14 DAY TRIAL // After boasting in a vulgar video that he’s become the first billionaire in hip-hop, Dr. Dre might need to brush up on his math skills, especially after Apple cut the purchase price of Beats to $3 billion / €2.2 billion.
People close to the talks between Apple and Beats Electronics say the Cupertino giant has had a change of heart lately. Nothing major like canceling the deal or anything, but they’ve reportedly slashed $200 million (€146 million) off the original purchase price, leaving it at $3 billion / €2.2 billion.
Based on the new figures, Forbes will find it hard to award Dre a 10-figure net worth, making the hip-hopper look like a fool after he recently boasted in a tasteless video that Forbes would need to change its rich people list to slide in his name.
After dividing the purchase money among the people with proprietary rights in the acquisition, Dre will be just shy of $1 billion (€730 million), and that includes the money he’s made in his entire career, according to the NY Post.
Nevertheless, the California tech juggernaut is expected to announce the costly acquisition this week, according to people familiar with the talks.
“Apple hadn’t even begun its due diligence process when news of the number came out,” one source said, referring to the price cut.
Other reports have said that one of the reasons behind Apple’s change of heart is actually the offensive video that leaked out from Dre’s studio party where he not only disclosed Apple’s plans without permission, but also used language that can be deemed inappropriate by most people.
Another reason is said to be the low subscriber count of Beats Music. Compared to rivals Pandora and Spotify, Beats is but a speck in the sea with just over 100K customers. By comparison, Pandora has 10 million with credit cards on file and another 30 million who stream their music for free.
But Beats is more about the headphones, these people say: “Apple doesn’t have a streaming music business so it would be a nice instant get, but the hardware is the profitable business,” said one of the sources.
Yet another reason (and probably the actual driver behind the acquisition) is Beats co-founder Jimmy Iovine, who has his mitts in every corner of the music industry and may even help Apple’s television plans take off, some people have speculated. Rumor also has it that Dre and Iovine will be sitting on the Apple executive board once the papers are signed.