 4.3-Inch 720p Display, 1.5GHz Dual-Core Processor, Beats Audio". TechCrunch. Retrieved September 19, 2012. 
  24. ^ "More HTC handsets with Beats headphones? Probably not". CNET. Retrieved 22 April 2013. 
  25. ^ Kekeh, Nicole. "Meet The Boss Behind Chrysler's Image Makeover; He Is French". Forbes. Retrieved 2012-03-20. 
  26. ^ Mike Snider (2 July 2012). "Beats Electronics acquires MOG music service". USA Today. Retrieved 13 October 2012. 
  27. ^ a b Charlie Warzel (2 July 2012). "Beats Electronics Acquires Mog Rapper Dr. Dre's headphone makers scoop up digital streaming service". Adweek. Adweek. Retrieved 13 October 2012. 
  28. ^ Rhian Jones (24 August 2012). "Remaining half of Mog Music Network sells to Townsquare Media Group". MusicWeek. Intent Media. Retrieved 13 October 2012. 
  29. ^ "Beats Music Beefs Up Curation Team, Says Service Is 'Coming Soon'". Billboard.biz. Retrieved 27 August 2013. 

External links[edit]