Hi, this is Wayne again with a topic “What happened to Beats by Dre?”.
So, there’s a good chance that if you clicked on this video, you remember beets, when i was growing up beets were everywhere every street every corner, every cafe you couldn’t leave the house without seeing beets and even for the people who couldn’t afford them. Like me, just the promise of fake beats was tantalizing, so what happened? How is it that within 10 years beats went from the brand of people’s dreams to this side? Chick company, who just silently pops out a new product every now and again well beats had an incredible start. The face of the company was this american rapper called dr dre, and one day he looked at apple and realized. Hey wait a second, this company’s out here, selling 400 ipods supplied with one dollar earphones.
He did not like these earphones like as far as dre was concerned. The only thing they were good enough for was to just check that your sound worked. This was a two-sided coin for him, because on one hand he took this as a bit of an insult.
You know he’s out there in a studio all day, all night, just pouring love into his tracks to make them sound good, but no one could appreciate it, but on the other hand he saw this as a golden opportunity, so he took it him and his business Partner then built a pair of headphones to fill this gap and because of how they then leveraged. All of their celebrity. Contacts like right from the very first product beats just flew like before they even launched their first headphones. They sent out 15 pairs to lebron james world famous basketball player turns out these headphones ended up on the heads of every single one of the 2008 olympic us team.
That’S ultimate exposure and it’s actually better than paying for adverts because, instead of people rolling their eyes or trying to fast forward, this was the equivalent of people’s childhood heroes. Saying to them. Hey buy these headphones to be more like me, and it was not just basketball players. They gave nicki minaj an exclusive set of pink ones.
Lil wayne was sent custom diamond encrusted ones. They got justin bieber on board. Lady gaga had her own set of earphones made after her, and david guetta had his own headphones made after him, and here’s the clever part beats made absolute sure that these guys got their headphones just before they were about to either go on tour or do a Performance or make a music video because they knew full well, our headphones look cool and these guys are getting a custom headphone made for them. Of course, they’re going to want to show them off, but here’s the thing beats were never the best sounding headphones.
They were never the best quality headphones. They were definitely not good value for money, but the one thing they did well was to just target to market that nobody else had targeted before they recognized that up until this point premium, headphones were just considered an enthusiastic tool. This endless slew of boring, looking black and grey gadgets that were only made for professionals, but by associating with just cool people and by giving customers so many fun, colors and designs to choose from they created a premium headphone that everyone wanted, even if it was just To compliment an outfit now, the other stroke of genius was the simple fact that beads were tuned to exaggerate bass, which is the main thing that those one dollar apple earphones were lacking, and so for all of those users. People who jumped from those to these people who never really tried proper high-end headphones beats, genuinely did sound amazing in comparison and so as well as that aspirational effect that whole seeing your childhood heroes on tv use beets and wanting them.
Because of that, there was also the secondary effect of consumers, recommending beets to other consumers, and so within just a few short years. Beets have managed to gain 70 of the premium headphone market – i repeat: 70 percent by selling headphones that cost just 20 to make. You know what else cost 20 to make uh wish.conference and they were just getting started. They then worked with hp to integrate, beats audio into laptops and htc to integrate it into phones.
They were building their own music subscription service, which is exactly the future that we’ve moved to now. How do you go wrong from there? Well, in 2014, beets was bought by apple, and while it didn’t really seem like it at the time, this was the beginning of the end for beets. On the face of it. This was one of the strangest acquisitions of the decade.
Why would apple of all companies spend so much money? This was their biggest acquisition ever by the way on a brand of fashion, first headphones that were scoffed out by anyone who really cared about sound apple’s, getting criticized left right and center for this acquisition. But let me ask you a question which company do you think is the biggest seller of earphones. Now it’s not beats it’s apple, and this acquisition is a big part of why apple knew full well in 2014, that wireless earphones were about to explode. They saw this content boom coming the fact that it feels like almost every person on the planet now uses their smartphone to listen to music or podcasts or watch netflix shows on, and so they realized preemptively how important a good pair of wireless earphones was going to Be but they didn’t want everyone to be using beats headphones, they want everyone to be using apple headphones, and so you can probably see where i’m going with this when apple bought beats, they had no intention at all of collabing with them of making joint products or Really using the beats brand at all for anything apple, i think that right from the start, apple bought beats with the intention of dissecting them and basically using all the resources they could gather to fuel apple products and that’s basically, what happened. Apple practically pillaged beats his audio engineers, their talent, their ideas, their technologies and used them to make airpods airpods pro homepods and most recently airpods max.
They do still sell beats. You can go onto the official apple store head to the music section and find beats products and apple has actually equipped those beats products with apple built chips so that they work really well with iphones, because why not? The beads brand still has value in it. So apple might as well just continue to make profit from it, but you will notice that while they haven’t killed it, it really does look like they’re letting the beats brand die.
Apple is reinvesting very little in beets’s, long-term future, and while they have released some new beats products. If you look a little closer you’ll see that they’ve only upgraded ones that don’t compete with apple’s own, like apple, hasn’t refreshed the beats pros at all, because they knew full well that they were coming out with their own pro headphones. They practically left the beats pill to rot and they scrapped the smart speaker. That beats was working on too, because apple needs as little competition as possible in the speaker market. The main two products that they’ve kept are the sports focus, power beats and the fashion focused over ear headphones, and that’s just because right now, apple doesn’t have one of its own products to fill those spaces. But you can bet your bottom dollar that the minutes they do beats are out now you’ve heard of apple music right, the company’s big budget monthly subscription music streaming service. Well, i’ll give you one guess where the foundations of that came from and if you’re enjoying this video a sub to the channel would be music to my ears.
So i mentioned earlier that just before they were required, beats had built a music streaming service of their own, they called it beats music, and i got ta say one thing i did really well is help. People find new songs, beats, had gotten radio hosts and artists themselves on board to create custom playlists and what that meant for you, as a user, is that you really felt like you, had a friend out there who was hand-picking tracks for you now. At the same time, spotify was booming, they were getting millions of paying subscribers a month and apple had nothing, because i think, for the longest time, steve jobs had this idea that people would always want to own their music.
And so, even as these music rental services were picking up, apple, just continued to run with their concept of the itunes store, where you’d have to buy every track individually. But you do get to keep it forever. But i think it’s fair to say that apple was wrong about this spotify and beats music made apple, realize that not only was the average consumer becoming more okay with paying a monthly fee to stream music, but also that you could earn way more money. By doing this, instead of having to convince each person to buy each song every time they wanted to, you only need to convince them to subscribe once and then effectively they’re buying from you automatically every month. It’S just that by the time apple realized that they were wrong about. This spotify was so far ahead that catching up seemed like an impossible task, so they used beats music. They effectively copied beats as recommendation engine and the entire bass that they’d built, and then they shut it down and started their own apple, music, equivalent and just built a system so that beats music. Subscribers could easily transfer their subscriptions across so to bring this all together. When apple first acquired beads, it was a confusing move because, yes beats were doing well, but it just kind of seemed like they were two very different companies. But what had actually happened is that apple foresaw that, while these two weren’t competitors, yet they were about to be very soon apple, wanted in on the audio market and so by buying them out. They could effectively take the things that beats did well and use them. In their own products, but at the same time eliminate a future threat, and i think this acquisition was a big part of why beats went downhill.
Think about it when beats was its own company, the incentive was just. How do we get bigger? How do we keep the excitement up and keep selling as many beats products as possible, but as soon as beats is absorbed under apple’s umbrella? The incentives change it’s less about, what’s good for beats and it’s more. How can beats be used to make apple more profit? Okay, there’s one final thing, though one more thing which i think has really catalyzed this process of beats drifting away into irrelevance. It’S the increasing importance of reviews like this isn’t the only measure, but if you just look at the size of the largest youtube tech channels back in 2010 versus the largest tech channels in 2020, it’s very clear that more than ever, consumers are informed. Consumers can very easily find out now whether a product is good or whether a product is bad, and this new fact-based market strongly favors brands with higher levels of technical performance.
And so i think the natural trend that we’re just going to start seeing over the years is that as well as being marketed well for products to truly succeed. They also just need to be good. So that’s what happened to beets, they had their peak and i don’t think they’re going to return to it.
Thanks for watching. My name is aaron. This is mr who’s, the boss and i’ll catch you in the next one. You .