According to the Wall Street Journal’s sources, Beats Music, launched in January, is worth $500 million of the $3 billion Apple is paying for the brand.
A source familiar with the matter told Billboard that the estimate “isn’t far off.”
As the Journal points out, the $500 million valuation can’t be based on the service’s subscriber numbers. If it was, using the yardstick of Spotify’s subscriber numbers and recent $4 billion valuation, Beats Music’s 250,000 subs — cited by Jimmy Iovine recently during the Code Conference — would put Beats Music’s worth at about $100 million.
The Journal’s sources point out that the valuation is mostly a a backroom accounting based on the various investors in each company (Beats Electronics, the headphone maker, and Beats Music).
Deezer, the other big streaming service that has yet to enter the U.S. market, would, based on its 5 million subscriber count (cited by Financial Times last fall), be valued at $2 billion. The service is expected to launch stateside sometime in the fall.
Apple and Beats did not immediately respond to a request for comment from Billboard.