The Business of Celebrity-Endorsed Headphones

6 comments
March 9, 2011 ‐ By TheEditor

"beats by dre"

By Brittany Hutson

It’s atypical that anyone in the music industry could stay relevant for three decades having only released two official solo studio albums—but yet, Dr. Dre has seemed to do exactly that, ironically, while sometimes staying behind the scenes. Though he’s been busy over the years launching the careers of superstars Eminem and 50 Cent, and producing hit tracks for various artists, beat making isn’t the only stream of income that keeps him making deposits at the bank.

Unlike other big names in hip-hop who have dabbled in business ventures involving clothes, shoes and sneakers, alcohol and perfume, Dr. Dre has scored big simply due to a set of headphones. Beats by Dre—which was created by Dr. Dre and Interscope Geffen A&M Record’s chairman Jimmy Iovine, and manufactured and distributed by Monster Cable Products—was released in 2008 with the original “Studio” headphones. Since then, Beats by Dre has expanded into an audio products line complete with six over-ear headphones, six in-ear headphones, and an artist series, for which, Dr. Dre and Monster collaborated with figures in music, fashion and sports, such as Diddy (DiddyBeats), Lady Gaga (HeartBeats), Justin Bieber (JustBeats) and Lebron James (PowerBeats). There’s also the compact and portable speaker, BeatBox, and 15 notebook PCs, which were developed by Beats Electronics, LLC and Hewlett-Packard. Retail costs anywhere from $119.95 for the iBeats in-ear headphones to $449.95 for the BeatBox and Pro headphones.

The marketing strategy is simple: Dr. Dre wants people to hear the music the way that he does. According to Iovine, its not exactly low album sales and digital downloads that are killing the music industry, but bad sound. He explained to the Financial Times that the sound that artists and producers work hard to perfect in the studio gets lost after it is compressed in order to be copied on to a CD. The sound is further compressed into an MP3 file format so it is compatible for use on a computer or mobile phone.

As of late 2010, Beats by Dre is on track to sell more than 1.3 million devices, which would more than double sales from 2009, reports Billboard. Unit sales volume for Beats doesn’t crack the top five headphone brands as tracked by market research company, The NPD Group, but Beats’ dollar share ranks fourth at 9 percent, coming behind Sony at 23 percent, Skullcandy at 14 percent and Bose at 12 percent.

Beats is unofficially credited as the tipping point for a recent trend in celebrity endorsed headphones that is certainly helping to boost sales of stereo headphones. According to The NPD Group, music artist endorsements ranked highest among consumers purchasing headphones under $20 and over $100. Headphones with a retail price over $100 increased from being 2 percent of the headphone market in 2009 to 3.5 percent of the market in 2010. Overall, stereo headphone sales increased 17 percent in units and 30 percent in dollars in 2010.

“I think this [celebrity endorsed headphones] is a good strategy for the music business,” said Chuck Creekmur, co-founder and CEO of allhiphop.com. “At some point in time, music has to be worth something to the consumer. Music may be seen as disposable to fans, but I think this is a way to give them great sound and actually increases music perceived worth.”

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  • Shelly

    My Company would like to be endorsed by Dr dre. can anyone open the door of opportunity for us?

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  • http://www.buydreheadphones.com linyanling

    ?Beats Headphones are considerable for achievement with monster tones, which suggests you need to think about benefit of them

  • Robin

    The headphones look great and sound great, but they sometimes dont work that great. So if a mogul like Dr. Dre. is going to grace the label with his name, in addition to reading the sales figures, he should be reading the reviews about them as well. There is a consistent problem with the left ear bud. Review after review indicates there is something wrong with it. In spite of that and because of my 25 year love for Dr. Dre and my 15 year old baggering me. I got him some for x-mas. Boom! February the left ear bud is out. Now I have to send them back to the manufacturer, because best buys 30 poilicy is expired and the manufacturer had the audacity to ask that I pay to ship their defective headphones back!!! After we got past that and he sent me a fed-ex label, I mailed them back and they sent another one in a very expeditious manner. Lets pray this is a good one. I want to support Dr. Dre, I am just saying that is a lot of money to spend on earbuds that only work for less than two months.

  • Bob B.

    Great Article! If your interested in celebrity endorsed headphones then i would check out http://www.celebheadphones.com. It is a website devoted to news, updates and reviews on all the latest headphones that are coming out are being endorsed by all kinds of celebrities.

  • http://www.monster-beatsheadphones.com cc.koud

    We sell in great quantities cheap monster headphones, for example:beats studiobeats tour.

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