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Apple acquires Beats Electronics for $3 billion

Apple is making things official: Dr. Dre's Beats Electronics belongs to Cupertino, and it cost them $3 billion. Rumors had circulated that CEO Tim Cook was interested in nabbing up the audio accessory and music-streaming outfit, corroborated by a beer-drenched video in which Dre himself declared that he had become "the first billionaire in hip-hop." And now, after Financial Times had already let the cat out of the bag, we have Apple's side of the story. As expected, co-founders Jimmy Iovine and Dr. Dre (Andre Young) will join Cook and VP of Internet Software and Services Eddy Cue, but their exact job titles haven't been revealed just yet.

Despite rumors that Apple was only interested in Beats Music in an effort to boost a decline in iTunes numbers, the deal includes both the hardware and the streaming software sectors of Dr. Dre's business. And it's Apple's largest purchase ever. "Music is such an important part of all of our lives and holds a special place within our hearts at Apple," noted Cook. "That's why we have kept investing in music and are bringing together these extraordinary teams so we can continue to create the most innovative music products and services in the world." That doesn't rule out selling the headphone and speaker portion of the acquisition down the road, but it seems that for now, the folks at Apple are interested in the whole lot.

"I've always known in my heart that Beats belonged with Apple," said Iovine, who's also Beats' CEO. "The idea when we started the company was inspired by Apple's unmatched ability to marry culture and technology. Apple's deep commitment to music fans, artists, songwriters and the music industry is something special." Of course, the purchase — which includes $2.6 billion in cash and $400 million in stock — is subject to the requisite regulatory approvals, but it's expected to close by late September.

As you might expect, the Beats duo will be tasked with the next wave of Apple's music products, but in an interview with The New York Times, Cook didn't offer up any details. "They're going to be coming up with ways of features that blow your mind," he said in the interview, "and products you haven't thought of yet, and seeing around the next corner to articulate the way to take music to an even higher level than it is now." While Apple was once at the helm of the digital music age, it has lost considerable momentum to services like Spotify, Rdio and Pandora. For now, it seems that Beats and Apple will keep their products separate until those new projects are complete, as the Cupertino-based outfit isn't sharing any preliminary plans for any hardware that it will release or exactly how a subscription service may factor into its existing audio efforts. Initial comments from Apple VP Eddy Cue seemingly confirm that Beats Music and iTunes will remain separate items as well. We'll also have to wait and see if the highly-anticipated Detox album will finally launch as an iTunes/Beats Music exclusive.

To celebrate, Beats Music has already updated its iOS app, dropping the cost of an annual subscription to $100 (a $20 discount) and extending the free trial window to two weeks. What's more, Tim Cook has confirmed to Financial Times that the streaming service will still be available to folks on Android and Windows Phone after the deal goes through.