Beats Worth Over $1 Billion
Wow. Remember all the hate Beats by Dre got on WSO when they first came out? Only an idiot would pay that for headphones. There's no way they're going to sell any at that price. They probably don't even sound that great. Well, guess what? We were all wrong.
Dr. Dre is cashing a check for $250 million after selling his minority stake in the company to The Carlyle Group, valuing the company at more than $1 billion overall. The company is an absolute juggernaut in the headphone space, garnering more than 50% of the high-end US market since its launch in 2006.
The firm, which primarily sells under the Beats by Dr Dre brand, has cornered the market in high-end headphones. Beats accounted for 64% of headphones selling for more than $100 in the US in 2012, according retail analysts NPD Group. The market for expensive headphones increased by 73% in 2012.
The company has increased revenue 500% since 2010 and now books over a billion in sales per year. While consumer electronics aren't really in Carlyle's wheelhouse, it looks like a pretty smart play. Anytime you can buy that kind of growth for 1x sales, it's probably a good idea.
So now I have a question for you guys. I'm sure a bunch of you own a set of Beats. I am forever going through earphones. I literally buy them in bulk (3 or 4 sets at a time) because they generally only last me about 8 weeks before I pull the cord out the wrong way or do something to screw them up. Is it worth it to spend $300 on a set of Beats Studios? What the durability like?
I've never liked in-ear earphones, but I'm sort of resigned to them because they've been a low cost solution that's easily replaceable. If I spent $300 on a set of headphones and then mangled the cord so they didn't work, I'd probably want to smash something. Have any of you had that problem with Beats?
Whoa whoa whoa. Wait a fucking second. This is another PRIME example of how a combination of excessive marketing towards youth combined with peer pressure of wanting to keep up with the latest "cool" tech trends launch a company into these types of numbers, see the iPhone for further reference.
Am I hating? No, exploiting morons is where it is at, but if anyone for a second thinks that Beats are even worth half their MSRP, you are a moron that needs to be punched in the face.
Eddie, if you have decided to go the route of cans instead of IEMs or ear buds, I would suggest going with one of the very reputable brands out there like Shure, Sennheiser, and Audio-Technica.
These, for example, are widely regarded as one of the best sets of cans on the market for the price:
http://www.amazon.com/Audio-Technica-ATH-M50-Professional-Monitor-Headphones/dp/B000ULAP4U
I would suggest getting these, but also keep in mind when it comes to listening to audio via headphones, a few factors come into play: The file type you are playing (file types like .FLAC will produce the highest audio quality) what type of music software or program you are using (for android, I suggest using PowerAmp as your app - not only is it a great music app, but it has a very intuitive equalizer). If you are listening on a computer, I would even suggest investing in an external amp.
Comparing Beats with the iPhone is a pretty ridiculous argument. Until recently Beats didn't even develop or manufacture its own product, it was all outsourced to Monster - which actually makes some pretty decent high-end audio products itself. I would compare the original Beats business model more to something like Red Bull - an exercise in pure marketing with outsourced manufacturing and distribution. Hilarious that you think Apple was simply exploiting morons by developing the iPhone, probably the most influential and redefining consumer product developed in last decade or so. But you know, the whole mobile revolution is just, as you say, a "cool trend".
[quote=Nefarious-]
Am I hating? No, exploiting morons is where it is at, but if anyone for a second thinks that Beats are even worth half their MSRP, you are a moron that needs to be punched in the face.
I have the ATH M50s and they are stellar
They don't.
Related WSO Content: "Goldman 4Q Loss Over $2 Billion?" :)
On topic: Can it be a good investment? Definitely yes, it has outstanding growth and the trend can easily continue. But is it fair (meaning, will such growth occur if all customers were 100% rational)? Definitely no. Totally agree with Nefarious on marketing aimed at young crowd.
I second Nefarious. I have a pair of M-50's and they are absolutely incredible.
Another thing- if you are interested in investing in a pair of headphones, my suggestion is to also go to a store and just try out a few to find the ones that are best for you.
Anyone who pays more than $100 for over the ear head phones and doesn't buy a nice Sennheiser set is a clown.
Yea, because there are absolutely no other companies who make decent headphones in the $100+ price bracket.
Amazing. Dr. Dre is easily one of the most influential rap artists of all time and his work in NWA in the early nineties was the definition of gangster rap. I'm sure he did relatively well financially through NWA, his solo records, and through his protégés Snoop Dogg and Eminem.
But, the most important thing he did (apparently), was hawking overpriced headphones. I'm not sure what the lesson is in this story, but I'm positive there is one. It must be in managing your personal brand. Kudos to him.
I have a lot of international travel over the next few years, so I decided to plunk down $200 for the mid-range Bose headphones. Sound quality is good, but it's the noise cancelling feature that won me over, and allows me to sleep on planes. However, I would never use these as everyday headphones; only for travel.
Okay, I get it. I won't be shelling out the dough for Beats, and I realize I'm kind of a goof for even considering it after having tried the Sennheisers and loving them.
But here's a little perspective for those of you uncomfortable with the valuation: Regardless of whether or not the retail price is justified, Beats Audio did a billion in sales last year and is valued at just over a billion. Compare that to Instagram, with no product, no revenues, and a platform that was just duplicated for free by Google+. Those guys cashed a check for a billion.
I own a set of Grados. They're cool.
Also- man this is some good marketing. These hip-hop guys definitely know how to make a buck. Clothing lines, headphones, jewelry, shoes, drinks.
I've had my sennheisers (lower end model) for years now and they still sound great and show no signs of stopping. I've always wanted those $300 bose noise-cancelling ones though, they literally block out any noise whatsoever
Active noise cancelling is over-rated IMO. I wouldn't say they block out any noise, but they're pretty good at reducing reverberating low frequency sounds, i.e. on the private heli to the hamptons they are great. But then you are paying for that feature with reduced sound quality, since the software actually modulates (read: distorts) the waveform itself. As with Beats, most punters cannot discern the difference.
If you just want to keep buying cheap pairs of beater headphones I cannot recommend these enough:
http://www.amazon.com/gp/product/B007TRUTZS/ref=oh_details_o06_s00_i00?…
Cheap to the point where you won't care when they break and the quality is absolutely unbeatable for that price point. It actually blew me away when I first tried them. Plus I'm still on my first pair (purchased in April) and I normally go through headphones at the rate you do.
I've been buying JBuds J3's for like $3 apiece whenever they show up on Woot. Might be time to get the mousetraps out of my pockets.
Hey, whatever the company's worth, Dre just got a huge check and says "fuck you".
Goddamn, I'm in the wrong business. He made a fortune peddling to morons, and whether or not the earphones are good doesn't matter considering that this is the same target audience that pays $100 for a pair of sneakers.
let's start a company, ideas?
never underestimate the stupidity of the american public
when i got back to the states (July) this phenomenon was one of the first things i noticed... ALL the cool kids wearing beats by dre. That, combined with their international appeal (they're all over france as well) + combined with their M$$$$RP and not too surprised at the valuation.
whoever designed the marketing on this is pretty genius, good model to follow for this type of brand.
//www.youtube.com/embed/peMSWg94ZwY
Those plastic noise-making headbands me makes are shit. That being said, he sold out way to soon.
Once the Carlyle PE guys told Dre the difference between Sales and EBITDA, I'm sure he didn't want to wait for another 3-7 years .... so it's not that bad of a deal. Plus $250M for a 'minority' ownership stake isn't that bad when you're nearly 50. I'm sure he will have a blast for the next decade.
Does anyone on here have a set of BOSE headphones, they look nice and are from a reputable company. Thinking about getting bose cause beats can go F themselves.
Beats are high-quality. I'd still never pay $250 for headphones. Honestly, unless music is your passion, I don't see the point in spending more then $100 for a decent set. At MOST I'd buy the $180 Sennheisers, though you can find them on sale occasionally for 10-25% off.
Also, Beats isn't just headphones. HP laptops come with them too (not sure if all of them, but mine did and it looked like at least an option on many of them).
End of the day, they blend clean design with decent sound and created a premium brand. Yes, you can get better quality headphones, but they're selling a total package. Even if you think it's dumb, it's what it is. It's like buying Nikes when you could get a pair of Asics.
It depends on what you want. If you just listen to rap all day long and want thumping bass at the expense of quality mids/highs, then maybe you'd like some Beats. However, if you value overall sound quality across the spectrum, Beats don't hold a candle to cans made by Sennheiser/Grado/AKG/etc. If you fly frequently and value noise-canceling, Bose QuietComforts are great at that.
Personally, I have a pair of AKG K550's (http://www.amazon.com/AKG-Acoustics-Closed-Back-Reference-Headphones/dp…), and I can't recommend them enough. Very balanced soundscape, amazing clarity, not to mention they look dope. If you read reviews, people might complain about their size and comfort level for certain head sizes but never about the sound quality.
Bose/Sennheiser>Beats...I guess marketing does help.
Haha beats, what a joke. I think the cheapo JVC Gumy's (which barely cost more than a cheeseburger and fries) are a better value.
People just buy these beats or whatever because they think it makes them look cool somehow, when really it makes them look like they're lacking grey matter.
Last year I bought a pair of over-the-ear Bose headphones. I never really thought about the quality before one of my buddies showed me what that meant on a pair he'd purchased. I borrowed them for a day and listened to one of my all-time favorite albums (Violator by depeche mode, if anyone is curious) and heard things on songs that I've been listening to for an eternity, that I hadn't heard on there before. If you are into music, and you travel a lot, I would highly recommend them. If I had to go back and make a different purchase, I would opt for the on-ear versus over-the-ear, since they can become quite burdensome on the sides of your head and ears after 2-3 hours of listening... not to mention, sweaty. The other suggestions above (Sennheiser, Audio Technica) were pretty solid and seem to come from people with a much deeper appreciation and respect for music quality. Buying these caliber of headphones also requires a little bit more care than what most people are used to (replaceable in-ear buds).
How did these become the "cool" brand over other artist's headphones? 50 Cent, Ludacris, Lady Gaga, etc.. all have lines of headphones, but Beats obviously dominates the market.
Can't say for sure, but I'd have to say being the first mover has a lot to do with it. And all the aforementioned names are purely performing artists, whereas Dre is primarily a producer/engineer/mixer, roles that rely on high-end studio gear for sound quality.
This sorta reminds me of all the dopes out there buying their cell phone based on the colors available for the model instead of the actual hardware or software of the device. The reason Beats got so much hate on WSO before is because most of the people on this site are smart enough to recognize a junk/overpriced product. This is the type of company Wall Street gets wrong because they aren't exposed to the target demographic enough (young,urban,under educated). It just goes to show you how easy it is the prey on this group with shiny marketing and a perfect spokes person.
Lots of people have mentioned Sennheiser sets. In terms of over-the-ear, does anyone know how their HD419's are? On Amazon they're only $35 right now and rated 4.2/5. How much difference is there between that and their higher models, like HD518 or HD600? Any insight appreciated.
The 518/600 are open headphones (which means they aren't completely closed off, thereby leaking sound), and I've heard the difference between open and closed cans is pretty major.
This was a great branding commercial for the line too during this year's NBA Finals. I remember watching it thinking man if I had a pair of those headphones, I could do all that too. LOL.
//www.youtube.com/embed/n6kyn-7MSFk
Hey, whatever the company's worth, Dre just got a huge check and says "fuck you". @ufoinsider
Goddamn, I'm in the wrong business. He made a fortune peddling to morons, and whether or not the earphones are good doesn't matter considering that this is the same target audience that pays $100 for a pair of sneakers.
........>>> thats EXACTLY what iWas thinking
You absolutely aren't getting a value nor are you going to get the absolute best headphones out there. I don't think they are even trying to fake that they are selling that type of product. At the end of the day they are a lifestyle company making accessories more akin to a clothing line than an electronics company. They are selling you a look and a feel combined with decent sound quality and a nice looking design. There are even a myriad of colors to choose from so you can pick one that suits you best. Again, they are an accessory company. Not a tech company. It frankly doesn't matter one lick to their target audience what high or low notes they can or can't hear in these headphones.
They aren't looking for audiophiles. I'm 100% certain you can find a much better value for your money if you choose to. Again, they aren't about that. Why do people pay a premium for Hermes products? Sure, they are nicely made but their scarves aren't THAT nicely made. There is a price point where yes, the quality will be better but as with anything after a certain point you are buying the brand, lifestyle etc.
He's a smart guy.
He has a lot of respect in the music industry and not just from NWA. Dre got more famous after he brought America Eminem. Although there was white rappers at the time, Eminem was different and Dre saw that. He brought more white young people to listen to rap, a whole generation. He did the same thing with his headphones but with a mass appeal to every segment of the young population through his commercials and it made sense. Who doesn't like listening to quality music (even if it's not the best)? If you look at his commercials, he not only a diverse set of influential music artists (EDM/Rock/Rap/Pop) but athletes as well (football/tennis/baseball/others). Beats spent a ton on marketing and it worked, he knew what he was doing.
Lot's of Haterade flowing here.
Left a pair of $300 Bose QC2s on a plane once, decided not to buy expensive headphones anymore. Now I almost exclusively use the Skullcandy Titans. They have great sound quality, and last a decent amount of time ($30-40 a set, and they have lasted 5 times longer than the $20 ink'd pair I had prior to them).
I've noticed a lot of people complain about the sound quality from cheaper headphones, when in reality it's mainly a result of them not having the highest bitrate music on their ipod, or that they stream music (i.e. Spotify, Pandora, etc.) over a weak connection.
Good on Dre for making his nut. Just another example of strong branding, marketing and celebrity endorsements trumping quality.
I own the Studio's and although they're good, I don't use them for daily use. I really only use them when watching a movie on my laptop. I use Apple headphones even with my Android phone or primary computer. Then again, I'm not an audiophile so I can't tell the difference between 5$ headphones and 350$. The studios are good comfort wise but after about 2 hours of use they really hurt the ears, and gets a little damp (read: swamp ear).
No businessman ever lost money underestimating the intelligence of the American consumer
^...nor has anyone lost public office doing that -HL Mencken
it's all about sex
What makes you all think the product quality will not improve now? They have the marketing, market power/share and reputation. The main issue all keep saying is product quality, so if they improve that would you then buy them?
I hate to say it, but I doubt people would be as negative if these headphones were identical, but produced by Paul McCartney or Bono.
I like my ifrogz. So does my dog.
Wow. Love the signature line. I'm flattered.
I actually laughed out loud when I read that part of the book.
Is it purely a branding thing?
I don't understand the mentality of the consumer in this. I just think "people that want to look cool" and the marketing associates Beats to "cool".
I paid 250 for sennheiser hd25-2 and i think that was way too much but I was making money out of using them. For casual use i will not pay more than 30$ for smth that costs like 2$ to make or something. I love the free apple ones. Are teenagers really this spendthrift nowadays?
Im thinking to spot companies like this you need to understand the consumer but i didnt do marketing and it doesnt really make sense to me.
Bang & Olufsen headphones. You simply will not get better. nuff said.
Real losers here are HTC. They made nominal money on their 50% stake as the valuation of the company went up by multiples, due to a combination of bad liquidity management (horrifically bad, you can't be an electronics company and pay your immensely powerful suppliers late, like ever). Add to that the lost strategic potential (they had a legitimate shot at owning a brand and business besides the increasingly commoditized smartphone market and blew it) and this actually scores pretty high on the missed opportunity list.
I think the hate is a combination of annoyance among those who don't buy the marketing plus the fact that if you build headphones for west coast rap music, most other things besides EDM will sound bad on them. Versatility in headphones is very hard to get right, remember how many people were hating on Bose back when they introduced their bass-focused sound?
short beats long ENTs
Wow - These are just a fad - In a couple of years, after their "cool" runs out (after 50 year old white folks start to wear them), there just going to be one of the many other headphones.
After significant research, last week I chose to buy the Audio Technica ATH-M50. It seems to not only be a genuinely better headphone than the Beats, but also sell at a reasonable price.
http://www.amazon.com/Audio-Technica-ATH-M50-Professional-Monitor-Headphones/dp/B000ULAP4U/ref=sr_1_1?ie=UTF8&qid=1380701382&sr=8-1&keywords=audio+technica+ath+m50
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