Tomorrow, Apple will likely debut the new iPhone 7, and along with it a host of new headphones from Beats. Beats arrived at Apple, however, through one of the most convoluted and unlikely stories in tech history. It’s a story of a major company that thought it was exploiting a celebrity only to discover, too late, that the celebrity was hustling them instead. And it’s both a fascinating tale and a warning to consumers who might find themselves suddenly being pushed, hard, to buy Beats.
The Founding Of Beats
The official story behind Beats is straightforward: Music impresario Jimmy Iovine and titan of rap Dr. Dre viewed Apple’s cheap earbuds with scorn and decided, if their music was going to get stolen, then at least the thieves should listen to it with the best equipment possible. After consulting with some of the hottest artists of 2006, Iovine and Dre launched Beats. What isn’t mentioned in that tale of “how it all began” is Monster Cable, the company which did the actual engineering of the headphones.
Monster Cable, founded by Noel Lee in the late ’70s, was, at the time, notable for overpriced cables and litigation. If you had “Monster” in your name, whether you were a mini-golf course or a thrift shop, a famous energy drink or Disney, Monster would sue. For a time, Monster’s frivolous lawsuits were a running joke in the tech press, but the jokes covered up a darker side of the company.
Simply put, Monster was a machine built on marketing, not quality. The company was just as infamous for claiming a patent on basic technological concepts as it was for goofy trademark suits, and the company’s products were notoriously no better at doing their jobs than coat hangers. In of itself, this isn’t surprising. The way cables work is dictated by physics, not marketing, and there’s little you can do to copper wires that will yield better sound or picture in any meaningful way.
Monster wasn’t selling a bad product, per se, but buying a Monster product meant you were paying a premium for the marketing. At the time, Beats was seen as the next logical step for a company built on hype. Pairing with a celebrity like Dr. Dre, and the contacts Dre could make with them for endorsements and design, would let Monster take the next step in their flashy, hype-heavy marketing style. What Monster didn’t realize, however, is that they needed Dre more than Dre needed them, and that Dre and Iovine had set it up that way by design.
Forgot About Dre
Beats headphones debuted to critical brickbats: Even Iovine acknowledged in a 2012 article that Beats weren’t designed to give you the best possible audio reproduction, but rather to make the music sound more “dramatic.” Usually it did this, critics and audio engineers noted, by cranking the bass.
Regardless, the company grew quickly after its 2008 launch, and in 2010, it got what was arguably the golden ticket: A $309 million buyout from HTC, a Taiwanese consumer electronics company best known for its smartphones and a pioneer in getting Google’s Android on the market. Oddly, unlike most buyouts, Beats remained more or less completely autonomous. Iovine and Dre controlled the company directly and made every conceivable decision.
By 2012, Beats claimed to control 70% of the “$100 and up” headphones market. Monster, however, was unhappy. They’d reportedly not seen much of that splashy buyout, and wanted more visibility and money. The Beats executive suite, in response, simply ended the contract between Beats and Monster. Cutting off their main supplier and engineering firm would seem to be a risky move, but it quickly became clear just how out of their depth Monster had turned out to be. The deal they signed, largely negotiated by the founder’s son, gave Beats the rights to every scrap of material, from the engineering diagrams to the plastic parts. Monster had, it turned out, built an entire business for Beats, not realizing Beats could walk away at any moment with the whole company.