The Real Reason Apple Bought Beats: Addiction

I get the sense that a good many Apple enthusiasts are confusedby its acquisition of Beats Electronics. Sure, many are nodding their heads, saying that Beats is good for Apple and makes total sense. The headphones are selling well. With 250,000 paying subscribers, the Beats Music service is taking off fast, and it can only be elevated by Apple’s global brand and infrastructure.

However, there’s an undercurrent of concern, too — a bit of head-scratchingand scrambling to make sense of what this really means for Apple’sfuture. After all, couldn’t Apple have built everything that Beatsoffers, all by itself? (On the surface, yes.)

Does Apple really need to buy “cool” these days? (No.) More worrisome,is Apple becoming one of those big companies that starts buying othercompanies just to keep the parent conglomerate growing and expandingin order to confuse Wall Street and make lackluster executives feellike they’re actually doing something important? (I sure hope not.)

So why Beats? Why now? What the heck is going on here? Is Apple goingto start buying companies in order to attract new management talent,like Jimmy Iovine and Dr. Dre? After all, it’s hard to make atraditional “hire” of an industry-leading professional with deepindustry business connections. A simple hire seems like astep down, especially to pros who are running their own companies. Abig acquisition, though, makes landing an Iovine or Dre possible.

Despite making sense on paper, the whole Beats acquisition still seemsso anti-Apple that it’s just damn unsettling.

Finally, though — just now — I get it. Let me share. Maybe you’ll agree.

Good but Not Insanely Great Products

At first, I got hung up on the headphones, because the Beats headphonesare popular — but not insanely great. Apple used to shoot forboth — to make a product that was insanely great and make itpopular through fantastic marketing. As near as I can tell,audiophiles and music lovers who appreciate fidelity pretty much shrugtheir shoulders at the Beats line of headphones and speakers. Whywould Apple buy something that wasn’t better than what it could produce onits own?

This is an issue I’ve been struggling with. Like most of the techpress, I tried to shrug it off with the notion that the fledglingBeats Music subscription business is the key. That Apple is willing tobuy the mediocre “products” in order to get the backend subscriptiondeals with music labels, so as to offer something it doesn’t yethave itself.

Forget the scraggly trees, right? Just buy the whole damn forest.

However, Apple is a very thoughtful company. It moves with intent. If Applepoured US$3 billion into its own subscription service, it easily could launch a great new service, if not a whole new sub-brand. So what gives?

A Closer Look at Headphones

Despite popular belief, Apple is not a fashion company. Apple producesproducts that become fashionable — not because of how they look, butbecause of how they make customers feel. When you hold an Apple devicein your hand — iPod, iPhone, iPad, MacBook — the quality and care isobvious. Even the iPhone 5c is incredibly solid and well-made.

Combinethe hardware with the software, which delivers constant positiveinteractions with the user, and you’ve got a device that becomes anextension of a person’s personality — in a sense, an element offashion. Still, Apple didn’t set out to be cool — Apple set out to buildgreat products that, because of their greatness, became cool. As a consequence, Apple became cool, too.

Beats seems to come from a radically different place — it started with an attempt tocreate a product that was cool and fashionable — one that peoplewanted because it was cool.

That seems anti-Apple.

There’s something wrong with this simple explanation, though. It’s notdeep enough. It’s flat and condescending — not only to Jimmy Iovine andDr. Dre, but also to the consumers who shelled outfor mediocre-plus headphones in cool shiny colors.

So what’s going on? Music is about emotion. It creates and modifiesmoods. It’s profoundly biological. What Beats did was build and createa new cue — a sign of sorts — in color, format, and logo — thatreminds a person to listen to music and enjoy it, to put on theirBeats headphones with intent.

Then the visceral experience of themusic reinforces the distinctive design in such a way that users getmore joy out of listening to music through their Beats headphones thanthrough other, more generic-looking headphones. Cost and qualitybecome secondary to the repeated experience created byusing Beats headphones.

In short, Beats headphones represent a constant reminder to enjoy your music.

This achievement is a big deal. It’s not a fad. It’s a connectionbetween a product and life enjoyment — and when the joy is absent, it’sa form of addictive self-medication.

I’m not kidding.

Most of us manipulate our energy and moods with a wide variety oftactics and substances — coffee, alcohol, chocolate, hot showers,exercise, potato chips, drugs. Over the ear headphones (thatyoungsters will wear in public) create a suddenly immersive musicexperience. They shield you from the outside world and focusattention on the experience between your ears — in a way that Apple’siconic white earbuds simply cannot replicate. Earbuds deliver sound,but they don’t have the size and shape to trigger adeep physical and emotional signal that focuses your experience theway that large headphones do.

The very act of placing a large set of headphones over your earscreates a cocoon of sound and experience that both shields you fromthe rigors of the outside world and takes you somewhere else.

Does Tim Cook know this? Maybe. Does Apple? Maybe. I wouldn’t besurprised. The most coveted products are always less about fashionthan they are about emotion — the dirty little secret of addiction.(After Flappy Bird — which nobody accused of being cool — you wouldthink the connection between product, experience, and addiction wouldbe more thoroughly discussed.)

Enter the Beats Subscription Service

Apple could seek to create its own line of headphones toattempt to create this same sort of buying and using experience. ButApple doesn’t have the secret ingredient in high-grade musicaladdiction anymore — the connection of mood with device and content.

Beats connects the device (headphones) with the content through itscurated streaming music service. The customers trust their moment tothe Beats Music curated list. Then, each time a user creates anawesome playlist by connecting current music needs to theservice itself — and is rewarded with a blast of music-deliveredemotion — a reinforced feedback loop is created. Talk about customerloyalty. Talk about viral world-of-mouth marketing. Talk about sharedmoments hanging out with friends.

Pre-built playlists in iTunes do not invite this sort of surprisedcustomer delight. Apples iTunes Genius just doesn’t cut it. And iTunesRadio? The feeling is more akin to tolerating the stream than beingconnected to it.

Beats is not about headphones or a cool service with licensing deals.Beats is all about one-to-one connection of a brand and subscriptionservice that feeds a person’s soul — and it does it with a profitableproduct.

I’ve got to believe that Apple recognized something here that isprofoundly different than all the other companies that Apple couldhave bought.

Like Nest, for example. Nest users appreciate their smart thermostats,no doubt, but do they have a visceral addiction and appreciation forthe thermostat? I doubt it. Google buying Nest is a practical way tobuild a home-based world of Internet-connected things. Facebook buyingOculus VR or WhatsApp is more simply about a big brand expanding itsreach. Microsoft buying Nokia is a desperate attempt to wedge open themobile device door before it slams shut forever. All theseacquisitions are about acquiring very simple, tactical products.

Beats is not simple or particularly tactical.

What finally settles it for me is the realization that the acquisitionof Beats Electronics is more about the acquisition of a kindred spiritthan a new line of business. Sure, the executives from both companieswalk entirely differently, but their cores remain similar — theyunderstand that customers are about experience, and companies thatfeed a fantastic experience are those who win.

That’s worth repeating: Companies that feed a fantastic experience arethose who win.

Because the collision of products and services with deep customerexperience is such a rare quality, I don’t think similar acquisitionsare going to happen often at Apple. So yeah, the Beats acquisition isa big deal. Letting the service work with Android and WindowsPhone customers is a big deal. But shifting tectonic plates inCupertino? Not so much after all.

Chris Maxcer

TechNewsWorld columnist Chris Maxcer has been writing about the tech industry since the birth of the email newsletter, and he still remembers the clacking Mac keyboards from high school -- Apple's seed-planting strategy at work. While he enjoys elegant gear and sublime tech, there's something to be said for turning it all off -- or most of it -- to go outside. To catch him, take a "firstnamelastname" guess at WickedCoolBite.com. You can also connect with him on Google+.

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