The company confirmed on Wednesday that it is buying Beats for $3 billion, its larger acquisition ever. Some investors and Wall Street analysts appear mystified over the deal and the hefty price Apple is paying for the headphone and music-service developer.
But one thing is clear: Apple realizes that it needs to go back to one of its earliest success stories outside the computer business — the music business — and revive its offerings.
Just a year ago at its Worldwide Developer’s Conference, Apple unveiled iTunes Radio, a streaming music service to compete with Pandora Media, privately held Spotify, and other upstarts in music streaming. But iTunes Radio is not yet faring as well as its rivals, even though Apple is paying artists more in royalties and has been able to garner some exclusive radio-play deals because of that higher royalty rate.
Yet even though it now has its own streaming service, Apple has yet to see much of that streaming-music play translate into purchased music on iTunes. In April, Billboard reported that Apple was seeing 1% to 2% of iTunes Radio listeners buy music amid a general fall-off in buying and downloading music.
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