Black Celebrities

How Dr. Dre’s Firm Grew From Scratch To A Near Blue Chip Company

By Moses Kamuiru.

Hip-hop icon Dr. Dre and Interscope Records mogul Jimmy Iovine have transformed Beats by Dr. Dre headphone into a $ 1 billion-plus business. Now, together with new president and former Interscope executive Luke Wood, they’re faced with a new challenge: taking a hot brand and making it, you might say, even hotter. To that end, Beats Electronics has introduced portable and wireless speakers, co-branded smartphones–and in January it even launched a new streaming music service, Beats Music, to compete with the likes of Spotify. Beats Electronics, despite some ferocious competition, still controls almost 70 percent of the market for premium headphones. For that, it can thank lightning-fast marketing and an unbeatable grasp of pop culture. Iovine and Wood explain how they and Dr. Dre pulled it off–and what they have to do to stay on top.

Appreciate positive criticism and ignore the negative one

“We got dumped on by audiophiles on Day One,” says Iovine. Beats headphones weren’t tuned evenly, like the usual high-end headphones. They were tuned to make the music sound more dramatic. Iovine adds: “We wanted to recreate that excitement of being in the studio. That’s why people listen.” But skeptics also wondered why anybody would pay $200 for headphones when you got the ear buds for nothing. “I was like, ‘Bad audio is free,’ “Iovine says. “When you believe in something, the last thing you say to yourself is, well, no one’s doing this, so there must be no good reason to do it.”

Identify the Golden Niche

“You’ve got to be lucky enough to identify a problem where you think you can help,” says Iovine. Back in 2006, Iovine felt the music industry had two problems: first, the degradation of record sales because of piracy. Second: the degradation of audio quality because of Apple’s plastic earbuds. “Apple,” he says, “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.’ “But the Cupertino, California, tech giant was both their bane and their inspiration. “Steve Jobs was the first to marry technology directly with popular culture,” says Iovine. “I thought, Wow, technology is the new artist.” He and Dre settled on a plan. “They’re making a beautiful white object with all the music in the world in it,” Iovine says. “I’m going to make a beautiful black object that will play it back. Dre and I decided to market this product just like it was Tupac or U2 or Guns N’ Roses.”

Make what consumers are thinking about

“When we look at marketing for our year ahead, we don’t look at what products have the best margin or which ones sell best–that’s detrimental to progress and innovation,” says Wood. “We ask, ‘What do we think the consumer should learn about?’ ” This year, they’re talking a lot about wireless speakers and headphones–“We want to teach people that Bluetooth can sound good,” says Wood.

You can read more of this story here.

Photo credits: The Guardian

 

 

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