Formalizing a deal that’s been rumored for weeks, Apple announced Wednesday that it has inked a $3 billion deal to acquire Beats, the company behind a subscription-based streaming music service, software, and a line of CE gear highlighted by its iconic headphones.
Under the deal, Apple put up $2.6 billion, and $400 million that will vest over time. Beats cofounders Jimmy Iovine and Dr. Dre will be joining Apple. They expect to wrap up the deal during Apple’s fiscal fourth quarter.
The subscription-based Beats Music service, launched in January, reportedly has north of 200,000 subscribers, putting it well behind Spotify’s 10 million-plus. But Apple is expected to promote the service heavily and bump those numbers.
As Internet traffic goes, the still-young Beats Music service, which sells for $9.99 per month or $99.99 per year, has not registered among the top apps tracked by broadband management firm Sandvine, which reported earlier this month that Apple iTunes traffic represented 3.64% of downstream traffic during peak periods on North American fixed networks, well behind Netflix’s commanding 34.21%.