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How Dr.Dre’s Beats Took Over The Headphone Market

Is it all about the celebrity endorsement or is it something more?

27Oct

Dr. Dre shot to fame in the late eighties as one of the leading members of NWA. The group’s songs depicted life in Compton, Los Angeles, and their frustrations with the police.

Although NWA’s songs were accused of romanticizing crime, Dr. Dre was never involved in any serious altercations with the authorities. The group’s other creative lead, Ice Cube, shared Dr. Dre’s aversion to crime, and concentrated on writing.

It was a decision that’s reaped considerable rewards. If you believe Forbes, Dr. Dre’s now worth $700 million, if you believe the man himself, he’s worth $1 billion. His record label, Aftermath Entertainment, discovered Eminem and 50 Cent, while his own solo career has also been highly profitable, with both his albums - The Chronic and 2001 - going platinum in the US.

Yet despite many success stories making music, it’s been his Beats venture that’s caused his net-worth to rise so considerably. The producer turned business mogul has tripled his valuation in three years, almost exclusively on the back of the sale of his Beats stake - estimated to have been 25% in 2014 - to Apple. Dre banked $500 million that day.

Ironically, Beats cofounder, Jimmy Iovine had lambasted Apple eight years earlier for degrading audio quality, claiming that the company ‘was selling $400 iPods with $1 earbuds’. The iPod - clearly one of Apple’s greatest innovations - allowed people to transport their entire music collection around, but the product’s headphones, which actually became a fashion accessory, negated, in the eyes of Dr.Dre and Iovine, all the advantages it presented.

Apple, however, had a lasting impact on Jimmy Iovine. In an interview in Inc. he states: ‘Steve Jobs was the first to marry technology directly with popular culture,’ adding that ‘I thought, Wow, technology is the new artist.’ And just like Apple found a niche with the iPod, Iovine and Dre believe they’ve found theirs. A stylish, high quality headphone, ready to compliment the latest generation music players.

Beats’ rise has been remarkable. Like many successful technology products, it’s married fashion and high-spec entertainment, and according to Nate Lanxon, Editor at Wired, it’s caused a sea change where people understand why spending $200 on a pair of headphones, is worthwhile. How did they do it? Dr. Dre’s network stretches far enough that superstars like LeBron James and Pharrell Williams, for example, were willing to wear the headphones seemingly whenever they were in public - which drew real pull in the youth demographic.

The company’s President, Luke Wood, also puts a lot of emphasis on educating consumers. Beats headphones are inspired by customer queries about developments within the industry. In Inc. he states: ‘This year, they're talking a lot about wireless speakers and headphones,’ and that: ‘We want to teach people that Bluetooth can sound good.’

Not everyone’s convinced however. Fast Code Design led with the headline: ‘Beats By Dre Isn't Great Design, Just Great Marketing.’ Further stating that: ‘they’re really buying into is a seductive brand image fueled by a massive celebrity endorsement strategy.’ This, unfortunately, is a constant for Beats, with many companies writing them off as a fashion accessory and not worth the money in terms of audio quality.

Whatever the case, the product’s captured America’s youth. Jimmy Iovine knows that work still needs to done. He says: ‘Bad audio is free.’ But as many have pointed out, it shouldn’t cost $200. These doubts mean that the company still needs to convince everyone that they are as good as they say they are.

From a marketing standpoint, however, Beats are something of a blueprint.

Sources

Image: 360b / Shutterstock.com

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