Apple CEO Tim Cook met with Beats Electronics CEO Jimmy Iovine in L.A. in late February, according to a report from Reuters today. The news comes just as Beats project “Daisy,” a streaming music service built by Beats, is being spun off as a separate company by the audio electronics maker, with the help of a $60 million investment round. Apple was interested in Daisy, including its business plan and rollout, Reuters said.
Apple’s Eddy Cue, who is in charge of Internet Software and Services at the company (including the iTunes Store, iCloud and more) also attended the meeting, according to the report. It was an “information” gathering meeting, Reuters’ source says, with the intent of finding out how project Daisy plans to stand apart from Spotify, Pandora, Rdio and others. Iovine had previously said in an interview with AllThingsD that he’d pitched a streaming music service to then-CEO Steve Jobs back in 2003, but that Jobs wanted to wait to get record companies to lower their licensing fees.
Daisy is set to launch toward the end of 2013, according to a press release issued yesterday documenting the company’s spin-off from Beats. The company has some strong industry backing, including the involvement of Dr. Dre, Jimmy Iovine, Trent Reznor and CEO Ian Rogers. It’ll benefit from Beats’ acquisition of music streaming service MOG, which was purchased in 2012 for $14 million, too. All these and the sizeable initial funding should make Daisy a strong competitor for existing services like Pandora and Spotify out of the gate.
For Apple, it sounds on the surface like this was little more than a fact-finding mission. The iPhone-maker has been rumored to have been developing its own streaming music service for years now, and its recent moves with iCloud and iTunes Match seem to indicate it sees the value in streaming media. Digital music sales (of which iTunes makes up the lion’s share) also grew this year for the first time since 1999, with Apple accounting for around 60 percent of those, so the company is hardly at a do-or-die when it comes to streaming music services.
There are reports that Google is looking to do something with a Spotify-style streaming service via YouTube, which itself could prompt Apple to look harder at the idea, and might help explain why it wanted to set up a meet with Beats so quickly following Daisy’s initial reveal.
Apple could be feeling out Daisy to see if it makes sense as an acquisition target – Cook freely admitted back in February that Apple’s acquisition strategy could extend to larger companies with more complete product offerings, but in general, he said it’s about finding the talent needed to push Apple’s own projects forwards. There’s also the possibility that Apple will go the way of forming a formal partnership with a single provider, but that would be tricky in the long run in terms of working out a revenue arrangement that satisfies all involved. It would get around the big problem around outright acquisition of a streaming service, however, as licensing deals often don’t come along with other company assets in those situations.
It’s early to draw any conclusions from this meeting, beyond the simple one that Apple is very keen on the streaming music space and paying close attention to major news in that area. Not everyone gets a visit from Apple’s CEO and the man in charge of its digital media storefronts, after all, a pair that you can be sure does very little without specific intent.