Beats Electronics LLC, maker of the popular headphones, received a $60 million investment led by billionaire Len Blavatnik and will use the money to invest in its planned Daisy music streaming service.
Beats, founded by music producer Jimmy Iovine and rapper Dr. Dre, said in a statement yesterday it will start Daisy in late 2013 and spin the service out as an independent company. Blavatnik’s Access Industries will be joined in the investment by Apollo Global Management LLC’s Marc Rowan, casino magnate James Packer and affiliates of Lee M. Bass.
Beats, based in Santa Monica, California, is developing a subscription music-streaming challenger to Spotify Ltd., Rhapsody International Inc. and Rdio Inc. Beats bought the MOG music service last year and hired Topspin Media Inc. founder Ian Rogers and recording artist Trent Reznor to design the tentatively renamed Daisy.
“Beats has the vision, the brand, the management team and now the investor group to effectively change the expectations and experiences of a music subscription service,” Blavatnik said in the statement.
Access Industries owns Warner Music Group, the New York-based record company with labels including Atlantic Records Group. Last year Access invested $130 million in Deezer, a Paris-based music streaming service.
The already crowded streaming field is about to gain two new entrants. Google Inc., developer of the Android mobile-phone platform, plans to start its own music-streaming service, people with knowledge of the situation said last month.
Apple Inc., maker of the iPhone and operator of the iTunes store, is also planning a music service that would challenge both Spotify in streaming and Pandora Media Inc. in Web-based radio, people with knowledge of the situation said in September.
Apple has discussed a potential partnership with Beats, Reuters reported, citing people with knowledge of the matter.
Spotify lists 5 million paying subscribers and 20 million users of its ad-supported service in 17 countries.
Moelis & Co., a New York-based investment bank, acted as financial advisor and placement agent, Beats said.