Yesterday, reports hit that Tim Cook and Beats CEO Jimmy Iovine had met to talk about ‘Project Daisy,’ Beats’ secret project that, in some form or another, seems to involve music discovery.
No one’s quite sure what Project Daisy actually is, but Cook seems interested in it. It could be a music discovery engine, à la The Echo Next. It could be a streaming service like Rhapsody or Spotify. No one except Iovine and Cook know for sure.
The story about Apple and Beats’ CEOs meeting made me wonder. Apple has been a major player in the digital music business for 12 years now… yet they have never once delivered a pair of premium headphones the likes of which Beats has become known for. Why not?
By premium headphones, I don’t mean earbuds. Apple’s made hundreds of millions of pairs of pack-in (and premium) earbuds over the years, and even came up with a new design for them, rechristening them the EarPods.
The dirty secret of the EarPods, of course, is that while better than the old Apple earbuds, they actually don’t sound very good. Apple claims that their EarPods outperform headphones that cost “hundreds of dollars more.” In fact, EarPods arguably don’t even sound as good as a pair of $9 Monoprice headphones, according to testing by gadget aggregator review site The Wirecutter. So how is Apple convincing everyone otherwise?
Intriguingly, it’s by aping Beats’ own formula for success: clever marketing and branding and an aggressive approach to bass. And it’s working. Our own Leander Kahney wrote a glowing review of the EarPods in which he mentions their bass response no fewer than ten times without ever once referring to any other aspect of their sound quality!
I’m not trying to dismiss Leander’s opinion at all, but he’s the everyman in this situation: all most people care about with headphones is who made them, if they look cool wearing them, and how hard they thump.
So why not take Apple-branded headphones to the next level and go head-to-head with Beats?
Right now, Beats is the biggest player in the premium headphone market. How big are they? In 2012, the premium headphone market became a billion dollar industry for the first time ever. How much of that market does Beats own? In 2011, Beats brought in revenue of over $520 million, and they only got bigger in 2012. They are bringing in the lion’s share of money in their industry.
Yet the truth is, Beats isn’t making this money because they have gear that sounds good. Beats was originally a co-venture with Monster, a company that unabashedly sells the illusion of sound quality, not the reality.
In a fascinating expose over at Gizmodo, Kevin Lee, the son of Monster founder Noel Lee, says that Monster is in the business of finding a “cure for no disease.”
Originally, that disease was selling high-end audio cables, but that eventually paved the way for headphones. The audio placebo that eventually blew up in Monster’s face, though, was Beats, and now that the companies have gone their separate ways, Monster’s highest-ups are quite candid about how empty the Beats brand actually is when it comes to sound quality.
“Kids did go into a Best Buy and bought Beats not because it sounded cool, but because it made them look cool,” admitted Kevin Lee after Beats and Monster’s partnership soured.
His point is clear: Beats is a fashion company. They sell bling. Their headphones are well-marketed and branded, and the giant ear cups, thick headband and glossy coat are iconic in their own right. You know when someone is wearing a pair of Beats. But they don’t sound good to people who know what to listen for. Beats makes its money by convincing people that distorted sound with skull-destroying bass is worth buying at incredible premiums just because they have the Beats brand on them, and because some of their favorite hip-hop artists wear them.
What if Apple created a pair of headphones that were as much a fashion statement as Beats?
So imagine this. Imagine if Apple — the most iconic tech company in the world — created a pair of premium over-the-ear headphones that were just as much of a fashion statement as Beats, but actually sounded incredible? What if Apple gave them built-in AirPlay and Bluetooth, so you could effortlessly stream to them from your iPhone or Mac device? What if Apple put a glowing Apple logo on each ear cup, and got its own extensive network of musician partners to start wearing them?
What if Apple leveraged its incredible supply chain expertise and was able to do what it always does, and deliver these headphones at the same or even cheaper price as Beats, but with a much higher profit margin?
If Apple did all that, how long would it be before Apple started eating Beats’ lunch? Not long at all is my best guess.
But that’s unlikely to ever happen, for a few reasons.
For one, Apple doesn’t enter any market if it doesn’t believe it can be a billion dollar business for them. It’s unlikely premium headphones will meet this mark at any point in the near future. While it’s true that the premium headphone market has just become a billion dollar industry, that’s just not enough money to get Apple interested. Beats’ $510M in a revenue is less than Apple makes on any other project it takes seriously. It’s a drop in the ocean compared to the iPhone, iPod or Mac business. Even Apple’s rumored iWatch is believed to launch as a $6 billion business for Apple.
That money doesn’t make it worth it for Apple to make a major push into the headphones business. And besides, as we used the example of Leander to show above, the everyman can’t perceive great sound quality anyway. Although once you can hear the difference in higher-end audio equipment, you can’t unhear it; for most people, Apple’s right: a pair of $30 EarPods are aurally indistinguishable from a pair of $400 Technics.
For most people, Apple’s right: a pair of $30 EarPods are aurally indistinguishable from a pair of $400 Technics.
Finally, as much as a music lover like me would love to see Apple release a pair of premium over-the-ear cans like the ones I described above, there’s a reason they won’t: they would probably suck to use for the iPhone.
I talked to Eliot Van Buskirk, tech music journalist and editor of the fantastic Evolver.fm, asking him why Apple had never released a pair of audiophile-quality headphones despite the fact that their modern empire was built upon the foundation that iTunes laid. His response:
My theory, which I have never written, is that Apple may have been working on them, but that the iPhone killed them. The best earphones, over-the-ear and in-the-ear, form a seal with the ear (with the exception of open headphones by Grado and the like, which only work where there’s no noise around). If you’ve ever tried to talk on the phone using ear-sealing headphones with an inline mic, you know how awkward it is, because you can’t hear your own voice ambiently. So the iPhone made Apple stick with small earbuds that don’t form a seal. Considering that limitation, they’ve done about as well as they can.
It’s a good theory. Apple could either make great headphones, or they could make good enough headphones that worked well with the iPhone. They could chase a billion dollar industry, or the hundred billion dollar industry; the audiophile or every human being on Earth.
Even this EarPods-hating audiophile has to admit, Apple made the right decision.