Apple considers buying Dr. Dre’s headphone company, but why?

Apple once revolutionized the music industry with iTunes. Will it double down in the music game by purchasing Beats?

May 9, 2014 4:34PM ET

by Sarah Herndon @HerndonDC

Ray’s thoughts on reports of Apple’s acquisition of Beats

Apple, with its iTunes online music superstore, helped reshape the industry and escorted brick-and-mortar music stores to the grave.

Now reports emerge that Apple may be getting ready to do something big in response to the rapid rise of streaming. After making white earbuds an emblem of one big generation of music fans ... Apple may be getting ready to help you wrap beats around your head before jumping into the stream.

Apple took a big bite out of the music industry with the invention of the iPod and iTunes music store at the turn of the century.

It changed the way people bought and listened to music, ushering in a digital music revolution.

While iTunes is still the largest digital music seller, for the first time in a decade iTunes sales decreased last year — just 0.1 percent, but still a decrease.

Now there is direct competition for iTunes from online streaming services like Pandora and Spotify. It is a huge growth business.

In the U.S. alone, revenue from music subscription services rose roughly 50 percent last year to more than $1 billion.

Now online music services have 28 million subscribers, compared with just 8 million in 2008.

It would appear that Apple wants to make inroads in the streaming market. On Thursday, the Financial Times reported that Apple is preparing to buy Beats Electronics for $3.2 billion.

Dr. Dre and Jimmy Iovine collaborated to create Beats Electronics.

Denise Truscello/WireImage/Getty Images

Beats was founded by rap legend and entrepreneur Dr. Dre in collaboration with veteran music producer Jimmy Iovine. Its primary business is high-end headphones and includes Beats Music, a new online streaming platform.

Apple has not confirmed reports of any deal, but if it goes through, it will be a change in the strategy for Apple. It is not an unusual move in Silicon Valley for the big firms to buy up rising tech stars that round out the digital portfolio. Facebook's purchase of Instagram and Yahoo's acquisition of Tumblr are two of many examples.

Dr. Dre's Beats electronics headphones struck chords in both style and substance, promising cool design and better-quality listening than regular earbuds.

Vinyl is making a comeback among audiophiles.

2003 Getty Images

Vinyl may be making a comeback too. But Apple put most record collections into the attic for good as it changed the way we acquire, store and experience music. This reported multibillion-dollar deal would be proof that streaming is the new new thing and that downloaded songs might go the way of the dodo.

We consulted a panel of experts for the Inside Story.

What does Apple see in Beats?

Is it all about streaming?

How important is high-end design and better sound quality to consumers?