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Hip-hop’s Biggest Business Deal Explained in a Podcast


by Dan Runcie, Trapital, on LinkedIn, August 15, 2023


Hip-hop’s biggest business deal ever started from a unique conversation with two people.


In the mid 2000s, Dr. Dre had an offer for a sneaker deal, back in the heyday of S. Dots, G-Units, and other hip-hop stars with sneaker lines.


But his longtime business partner, Interscope Records founder (and then-CEO) Jimmy Iovine, hit him with the iconic line.


"F sneakers, let's make speakers."


Iovine was frustrated with the sound quality of the free headphones that came with every iPod. He wanted to make something better.


The duo launched Beats by Dre in 2006. It was the perfect partnership. Dre was the perfectionist artist and quiet genius. Jimmy was the marketer and talker.


Interscope Records was like an incubator for Beats (Interscope’s parent company Universal Music Group owned equity in the Beats). The headphones became a staple in Interscope artist music videos, from Lady Gaga to Soulja Boy.


Beats weren’t just about utility, they were a fashion statement too. At Best Buy, its sales associates were trained to sell Beats as a fashion accessory. Beats wasn’t competing with Bose, it was competing with Jordan Brand.


The strategy was to make Beats its own category, not just a leader in an existing category.


It all led to a $3 billion sale to Apple in 2014.


When Apple bought Beats though, Apple wasn’t really after the hardware accessory. Apple was really after its new streaming service, Beats Music. Spotify already had a 3 year head start in the US in music streaming, and Apple wanted to catch up. Beats Music became the foundation for Apple Music, which launched in 2015.


If you liked this breakdown, listen to the podcast episode I did with Zach O’Malley Greenberg about Beats, Interscope Records, and Dr. Dre.


Check it out on Apple Podcasts or Google Podcasts

Follow Dan Runcie on LinkedIn





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