The rise and fall of Beats by Dre, the £150 headphones that probably cost £10 to make...

The rise and fall of Beats by Dre, the £150 headphones that probably cost £10 to make...
Let me explain. This week a jury in Los Angeles ordered record producer Jimmy Iovine and rapper Dr Dre - who star in the Netflix documentary The Defiant Ones - to stump up £19 million to a former partner in their headphones company Beats, in a battle over royalties.

I know those headphones!
They were once super popular - 59% of high-end headphones sold in the US used to be Beats. Ours are broken and reside in the tangled wire drawer. But I'll get on to that later. 

So what was the fight about?

Money obvs, and the usual: he says, he says. A guy called Steve Lamar said he took the idea of a celebrity-endorsed headphone brand to Dre and Iovine in 2006 and Beats Electronics was founded. The first Beats headphones were released two years later. 
In 2007 Dre and Iovine agreed to pay Lamar 4% of the base price of each set of headphones sold, with only one model, Beats Studio, specified. But the design was carried over to other models and Lamar wanted a cut of those too. 

Which the court awarded him?
Partly. Lamar wanted almost £100m and he ended up with £19m ($25,247,350). His lawyer was happy.

So Dr Dre and Iovine must be really upset?
Neither are strapped for cash. Dr Dre, famed for his sexist rap lyrics and having won six grammy awards as a producer, earned £469m in 2014 - the highest amount ever made by a musician in a single year. His net worth is almost £570. Iovine, who began his career as a cleaner in a record studio, is worth nearly £700 million. 

But they still run Beats Electronics...

Actually Apple bought them for a whopping £2.3bn, the largest acquisition in its history, back in 2014, which is why they are both so rich.

And are Beats still best-sellers? 

When I looked this week they weren't even among Amazon's top 20 best selling headphones and earphones. Audiophiles say they're all style and no substance. Their reputation took a bashing when the New York Times revealed they cost as little as £10 to make after an engineer dismantleda pair - the packaging cost about half as much (£5.30) as the actual headphones.

So those big headphones, à la Beats, are over?

Ova guys. The global market for headphones is £6 billion and earbuds are now 60% of that. Today it's all about the bluetooth earbud that hangs around your neck and magnetically clips together like a weird necklace.   
Beats sell just such earbud headphones - they cost £129.99. 
Imagine how much they truly cost to make... 

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