Apple Buys Beats?: What Does This Mean For the Music Industry?

The homegrown California tech tycoon known simply as Apple made huge waves today when it was announced that they were purchasing Beats Electronics for a hefty price tag of $3.2 billion. While breaking news isn't covered on CDS Music, this news means some major changes are coming to the market. Apple, known for the universally popular iPod and spin off iPhone, was the creator of the digital music age. With the world's first ever MP3 player (iPod), and the first ever online digital music store, Apple paved the way for current music.

Since the launch of the iTunes Store in the United States in April 2003, CD singles have gone from being widely available to nearly nonexistent, and the entire US music system has been transformed. A mere two months after the launch of iTunes, Billboard dropped physical single sales from the equation, focusing solely on digital music downloads still combined with the long lasting (and still popular radio format). In 2009, iTunes hit a peak with sales crossing 10 billion. By 2010 it was the largest music vendor across the globe, with sales reaching past 25 billion (worldwide) as of 2013.

But everything has a breaking point. With the success of Samsung products, overall iPhone sales were level, but they accounted for a smaller overall portion of the market. Another competitor, Android, also helped take a cut into Apple's iPhone market. While both these factors slowed the pace of digital track sales, the 2011 US launch of Spotify made the issue even worse. Apple's iTunes Store sales have been on the downfall for months, due to Spotify giving subscribers a sweet deal. A couple bucks a month for whatever you want to listen to - with no ads and unlimited listens. Ever since, Apple has been trying to crawl back. They're still #1, but their lead is diminishing rapidly.

In September of 2013, Apple announced a new iTunes built in feature that allows all registered iTunes accounts to stream music for free through a mobile radio style add on. You can choose to skip songs, select certain genres and customize a station based on a specific song or artist. When listening, you can instantly purchase the track through iTunes and it will instantly appear in your library. While this idea seemed like a good alternative to Spotify, it has proven highly unsuccessful. According to reports, it has only been able to boost sales by a meager 1-2% while the popularity of iTunes has slumped by a noticeable 15-20% (bringing its market share from about 70% to 50%).

In December 2013, Grammy Award winning artist Beyoncé dropped her 5th studio album on the iTunes Store unexpectedly. While this huge release caused a stir, and set a huge 3 day record for most units sold on iTunes, it still wasn't enough to help Apple get out of the slump.

Now, as they desperately try to salvage their dying trend, Apple has announced that it is intending to buy Beats. That would include both the overpriced "premium" headphones and the streaming service that Beats operates. While other news sites are focusing on the possibility that Dr. Dre will become the first ever billionaire in the hip-hop business, I'm thinking about a more important one. "What Does This Mean For the Music Industry?"

Well in fact it means a lot of things or perhaps nothing - it depends on the way the cookie crumbles. With Beats entering the Apple family, endorsement deals with musical acts such Nicki Minaj, Kendrick Lamar, Robin Thicke, Pharrell Williams, Britney Spears, will.i.am could continue or seize to exist. If they continue, Apple and iTunes could be called out for "favoring" certain artists, and putting a skew on track sales. On the other hand, the teenage demographic (that Beats headphones are most popular with) might not be as interested because their favorite star no longer "supports" the brand. This could cause sales to slump, making the Beats investment a bad idea on Apple's part.

While it's all just "if" and "could" at the moment, I can almost guarantee you that controversy will leave Apple with nothing but a bad seed investment. For a $3.2 billion price tag, I'd analyze what could happen to the market if the purchase goes through. Either way, the music industry is going to get a major make over if Apple consumes Beats. Only time will tell if the flashy colored headphones that make up the most of the Beats package can really keep the slow sinking ship, that is Apple, alive.