After news broke late Thursday that Apple is working on a $3.2 billion deal to buy Beats Electronics, the developer behind the popular headphones of the same name, company co-founder and hip hop producer Dr. Dre, appeared in a video online and declared himself “the first billionaire in hip hop.”
Actor Tyrese Gibson was apparently celebrating with Dre in the producer’s studio following the reports, and posted the video to his Facebook page.
“They need to update the Forbes list,” Gibson said in the video referencing the magazine’s list of the world’s richest people, and described Dre as having joined the “billionaire boys club.”
“In a big way — understand that,” Dre followed up. “The first billionaire in hip hop.”
Though the expletive-rich video appears to show Dre celebrating the deal, he doesn’t explicitly reference or confirm the news. The post has since been taken down, but initially included the caption: “How did I end up in the studio with Dr Dre ON THE night his deal went public that he did with Apple 3.2 BILLION!!!!! The BEATS HEADPHONES JUST CHANGED HIP HOP!!!!!!”
The New York Times, Wall Street Journal and Financial Times reported the story Thursday citing sources briefed on the talks.
Beats by Dre headphones‘ annual sales revenues have reportedly gone up to $1.5 billion since the company was founded with music executive Jimmy Iovine began selling headphones in 2008. The deal would include the new Beats Music streaming service, which Apple is likely acquiring to compete with streaming services like Pandora and Spotify after the company’s iTunes Radio failed to impress the industry.
Apple’s revenue growth has declined sharply in recent years, and the company only entered the broadly popular streaming market last year — late because of former CEO Steve Jobs’ reported unfavorable opinion of music subscription services. The company continues to be the largest seller of music downloads, but is losing market share to companies like Amazon. Purchasing Beats would mark Apple’s largest acquisition ever.
The headphones retail between about $169.95 to $449.95, depending on model and features, and despite many music and sound industry experts describing their quality as “extraordinarily bad,” the brand has become enormously popular as a fashion item among a younger consumer base, and the popular alternative to standard earbuds models.
Beats’ success is due in large part to its wide profit margins – despite the steep prices of the popular bass-heavy headphone models, each individual unit reportedly only costs around $14 to produce. Private equity firm Carlyle Group invested $500 million in Beats last year, and valued the company at more than $1 billion.
Neither Apple nor Beats would comment on the deal in the original reports, and the briefed sources said they were still in the negotiation stage. Though the companies have yet to consummate the agreement, and it could still fall through, if things go as planned the official announcement could be made as early as next week.