So, there's a good chance that if you clicked on this video, you remember Beats. When I was growing up, Beats were everywhere. Every street. Every corner. Every café. You couldn't leave the house without seeing Beats, and even for the people who couldn't afford them, like me, just the promise of fake Beats was tantalizing.
So what happened? How is it that within 10 years Beats went from the brand of people's dreams to this side chink company who just silently pops out a new product every now and again.
Well...Beats had an incredible start. The face of the company was this American rapper called Dr. Dre and one day he looked at Apple and realized..."Hey, wait a second, this company is out there selling $400 iPods supplied with $1 earphones". He did not like this earphones, like as far as Dre was concerned the only thing they were good enough for, was to just check that your sound worked. This was a two-sided coin for him, because...on one hand he took this is a bit of an insult, you know, he is out there in a studio all day, all night just pouring love into his tracks to make them sound good, but no one could appreciate it. But on the other hand, he saw this as a golden opportunity. So, he took it. Him and his business partner then built a pair of headphones to fill this gap.
And, because of how they then leveraged all of their celebrity contacts, like, right from the very first product...Beats...Just...Flew. Like, before they even launched their first headphones, they sent out 15 pairs to Lebron James (World Famous Basketball Player). Turns out, this headphones ended up on the heads of every single one of the 2008 Olympic US Team. That's ultimate exposure, and, it's actually better than playing for adverts, because, instead of people rolling their eyes or trying to fast forward, this was the equivalent of people's childhood heroes saying to them: "Hey, buy this headphones to be more like me". And, it was not just basketball players. They gave Niki Minaj an exclusive set of pink ones. Lil Wayne was sent custom diamond encrusted ones. They got Justin Bieber on board. Lady Gaga had her own set of earphones made after her. And David Guetta had his own headphones made after him.
And here's the clever part, Beats made absolute sure that this guys got their headphones just before they were about to either go on tour or do a performance or make a music video. Because, they knew full well our headphones look cool and these guys are getting custom headphones made for them, of course they're gonna want to show them off. But here's the thing, Beats were never the best sounding headphones, they were never the best quality headphones, they were definitely not good value for money.
But, the one thing they did well, was to just target to market that nobody else targeted before. They recognized that up until this point, premium headphones were just considered an enthusiastic tool. This endless slew of boring looking black and grey gadgets, they were only made for professionals. But, by associating with just cool people and by giving customers so many colors and designs to choose from. They created a premium headphone that everyone wanted. Even if it was just to compliment an outfit.
Now, the other stroke of genius was the simple fact that Beats were tuned to exaggerate bass which is the main thing that those one dollar Apple earphones were lacking. And so for all of those users, people who jumped from those to these, people who never really tried proper high-end headphones, Beats genuinely did sound amazing in comparison.
And so, as well as that aspirational effect, that whole seeing your childhood heroes on TV use Beats and wanting them because of that, there was also the secondary effect of consumers recommending Beats to other consumers. And so, within just a few short years, Beats has managed to gain 70% of the premium headphone marker. I repeat...70%, by selling headphones that cost $20 to make. You know what else cost $20 to make? Uh...Wish.com phones.
And they were just getting started. They then worked with HP to integrate Beats Audio into laptops. And HTC to integrate it into phones. They were building their own music subscription service which is exactly the future that we've moved to now.
How do you go wrong from there?
Well...in 2014, Beats was bought by Apple, and, while it didn't really seem like it at the time, this was the beginning of the end for Beats. On the face of it, this was one of the strangest acquisitions of the decade.
Why would Apple off all companies spend so much money ($3 billion)? This was their biggest acquisition ever. By the way, on a brand of fashion first headphones that were scoffed out by anyone who really cared about sound. Apple is getting criticized left right and center for this acquisition.
But let me ask you a question: Which company do you think is the biggest seller of earphones now?
It's not Beats. It's Apple. And this acquisition is a big part of why.
Apple knew full well in 2014 that wireless earphones were about to explode. They saw this content boom coming, the fact that it feels like almost every person on the planet
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