Apple confirms purchase of Beats for $3 billion

CUPERTINO, Calif., May 28 (UPI) -- Apple confirmed that it will purchase high-end headphone maker Beats Electronics for $3 billion, and founders Jimmy Iovine and Dr. Dre will join the company.

Apple said it wold pay $2.6 billion in cash and $400 million in equity for Beats Music, a subscription-based music streaming business, and for Beats Electronics, which makes high-end headphones and audio software. The Beats brand will remain separate from Apple, a first for the company, but both services will be retained.

The iPhone maker is hoping to cash in on the Beats subscription-based music service. Its iTunes service currently relies on a sales model that faces serious challengers in subscription services like Spotify. Executives from Apple and Beats said that they will work to provide consumers worldwide with more options to listen to music.

Longtime music executive Jimmy Iovine and rapper Dr. Dre will now join Apple as executives working under Eddy Cue, Apple's executive in charge of Internet services. They will join other prominent executives such as Angela Ahrendts, the former chief of Burberry, and Paul Deneve, the former chief of Yves Saint Laurent.

"We think these guys have a very rare talent," said Apple CEO Tim Cook. "We love the subscription service that they built -- we think it's the first one that really got it right."

Despite iTunes being the dominant seller of music online, listeners have been moving towards music streaming services like Spotify and Pandora.

The acquisition, one of the biggest for Apple, is also being seen as a push by Cook to establish his own legacy at the company, which since the death of founder Steve Jobs has run by his established products and ways.