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Lance Bachelder
Sad rumor...
on May 29, 2014 at 2:52:12 am

Apparently the FCPX folks have been put on hiatus and moved from their offices to make room for the new headphone folks? Makes sense.

Lance Bachelder
Writer, Editor, Director
Downtown Long Beach, California
http://www.imdb.com/name/nm1680680/?ref_=fn_al_nm_1


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Shane Ross
Re: Sad rumor...
on May 29, 2014 at 3:34:47 am

What's your source? Cite your source. Otherwise it seems like you are trying to start this rumor. It makes zero sense.

Shane
Little Frog Post
Read my blog, Little Frog in High Def


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Lance Bachelder
Re: Sad rumor...
on May 29, 2014 at 4:17:10 pm

My source eh? Ummm... well it could happen...

Lance Bachelder
Writer, Editor, Director
Downtown Long Beach, California
http://www.imdb.com/name/nm1680680/?ref_=fn_al_nm_1


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Shane Ross
Re: Sad rumor...
on May 29, 2014 at 4:47:43 pm

[Lance Bachelder] "My source eh? Ummm... well it could happen..."

So YOU are starting it then. Just trying to stir the pot needlessly. Or are you trying out for a position on THE ONION?

"it could happen?" Pu-lease! Apple COULD stop making iPhoto too...but it's highly unlikely.

Shane
Little Frog Post
Read my blog, Little Frog in High Def


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Lance Bachelder
Re: Sad rumor...
on May 29, 2014 at 5:15:15 pm

The Onion...now that would be fun.

Lance Bachelder
Writer, Editor, Director
Downtown Long Beach, California
http://www.imdb.com/name/nm1680680/?ref_=fn_al_nm_1


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Gary Huff
Re: Sad rumor...
on May 29, 2014 at 5:20:24 pm

[Shane Ross] ""it could happen?" Pu-lease! Apple COULD stop making iPhoto too...but it's highly unlikely."

But hey, it puts him on an even keel with a lot of others around here...


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Lance Bachelder
Re: Sad rumor...
on May 29, 2014 at 6:44:07 pm

Lesson learned... again... don't surf the Cow under the influence of Pinot... just impatiently waiting for FCPX 10.1.2.

Oh and Resolve 11...

Lance Bachelder
Writer, Editor, Director
Downtown Long Beach, California
http://www.imdb.com/name/nm1680680/?ref_=fn_al_nm_1


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Tim Wilson
Re: Sad rumor...
on May 29, 2014 at 7:15:19 pm

[Lance Bachelder] "don't surf the Cow under the influence of Pinot"

We're cows, so might we suggest grass.



KIDDING, but I couldn't resist.


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David Mathis
Re: Sad rumor...
on May 29, 2014 at 9:55:13 pm
Last Edited By David Mathis on May 29, 2014 at 9:58:38 pm

Same here. Until then I will sing "99 Bottles of Beer On The Wall".



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David Mathis
Re: Sad rumor...
on May 29, 2014 at 3:39:29 am

The keyword here is rumor. I do not believe everything posted on the net. Time will tell the truth, the real story. My two cents, whatever it is worth.


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Tim Wilson
Dr. Dre gets his Apple employee ID badge
on May 29, 2014 at 3:51:19 am
Last Edited By Tim Wilson on May 29, 2014 at 3:52:08 am

There's no need to set aside a few extra desks for headphones. Apple announced today the biggest acquisition in their company history, $3 billion for Beats Electronics.

This is primarily a subscription music play -- indeed, both Jimmy Iovine and Dr. Dre (you read that right) will be reporting directly to Eddie Cue, Apple's internet services guy (you read that right, too) -- but I have a feeling that Apple has the future of its headphone business well in hand.


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Bret Williams
Re: Dr. Dre gets his Apple employee ID badge
on May 29, 2014 at 5:04:30 am

Still a baffling purchase. Obvioulsy the guys aren't worth billions. And the subscription service isn't worth much. And Apple already has their own or the elements to produce a similar service. Apple could certainly produce cheap headphones if it wanted and they'd probably crush the competition cuz every kid would want their iPhones. There must be something else going on I think.


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Marcus Moore
Re: Dr. Dre gets his Apple employee ID badge
on May 29, 2014 at 5:23:04 am

Separately the components may not make sense. But together I think it equates to a "good" deal in comparison to other high-value purchases made recently. By that I mean when you consider the 18billion purchase of WhatsApp by Facebook.

I think it's a 50/50 really on the subscription music service and Iovine/Dre. Iovine has apparently been very close with Apple for nearly a decade, involved with iTunes from very early on. Has a lot of pull with the record industry and Hollywood. Apparently sales of digital music is on it's way down with the rise of these subscription music services like Spotify. BeatsMusic is still young (200,000'ish subscribers)- so Apple still getting in before it gets too big to buy.

I think the headphones thing is honestly something they just had to take as part of the package. It's a profitable and popular brand (regardless of what us pros think of their quality)- so there's way worse ways to spend money. And I'm sure it will eventually merge into something else. Eddie Cue talked tonight about speakers being a big opportunity.

Cue also talked about AppleTV. I think there is a big opportunity to do away with a lot of the complexity of home theatre. Getting rid of complexity on both the software and the hardware side. Again, to meet consumer needs.

Regardless, since the deal won't even be finalized until later this year, and HP still has a Beats licence until the end of 2015, I don't think we'll see the real results of this for several years.


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Bret Williams
Re: Dr. Dre gets his Apple employee ID badge
on May 29, 2014 at 5:31:51 am

Yeah, buy hey, I watch Shark Tank. Where's the valuation coming from? 200,000 (I heard it was more like 110,000) times what, $120/year = $24 million. I know there's the headphones and such, but the numbers don't really add up. If you had a business that was brining in 24 mil a year, with no guarantee someone might come up with something better the next year (myspace anyone?) I'd think you'd be pretty happy to take 10 times the valuation (240million) for it. But 100 times it's valuation? Wow.

And facebook lost their mind.


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Marcus Moore
Re: Dr. Dre gets his Apple employee ID badge
on May 29, 2014 at 5:39:23 am

Apple isn't buying it for the existing user base- or even the potential user base of the existing product. BeatsMusic will eventually get folded into something Apple-branded. I think it's mostly a technology buy on that side. For a billion or two in value Apple gets to jumpstart their subscription music offering.

Ultimately I don't think the Beats brand survives this- I mean 5 years from now.

And until then Apple still gets the 1Billion a year Beats makes on headphone sales- so they recoup their 3 billion investment in 3 years.

But lets be honest- that's small potatoes to Apple.

Apple is notoriously stingy with acquisitions- usually small technology companies that have stuff they want for their hardware or services offerings. They have to see something here. Or a mixture of things: People. Technology. Brand.

As Cue said tonight- this has been in the works for a while.


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Bill Davis
Re: Dr. Dre gets his Apple employee ID badge
on May 29, 2014 at 8:07:23 am

Well, since we're speculating...

I read some months back that Apple partnered with one or more of of the worlds largest hearing aid companies and are doing joint development on assisted listening products. These are supposed to be tied into iPhone app use such that you can dial in listening profiles for hearing aids as well as use Bluetooth links for incorporating remote monitoring from the phone to the hearing aid.
What got me interested was imagining that such a system if delivering exceptional fidelity - might be a massively wonderful audui monitoring system in the field. After all sound is sound. And a programmable tiny in-ear monitor could just as easily provide entertainment as hearing loss support.

Headphones, earbuds, hearing aids. Seems like they ae all cousins. And maybe Apple has its sights on "personal audio" in a much broader sense than just music headphones?

Remember, headphones for music, even at the high end sell for hundreds...some high end hearing aids sell for thousands. And the baby boomers are aging right toward that sweet spot.

Just trying to keep one eye on the big picture here.

Know someone who teaches video editing in elementary school, high school or college? Tell them to check out http://www.StartEditingNow.com - video editing curriculum complete with licensed practice content.


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Bret Williams
Re: Dr. Dre gets his Apple employee ID badge
on May 29, 2014 at 12:32:12 pm

It's genius. First they trash your hearing with earbuds, then come to the rescue with beats hearing aids!


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David Mathis
Re: Dr. Dre gets his Apple employee ID badge
on May 29, 2014 at 3:34:49 pm

[Bret Williams] "It's genius. First they trash your hearing with earbuds, then come to the rescue with beats hearing aids!"

You earned the "Post Of The Year" award! :-)

That made my day! Rolling down the stairs laughing.

My Final Cut Studio:

Core Software
Final Cut Pro X
Motion 5
Resolve
Pixelmator

Plug-ins
Red Giant Universe

Utilities
7 to X
Clip Exporter
Ultrascope

Cameras
Black Magic Cinema Camera
Canon (consumer model)


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Phil Hoppes
Re: Dr. Dre gets his Apple employee ID badge
on May 29, 2014 at 1:16:57 pm

Speaking as a boomer who's hearing has gotten so bad I can hardly hear myself let alone someone else, having an "integrated" hearing aid system that incorporated to all of my devices would be pretty slick. I have a set of hearing aids now that will communicate via BT to a device I have to wear around my neck but quite frankly it is still a PITA to use. I've about given up going to movies and theater as I have a very difficult time making out dialog. Movies these days, I swear, have their audio mixed by idiots, and this is not just deaf me talking. My kids routinely complain that they have a very difficult time making out dialog.

If I could get a well integrated hearing aid system that would allow me to use my aids so I can hear well in my home, movie theater and dramatic theaters such that things don't have to be a 90db for everyone else I'd get it in a heartbeat. At the moment, while some of these things are available, they are a hodge-podge of services that may or may not work and are not consistent.

Definitely hearing challenged in Phoenix...........


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Bill Davis
Re: Dr. Dre gets his Apple employee ID badge
on May 29, 2014 at 3:50:31 pm

Phil,

Take heart. These things are very real and on the way globally. But remember, these are not consumer class - they're medical devices. So the prices are likely to be at a level where some guys will be deciding which they want - that shiny Harley - or better hearing.

Know someone who teaches video editing in elementary school, high school or college? Tell them to check out http://www.StartEditingNow.com - video editing curriculum complete with licensed practice content.


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Mitch Ives
Re: Dr. Dre gets his Apple employee ID badge
on May 29, 2014 at 4:25:44 pm

[Marcus Moore] "I think the headphones thing is honestly something they just had to take as part of the package. It's a profitable and popular brand (regardless of what us pros think of their quality)- so there's way worse ways to spend money. And I'm sure it will eventually merge into something else. Eddie Cue talked tonight about speakers being a big opportunity."

Makes sense. At the risk of piling on, I found Beats very mediocre. The fact that someone said they do $1 Billion in sales is damned impressive though. What was it P.T. Barnum said "nobody ever went broke underestimating the taste of the American public"...

Mitch Ives
Insight Productions Corp.

"Criticism may not be agreeable, but it is necessary. It fulfills the same function as pain in the human body. It calls attention to an unhealthy state of things." - Winston Churchill


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Tim Wilson
Re: Dr. Dre gets his Apple employee ID badge
on May 29, 2014 at 7:43:01 pm

[Mitch Ives] "The fact that someone said they do $1 Billion in sales is damned impressive though. What was it P.T. Barnum said "nobody ever went broke underestimating the taste of the American public"..."

Two quick notes...

It was more like $1.5 billion last year. Apple basically bought them for 2x, give or take. From straight-up M&A, that's pretty slick.

That "never went broke" quote was said ABOUT Barnum by one of his competitors - ie, Barnum is a huckster, and he's making a fortune by pandering to morons. The observation is still sound, but I think the proper context sheds a slightly different light on it.

I've got a post cooking on this topic that I'll get to soon, but I think you fellers are dramatically underestimating the value of the work Beats has already done to build a subscription music infrastructure. The digital music SALES business is down 14% this year, and the rate of loss is accelerating incredibly quickly -- and the bite is coming out of people like Spotify, who are drawing blood from Apple that Pandora never did.

Heck, Apple responded to Pandora with a flick of the wrist: iTunes Radio, done and done. Not that Apple needed to replace Pandora. They just needed something good enough to stop the bleeding. If Apple could have developed the subscription business in a timely fashion, for less than a billion dollars, they would have.

As Tim Cook said, the great thing about being bazillionaires is that we can buy other bazillionaires to do that stuff more quickly, and in the end, less expensively than we can do ourselves.

I'm paraphrasing.

But we're basically talking about the Netflix of music...with Apple being the video store of old. Apple isn't in the business of staying in businesses whose pie is shrinking by double digits every year. It's no wonder that this is the biggest investment in the company's history. Watch. It'll pay the biggest dividends in the company's history too.

Another quick note: I've seen people say that Jimmy Iovine is the real gem in this package. On the one hand, true enough. On the other, Apple could surely have bought Jimmy's services for less than $3b. LOL But Apple has a long tradition of buying smart PEOPLE along with their businesses, and Jimmy brings something that Steve never could. Entertainment execs LIKE Jimmy. They RESPECT Jimmy. They don't fear him or disdain him the way they did Steve.

Apple TV programming never took off as hoped because TV guys didn't have a problem like kids swiping MP3s that Apple could immediately solve, and they had no use for Steve's bullying them into deals they weren't interested in taking. The saying was, "We don't want to get iTuned." This doesn't get talked about much, but the extent to which Steve was the obstacle for acquiring Apple TV programming that couldn't be overcome can't be overstated.

Jimmy will do a much better job getting them excited about the possibilities of working with Apple, rather than trying to back them into a corner. He's a master of cross-platforming entertainment, and as one of the elites among his peers, he has a trust and a respect that no outsider could bring. And those other peers are going to want a slice of the pie, rather than let Jimmy be the only one who gets to avail himself of a collaborative, rather than threatening, Apple.

Although, who knows? Maybe Apple's approach under Tim may not be any different besides putting Jimmy at the front of it...but that doesn't seem at all likely. It seems a lot more likely that this indicates a sea change in Apple's approach, and I think the investment will start returning FAST.

The speakers and hearing aids things, plus the stuff we don't know about yet...and maybe never will, because it'll just sneak in where it can...are all intriguing, but no kidding. People like Spotify and Beats are Netflixing music, and Apple shaved years off their development time and dozens if not hundreds of millions in infrastructure money. This was a great deal for them for that alone.


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Andrew Kimery
Re: Dr. Dre gets his Apple employee ID badge
on May 29, 2014 at 8:50:35 pm

[Tim Wilson] "I've got a post cooking on this topic that I'll get to soon, but I think you fellers are dramatically underestimating the value of the work Beats has already done to build a subscription music infrastructure. The digital music SALES business is down 14% this year, and the rate of loss is accelerating incredibly quickly -- and the bite is coming out of people like Spotify, who are drawing blood from Apple that Pandora never did."

Just to riff off this for a second, if Apple goes after the music streaming like it went after the downloadable music sales market then 'independent' streaming services like Spotify are toast.

When the iTMS rolled out Jobs said he didn't worry about the competition because the competition was trying to make money selling music where as Apple was trying to make money selling iPods. The music store was just a feature and it only needed to hit the break even point. Apple and Amazon currently own about 85% of the downloadable music sales businesses and I think they'll eventually rule the music streaming business too.

I think the biggest losers in all of this are the artists themselves. CD sales have been in free fall for like 15 years, digital download sales (which barely eclipsed the plummeting CD sales) are leveling off, and streaming services pay peanuts.


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Tim Wilson
Re: Dr. Dre gets his Apple employee ID badge
on May 29, 2014 at 11:22:22 pm

[Andrew Kimery] "Just to riff off this for a second, if Apple goes after the music streaming like it went after the downloadable music sales market then 'independent' streaming services like Spotify are toast."

I think Spotify is safe-ish because the social features are so deep. You'd have to take down Facebook to take down Spotify. In fact, now that I think about it, Spotify is ripe for being picked up by Facebook. FB has gotten acquisitions like this right more often than not. I really like how they've worked Waze, and after a bump with Instagram, that thing has taken off. I think Spotify would go at least that well. Maybe better.

Spotify also has deals in place that Beats doesn't yet. They'll surely get them, but Spotify won't be toast any more than iTunes toasted Amazon. Quite the contrary. Amazon carved its digital niche out of a world where iTunes was already the big player. There's room for more than one...but probably not more than two.

I see Pandora getting pinched first...but then again, the "don't make me think about what song to play next" model still works for a lot of people. That's why people like Apple and Spotify added that radio-like feature. Even Sirius/XM will let you build customized radio stations in their app.

Still, I haven't even considered downloading Pandora onto my last couple of phones. I can't remember the last time it even crossed my mind that it even EXISTED until I started talking about it here.

Google, though? I don't see how their music business doesn't suffer the worst of any player here. Even as an Android fanatic with a Chromebook, I can't imagine anything that would induce me to use ANY Google music services. None.

And for that matter, Amazon has surely been hit hard by Spotify...but nowhere nearly as bad as iTunes. Amazon never had all their eggs in the digital basket, and for Apple, iTunes IS the basket. Which is why this kind of bloodletting at Spotify's hands was intolerable.

While CDs are unquestionably on the decline, digital ALBUM sales have yet to surpass CD sales! In 2013, CD ALBUM sales held a 57% market share. CD sales are actually falling LESS fast than digital sales, but it looks like the lines will cross this year, and 2014 will be the FIRST year that digital ALBUM sales surpass CDs....even with digital's current decline.

I keep capitalizing the word ALBUM for obvious reasons...but CD singles were never really a thing, and it's important to underscore that CDs are nowhere close to as dead as most people think. But it won't be iTunes SALES that put them down for good. It'll be the idea of no sales at all.

Again: see Netflix.

Although Netflix also suggests that CDs dying altogether isn't happening any time soon. Netflix isn't killing DVD sales yet, and just as Amazon found a way to start a business in the iTunes age, Redbox did just fine coming up in the Netflix age. See? There's room for two.

Not three. Hence Pandora and Google looking a lot more nervously around the room than Spotify I think.

I was doublechecking a couple of quick numbers for this post, and I found an article from two years ago saying that Spotify had moved into the number 2 slot for record label revenue behind iTunes...and that if the numbers held, Spotify would pass iTunes in 2014! We'll know by this time next year when the numbers come in, but you better believe that Apple saw this coming....hence talking to Beats for a couple of years already now.

And not that I'm saying that Spotify WILL pass iTunes this year. But it could, and in any case, the numbers are close enough that taking another couple of years before meaningfully fending them off wasn't an appealing option.

But I couldn't agree more about the downsides of this for artists, Andrew. Labels are very excited by streaming because the model has no holes. I can't pass you my Spotify login (or for that matter Netflix) the way I might an MP3, because I'm not going to let you be the log-in to lock me out of one of my devices. LOL And I don't want your hands on my queue, dammit. LOL

The pattern seems to be continuing: every new platform is an opportunity for labels to make more and artists to make less. I could make the same observation about corporate life in general -- record highs on the stock market and exec compensation, while pay is declining for workers whose jobs haven't been eliminated -- but I won't. LOL

My point is that it's mistaken to brush aside the Beats music business because it's not yet a major player on its own -- because people who've been watching Spotify have seen this shift coming for years. Apple is very definitely one of those people...so to speak...who has seen it coming. It HAD to happen. It's NETFLIX FOR MUSIC. Buy a few disks as you see fit, but otherwise, it's more enjoyable for most people NOT to own their media.

The great thing about streaming subscriptions -- whether Spotify or Netflix -- for content owners is that I might casually pass you an MP3, or loan you a DVD, I'm NEVER going to let you get your hands on my log-in. I don't want you to lock me out of an account that I'm paying for, and I don't want your grubby hands on my queue. LOL This is the first time in history that content owners are on the verge of locking down revenue.

Seriously? Borrow my Netflix log-in? Are you on crack? If I log in at your house, I'll sign out before I even start looking for my car keys.

So today's young 'uns are buying less music than ever, LISTENING to more of it than ever, and increasingly, they're PAYING for it, because the right model is in place.

Except for Apple. Until now.

AND the younger you are, the more likely you are to like big-ass headphones. LOL

Not me, man. I'm all about the open airs (anything but earbuds), but I see EVERYTHING about this deal lining up very nicely for Apple's future -- with an up and running subscription business being one of Apple's most pressing needs, ESPECIALLY as it looks to its next generation of devotees.

Stopping the bleeding at iTunes, moving every phase of your media business forward FAST in the near term, and setting yourself on the right foundation for the longer-term shifts in media consumption -- I'm tellin ya, it won't be long before this pays off big for Apple, and it's going to keep paying off for a long time.


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Charlie Austin
Re: Dr. Dre gets his Apple employee ID badge
on May 30, 2014 at 3:40:06 am

[Tim Wilson] "I'm tellin ya, it won't be long before this pays off big for Apple, and it's going to keep paying off for a long time."

I'm with you on this one, though it's hard to convince some folks I know. All they see is headphones and a rapper. Ah well... if it works, and AAPL climbs back anywhere near the current price territory in a few years after the 7/1 split, someone will be happy. :-)

-------------------------------------------------------------

~ My FCPX Babbling blog ~
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~"The function you just attempted is not yet implemented"~


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Michael Phillips
Re: Dr. Dre gets his Apple employee ID badge
on May 30, 2014 at 1:09:24 pm

In looking at the breakdown of the deal, the Beats Music side was only the $500M of of the $3B deal. So if that was what they were really after, seems like they could have saved some money. Not that the deal would have been done just for the streaming side, but interesting to see the value breakdown of the deal. In the end, Apple probably puts a lot more value on the streaming side and having to pay $3B was worth it.


Michael


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Tim Wilson
Re: Dr. Dre gets his Apple employee ID badge
on May 30, 2014 at 4:34:36 pm

[Michael Phillips] "Not that the deal would have been done just for the streaming side"

"Tim Cook: This is all about music"


That's from a very interesting little interview at Re/code.

Couple of other juicy quotes, my emphasis added.


We get a subscription music service that we believe is the first subscription service that really got it right. They had the insight early on to know how important human curation is. That technology by itself wasn’t enough — that it was the marriage of the two that would really be great and produce a feeling in people that we want to produce.



Answering the question if they could have done it themselves:

We could build just about anything that you could dream of. But that’s not the question. The thing that Beats provides us is a head start.

And by the way — we do acquire companies. I know we don’t talk about them, but we’ve acquired 27 companies between fiscal year 2013 and this year so far. So we’ve never been of the mindset that we shouldn’t acquire things.


wtf? They've acquired TWENTY SEVEN companies that recently? Apple's FY ends in September, so I'm not sure if he means since the end of FY 2013 on 9/29/13, or if he means since the year before that, but either way, it's a LOT.



re: Dre getting an Apple employee ID badge:


re/code: So Jimmy and Dre are going to be Apple employees? Full time?

Tim Cook: 100 percent.



It's a short interview, but he also touches on the great people, Jimmy and Dre in particular of course ("they're kindred spirits," "people like this aren't born every day," etc.) and the headphone business.

The headphone business is small, but I agree it's interesting, because it sums up this part of Apple's business in a nutshell: trendy, overpriced, overrated, but good enough for people who don't know better, or who DO know better but do it anyway because of brand devotion.

Tim also says, "It’s because we always are future-focused. So it’s not what Apple and Beats are doing today. It’s what we believe pairing the two together can produce for the future."

I swear I didn't read this interview until this morning, AFTER what I wrote last night, but he confirmed every single point I made.

I also saw some more about the damage that Spotify has done to iTunes, and the decline of digital music sales. It turns out that digital music sales at Amazon are UP! Not huge -- a couple of percent -- but considering that the sector is down 14% on the whole, Apple is moving even MORE in the wrong direction than I thought.

It also turns out that paid subscriptions as a business are up 80% last year -- again noting that Spotify's MUSIC revenue will pass iTunes MUSIC revenue in Europe this year, with the US not far behind. So it turns out that that 2012 prediction by Spotify's CEO was pretty much right on the money.

Apple's iTunes music business: declining at double digits. Spotify subscriptions: up triple digits, on the verge of passing iTunes altogether. Not a hard call.

What I didn't realize until I read up on it is that Spotify spends 75% of its revenue on royalties! So streaming royalties may be a fraction of what digital sales are, but it doesn't appear that Spotify itself is the logjam. It may be that, just as 99 cents a song simply isn't enough to pay artists at previous levels, neither is $10/month enough to pay artists what they were getting at 99 cents...but then again, I don't see labels begging for money.

Anyway, I swear to Bessie that if you've been watching the growth of Spotify in particular, and streaming in general, and watching the toll it has been taking on iTunes, this looks a super-smart deal even in the short run. It doesn't require any kremlinology whatsoever.

And, as TC also points out, the deal is even moreso oriented toward the future. Don't forget what happened when Apple bought Casady & Green SoundJam MP and turned it into iTunes.

Yeah, the headphones business will make Apple even more money than it was making Beats, but to start with Tim's first words in the interview, "This is all about music."


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Michael Phillips
Re: Dr. Dre gets his Apple employee ID badge
on May 30, 2014 at 4:46:27 pm

Tim - All great points that I agree with, I was just commenting that the music streaming side only represented only $500M of the overall deal, but there was no way they were going to be able to buy just the streaming side, it was an all or nothing deal. To Apple, the music is the deal (content is king) and that alone was worth up to $3B. The headphones become the kicker in the long term value of the deal.


Michael


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Tim Wilson
Re: Dr. Dre gets his Apple employee ID badge
on May 30, 2014 at 5:43:33 pm

[Michael Phillips] "Tim - All great points that I agree with, I was just commenting that the music streaming side only represented only $500M of the overall deal,"

I wasn't disagreeing, or thinking you were disagreeing with me. I just found a couple of interesting articles I hadn't seen before, and they expanded a number of points in my previous post.

I was also making the observation that a lot of people are still scratching their heads about this deal, when I think it's a slam dunk.

I don't think I'm being especially insightful or contrarian or anything else. I think this IS the story. I just happened to be one many folks who happened to be looking in the right direction, which even a lot of first-tier media sources hadn't been. Maybe because Spotify started in Europe, and has only been in the US since 2011 I think. Maybe the news was more visible to people with smaller corners of the industry to cover.

Or maybe it's just that I've been a Spotify subscriber, and I LIKE the idea of Netflix for music. There's simply no question that this is a more lucrative approach for the future. It doesn't even require any persuasion, the way that early iTunes did. People are jumping on this model for exactly the same reason they're jumping on Netflix.

Because this is Netflix for music. I keep coming back to that point because it's the key to all of this. It's not an easy business to develop, or Apple already would have...but it's absolutely critical to Apple's music business, which is why there were talking to Jimmy and Dre about this for a very long time already.

re: headphones, just a few minutes ago, I saw that Beats accounts for 40% of that market. Right now, Apple ain't making any money on those white earbuds. Sure, you can buy 'em, but for the most part, they're a huge expense for Apple. They've now got a premium product that they can charge real money for, and Beats headphones don't have to be any better than they already are for Apple to keep charging $200-300 retail for the top of the line. Pretty much all that Apple has to do to cash in is sell them in Apple stores.

The Beats brand is already strong enough that Apple doesn't even have to offer them in white with an Apple logo...although I bet that that's an option in time for the holiday season. :-)


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Mitch Ives
Re: Dr. Dre gets his Apple employee ID badge
on May 29, 2014 at 9:53:17 pm

[Tim Wilson] "People like Spotify and Beats are Netflixing music, and Apple shaved years off their development time and dozens if not hundreds of millions in infrastructure money. This was a great deal for them for that alone."

You're right, it was another circus owner.

I recall Fed-X saying the same thing when they bought Roadway (RPS)... to shave off two years. Turned out to be the biggest disaster in the history of the company for years before it got fixed. Let's hope this is different?

Mitch Ives
Insight Productions Corp.

"Criticism may not be agreeable, but it is necessary. It fulfills the same function as pain in the human body. It calls attention to an unhealthy state of things." - Winston Churchill


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Tim Wilson
Re: Dr. Dre gets his Apple employee ID badge
on May 29, 2014 at 10:10:13 pm

[Mitch Ives] " Turned out to be the biggest disaster in the history of the company for years before it got fixed."

Trivia footnote: they hired my father to fix it!!! More precisely, the consulting company for whom he was an SVP, but this was his account, and all concerned were quite pleased with how it eventually worked out.

I don't think this will be like that that, though. Delivering physical things, and managing trucks and warehouses -- that's actual work. LOL


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Craig Alan
Re: Dr. Dre gets his Apple employee ID badge
on May 30, 2014 at 6:20:26 pm

I think they are buying the brand/the image/the personalities. While canceling competition in a merging market where Apple would want the hip label. Or maybe its just a tax write off.

Mac Pro, macbook pro, Imacs (i7); Canon 5D Mark III/70D, Panasonic AG-HPX170/AG-HPX250P, Canon HV40, Sony Z7U/VX2000/PD170; FCP 6 certified; FCP X write professionally for a variety of media; teach video production in L.A.


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Bret Williams
Re: Dr. Dre gets his Apple employee ID badge
on May 30, 2014 at 6:37:18 pm







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Jeremy Garchow
Re: Dr. Dre gets his Apple employee ID badge
on May 30, 2014 at 6:55:14 pm

https://www.youtube.com/

watch?v=H8ezWOEiLF8


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Tim Wilson
Re: Dr. Dre gets his Apple employee ID badge
on May 30, 2014 at 7:00:13 pm

Sorry I had to edit your post, man. We don't allow parental advisory music in the COW.

HOWEVER, I left the link there for anyone who wants to piece it together, because it's a GREAT choice. The perfect observation.

But NSFB language. Not safe for Bessie. :-)


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Jeremy Garchow
Re: Dr. Dre gets his Apple employee ID badge
on May 30, 2014 at 7:07:37 pm

[Tim Wilson] "We don't allow parental advisory music in the COW."

Too bad. It's the best kind of music.


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Tim Wilson
Re: Dr. Dre gets his Apple employee ID badge
on May 30, 2014 at 7:39:55 pm

[Jeremy Garchow] "Too bad. It's the best kind of music."

No argument from me. Outside the COW my language is filthy.

But we take seriously that the COW is in schools, places of worship, government facilities and workplaces where that stuff really doesn't fly. There are whole COUNTRIES that will shut us out if we don't take this kind of thing seriously.

So we do.

Outside the COW, though, have at it.


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Bret Williams
Re: Dr. Dre gets his Apple employee ID badge
on May 30, 2014 at 7:01:21 pm

So talented. He's worth at least-







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Tim Wilson
Re: Dr. Dre gets his Apple employee ID badge
on May 30, 2014 at 7:06:46 pm

[Craig Alan] "I think they are buying the brand/the image/the personalities."

I swear I'm not grinding on you personally, but this is by far the biggest deal in Apple's history, it's by far the most important. It gets to the absolute core of the company that Apple thinks it is today, and the kind of company it wants to become.

So I'm curious. When Tim Cook says "This is all about music," why do you not believe him? Spotify is passing iTunes in music revenue, doubling year on year, while iTunes is declining faster than even CD sales. Beats Audio gives Apple a chance to stop the bleeding in what had previously been one of the most lucrative parts of their business.

Not that the Beats brand and personalities aren't a big factor, but every bit of evidence that I've seen points to this being, exactly as Tim Cook said, "all about music."

I'm surprised that so many people are finding this hard to believe. The numbers are easily available to even a cursory Google search, and they're truly ugly for Apple.

Beats is also not a write-off. They're profitable, on revenues of $1.5 billion.

So, what are you seeing in either what Tim Cook is saying, or what he's NOT saying, that lead you to believe that he's trying to mislead us when he says the deal was about music?

Or are you not reading the links I'm posting? LOL There's a stupid number of them. I can see how normal people have better things to do with their time. LOL

Not that it colors the "Apple doesn't care about pros / Apple is completely committed to pros" debate one whit, one way or the other. But for seeing Apple's view of the big picture, this story is one of the 2 or 3 most important in the company's history. Again, going forward, I think it will be by far the single most important deal that Apple has ever made.

I love kremlinology as much as anyone here, but I don't see any reason to believe it's anything other than what Tim Cook says it is....which yes, includes brands and personalities...but per TC, it's "all about music."

As a kremlinologist, though, I'm also happy to be pointed to any numbers to suggest that there's something else afoot. :-)


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Craig Alan
Re: Dr. Dre gets his Apple employee ID badge
on Jun 1, 2014 at 4:36:43 pm

Yes, I believe its about growing their music business. But the criticism directed at the merger was that the company they bought makes so-so reviewed but PROFITABLE accessories and is not worth the money paid for the music distribution portion as compared too further developing their own. But Michael Jordan was a major variable in Nike's success. AFAIK he was not a talented shoe designer. He was a brand, an image, a personality. Notice that Apple's deal included hiring their two key players not just their business. My tax write off line was just saying if their gamble doesn't work then Apple will survive because they can afford a few huge miscalculations with their excess in liquid capital.

Mac Pro, macbook pro, Imacs (i7); Canon 5D Mark III/70D, Panasonic AG-HPX170/AG-HPX250P, Canon HV40, Sony Z7U/VX2000/PD170; FCP 6 certified; FCP X write professionally for a variety of media; teach video production in L.A.


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Craig Alan
Re: Dr. Dre gets his Apple employee ID badge
on Jun 2, 2014 at 4:34:55 am

just found this

http://www.macworld.com/article/2357401/how-apple-and-beats-could-shake-up-...

Fred Jacobs agrees, noting that the Beats deal gives Apple access to the creative drive and iconic status of Beats’ leaders Jimmy Iovine and Dr. Dre. And Jacobs knows a little bit about star power, having pioneered the “Classic Rock” radio format 30 years ago. These days, he’s president of the radio consultancy Jacobs Media and writer of its radio blog.

“None of the other music streaming services have the same celebrity-driven aura of Beats,” Jacobs said. “This gives Beats—and now Apple—something that Pandora and Spotify just do not have.”

Mac Pro, macbook pro, Imacs (i7); Canon 5D Mark III/70D, Panasonic AG-HPX170/AG-HPX250P, Canon HV40, Sony Z7U/VX2000/PD170; FCP 6 certified; FCP X write professionally for a variety of media; teach video production in L.A.


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Jamie Franklin
Re: Dr. Dre gets his Apple employee ID badge
on May 29, 2014 at 6:17:40 pm

Over-hyped over-priced headphones, they fit right in...

A violent rapper who beats up women...I don't get the "brand" appeal there.


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David Mathis
Re: Dr. Dre gets his Apple employee ID badge
on May 29, 2014 at 7:01:32 pm

Now if they would only come out with iVacuum, would make life easier. Just chill out, watch Apple TV, check quotes on the iPhone while cleaning the carpet. Maybe an iFridge that comes to where you are sitting and hand you a nice cold beer. Sorry, just could not resist this post.

My Final Cut Studio:

Core Software
Final Cut Pro X
Motion 5
Resolve
Pixelmator

Plug-ins
Red Giant Universe

Utilities
7 to X
Clip Exporter
Ultrascope

Cameras
Black Magic Cinema Camera
Canon (consumer model)


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Mitch Ives
Re: Dr. Dre gets his Apple employee ID badge
on May 30, 2014 at 3:22:40 am

[David Mathis] "Now if they would only come out with iVacuum, would make life easier. "

Oh great... now they'll buy Dyson...

Mitch Ives
Insight Productions Corp.

"Criticism may not be agreeable, but it is necessary. It fulfills the same function as pain in the human body. It calls attention to an unhealthy state of things." - Winston Churchill


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Chris Northcross
Happy Rumor
on May 29, 2014 at 5:08:11 pm

Smiling for just 5 minutes a day helps reduce your chances for cancer AND cynicism...

"Whether you think you can or can't, you're right."


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