There’s no doubt who holds the title of top headphones brand in the world. Beaty by Dre is a phenomenon with roots in popular culture and a growth story that comes around once in a generation. But how exactly did a company that was completely unknown rise to become a multi-billion dollar empire in six short years? The now best known headphones brand in the world has a Hollywood origin story worthy of studying as a case study in both product design and influencer marketing.
In the early 2000’s, Apple’s iPod was the coolest music device you could own. Sure, there were a ton of MP3 players already in the market. But they were expensive and didn’t hold very many songs. The products were also slow to load, buggy, and couldn’t easily interface with existing speakers. Because Wi-Fi and Bluetooth headphones technology had not yet been miniaturized for tiny devices, there was also no way to interface without bringing along cords. Luxuries like wireless charging and apps were also a far off sci-fi fantasy.
The promise of a better portable entertainment future began with a bang. The iPod rolled onto the scene on October 21, 2001. Apple was the first company to create an MP3 player that looked great and held your entire library of music in one device. The patented click wheel navigation on every iPod added an easy to use way to find music and adjust settings. Topping it all off? An iconic white and stainless steel color scheme that actually looked like a $399 device.
Apple’s unique approach to music left a mark. Not only was the device a catalyst for the growth of Apple as a global entertainment powerhouse, it also inspired others who saw the genius in Apple’s approach to marketing premium-priced entertainment electronics.
The iPod was brilliant, but not perfect. Understanding Beats by Dre history means getting a firm grasp on how the founders viewed the headphones market.
While the iPod was held in a bag or pocket it’s iconic white headphones were the star of the show. To this day that’s how you know someone is using an Apple product. During the early 2000’s Jimmy Iovine, cofounder of Beats by Dre and music industry veteran, started to take notice as the trend of digital music began disrupting an entrenched industry. The style and panache of the original iPod had energized young consumers, and Apple’s sharp marketing campaigns relied on popular artists to sell more devices. There was just one thing Iovine didn’t like about the iPod: Apple’s standard headphones, or EarPods, were poorly made.
Jimmy asked long time business partner and industry titan Dr. Dre for his take on the issue.
“Apple was selling $400 iPods with $1 earbuds. Dre told me, ‘Man, it’s one thing that people steal my music. It’s another thing to destroy the feeling of what I’ve worked on.’ ” – Jimmy Iovine
The rise of illegal copying and distribution of music on peer-to-peer networks like Napster and Limewire had left their mark on CD sales. Because the music industry made profits primarily from physical albums in the early 2000’s, the iPod represented an opportunity to consolidate and recover lost revenue through iTunes. The situation also represented an early sales opportunity. If iPods were selling to music fans, and those same fans purchased music through iTunes, what else might they buy?
Clearly the mediocre iPod earbuds represented an opportunity for the music industry. With a standard 3.5mm audio jack, any standard headphones could be substituted. But Jimmy Iovine wanted the best headphones for music that actually enhanced the sound of the digital files stored on the device. He felt that digital music lacked richness and fullness of a true studio experience, and that consumers needed to experience each track like they were right there with the artist.
To accomplish the feeling of being in studio with the artist, a new generation of headphones would need to be created from scratch.
The goal of Beats from the very beginning was two-fold: Create a pair of headphones that enhances music and puts the listener in studio with the artist, and embrace an Apple-like design philosophy of function and beauty. The goal of becoming the Apple of headphones is easier said than done. Beats went through an extensive and years long design phase leading up to their initial launch.
Renowned industrial designer Robert Brunner was hired to ensure the end product was as unique and luxe as the iPod that inspired it. This in depth product design stage was closely monitored by cofounders Jimmy Iovine and hip-hop icon Dr. Dre.
The original Beats by Dre headphones were released in 2009.
Until Beats by Dre hit the market, headphones manufacturers were focused on reducing manufacturing costs and providing sound that was good enough. The earbuds market was a particularly weak area of representation. There were no high quality, trendy headphones in the under $200 price range. In fact, there were no quality headphones in the sub-$100 price range.
Beats by Dre played of the trend of Apple’s iPod by adding a white, semi-gloss plastic to the design. Accenting with high quality metals and plastics, the headphones looked different than anything else in the market. This made them stand out in a crowd, and also imparted a premium brand sense. The headphones were truly a product that made you look cool, and let the world know you care about music.
In the studio, Dr. Dre and Jimmy Iovine had head countless artists perform up close and personal. That feeling of hearing the music from the source is not something normal consumers will ever get the chance to experience. Believing that studio performance sound would be a game changer to the headphones industry, Jimmy and Dre focused on parts and software to enhance any digital music track.
The focus of the sound engineering started with bass. Through market research, Jimmy and Dre discovered that consumers wanted deeper, richer bass when listening to their music. This is a notoriously difficult effect to create because over ear headphones rest directly on top of the ear. Rich bass requires distance to sound proper, something over ear headphones of the day could not provide.
The bass challenge was so technically complex that headphones and earbuds companies simply had no desire to solve it. And with very few innovators in the headphones market during the early 2000’s, there was little motivation to push forward with new research and development. Dre and Jimmy beat every major headphones company to the market by creating the best headphones for bass. Other elements of Beats by Dre were software tuned to louden, enhance, and enrich certain tones.
Finally, powered active noise cancelation was added to Beats. This feature required AA batteries for the wired over ear headphones, and put them up against high end audio companies like Bose. The active noise canceling feature was justified as a way to bring the listener closer to the music by drowning out any ambient noise.
With the first pair of Beats by Dre ready to go into mass production, the company began conducting product sampling as part of the launch campaign. This meant working with audio bloggers and traditional press to test and respond to the product. There were some major headwinds that Beats by Dre was facing in early 2008.
Firstly, the headphones were being manufactured by Monster. As a brand, Monster had become known for ripping off customers with expensive audio and video cables and adapters that provided no added value. Audiophiles were known to despise this practice and were actively speaking out against the products. Website and magazine reviewers were also on message, shunning anything coming from the company.
Secondly, the first edition of Beats by Dre headphones were priced at $350. The sky high price was unheard of for a new headphones brand, and scarcely existed outside of professional grade studio monitor headphones. Adjusted for inflation today, Beats by Dre would cost $408.99 under the same pricing model. What over ear headphones would you pay over $400 to wear?
The first reviews of Beats by Dre to hit news stands offered harsh critique. Audiophiles hated the studio tuned sound and enhanced loudness. They felt that the headphones distorted music more than helped it, and created an inauthentic experience. While not all reviews were negative, the majority took major issue with the newcomer audio company.
But none of that mattered.
What audiophiles failed to understand about Beats by Dre is the typical consumer ear is not fine tuned to music. Especially among popular music listeners loudness and energy mattered more than perfectly represented notes. The rise of digital music had also changed how people listen. It had become common to enjoy music while walking down the street, commuting, or sitting in a noisy environment. That meant headphones needed to be loud and crisp to be heard.
Additionally, it also meant design and brand were more important than ever. Legacy brands like Sony and Sennheiser were viewed at as stodgy and irrelevant by younger, trendy consumers. After all, when you’re out in public, fashion matters more. The first Beats by Dre headphones brought a new style and an iconic hip hop name to the space. Combined with the high price point, Beats by Dre were accepted as an exclusive, luxury pair of over ear headphones. Perhaps the first modern luxury pair of headphones ever conceived that actually ended up being adopted by the market.
Sales were high during the initial run of product despite negative reviews and high price point. Clearly Dr. Dre and Jimmy Iovine had tapped into a massive unmet need, much in the same way Apple’s iPod had dominated portable music players. Part of that early success can be attributed to the product itself, but much of the adoption came from an intensive, 360 marketing campaign with Dr. Dre at it’s center.
Beats by Dre headphones established themselves as a major player in the headphones space from day one. That’s no easy feat for an unknown brand with negative early reviews and a sky high price. So how did they do it? The answer isn’t as straightforward as celebrity promotion alone, nor was it a free word of mouth campaign. Had Beats by Dre relied on word of mouth alone, it may have worked against them. Instead, they created cool.
Beats by Dre had two early advantages no other headphones companies could match: Dr. Dre and Jimmy Iovine. Through their deep relationships in the global music scene from decades of producing star talent they were able to instantly place Beats by Dre at the heart of popular culture. In fact, its likely that the duo was able to ask for premiere placement directly from artists themselves, bypassing agents, managers, and other road blocks that prevent new products from finding their way into celebrity hands.
Combining famous talent with support from record labels meant Beats could also be placed at the heart of the professional music world. In a business built on relationships and largely before the age of Instagram influencers, consumers were heavily influenced by what they saw in magazines, reality television shows, and music videos. With direct access to all of these media channels, there was no question in the minds of those close to the business that Beats by Dre headphones would be a long term success.
Taking a cue from Apple, Iovine and Dre wanted to add style to the Beats brand. And like Apple, that style came in color schemes that could be released regularly to continue driving sales and maintain excitement. But unlike Apple, Iovine and Dre improved the process by collaborating with popular musicians to create limited edition designs. These collaborations were the start of a program that is still alive and well today.
These collaborations added improvements to hardware and software as well, allowing headphones for DJs, musicians, and studio mixing to be sold as specialized devices. Beats also expanded quickly to offer limited editions for sports figures and teams, country flags, and celebrities from other industries. Custom Beats collaborations became pop culture collectors’ items, sometimes selling for many times the retail purchase price on Ebay.
As consumer tastes and preferences change, Beats has kept up with the times. Over hear headphones are great for richer, more involved sound, but may not be appropriate for every situation. In addition, Beats by Dre were not truly adjustable, meaning customers with smaller heads or ears had trouble keeping them on.
By late 2012, Beats had expanded its on ear and over ear headphones products, gotten rid Monster as a partner, and secured major celebrity endorsements and collaborations including Lady Gaga and Lebron James. Now it was time to address the high end earbuds market. Releasing at $99.95 and promising a superior earbuds experience, the urBeats were received generally well by critics and took music listeners by storm.
Beats by Dre released the black and red urBeats earbuds in 2012, adding their first earbuds product to a growing over ear headphones line.
The benefits of Bluetooth headphones were becoming apparent as device manufacturers like Apple started switching to proprietary plugs for corded accessories. While many consumers used adapters and dongles, a market was created for wireless headphones solutions that did not rely on the ever changing cord world. As Bluetooth wireless technology grew in popularity and devices became prevalent, Beats by Dre needed a response.
Beats by Dre announced their first wireless Bluetooth headphones in late 2012. Named the Beats by Dr. Dre Wireless and listing at MSRP of $279.95, they debuted as one of the most expensive Bluetooth solutions on the market. Reviews were generally positive, and the headphones sold well during their first year in market. Bluetooth battery life was an early-cited concern, as the high-powered headphones quickly drained batteries when used at top volumes.
Beats by Dre Wireless headphones were released in late 2012. The headphones received good reviews and enjoyed early sales success.
Today Beats is owned by Apple, and continues to enjoy popularity online and in Apple stores worldwide. The brand has evolved to include new product offerings such as earbuds and continues to innovate in the style space. It has not been without challenges. Audiophiles suggest that Beats is an overpriced product, and teardown analysis support the idea that past models have used cheap parts and added metal weights to fake a premium heft.
The future is uncertain for the Beats brand. Now under the control of Apple, it is anyone’s guess what the next five years will bring. Apple has a spotty track record as a steward of acquired companies. The past is littered with failed attempts to enter the music space such as Ping, Apple’s musically-inclined social network. But the history of Apple’s successes in the music space cannot be ignored either. The inventor of iconic music devices like the iPod, EarPods, and AirPods may indeed be the best home for the most recognized headphone brand in the world.
Beginning in 2019, Beats by Dre has become the official partner and supplier to the NBA, WNBA, NBA G League, and US national basketball team of over ear headphones, on ear headphones, earbuds, wireless speakers, and any other audio gear. The official partnership will run through 2022.
Apple announced the new partnership with an all-star video kicking off with LeBron James. LeBron is a long time fan of Beats, and has worn them on multiple occasions. James was also an investor in Beats before the Apple acquisition, which has likely made him a fortune over the short lifespan of the company. Check out the latest promotional video below.