How Dr. Dre Made $300 Headphones a Must-Have Accessory

Just a few years ago, spending $300 on headphones was the exclusive domain of artists and producers. Now, musicians who aren’t sticking their name to a pair may seem tone deaf.

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Beats by Dre

Just a few years ago, spending $300 on headphones was something only a handful of artists, music producers, and audiophiles would even consider. But that was before a hip-hop legend got involved. These days, headphones — specifically ones that cost hundreds of dollars — are one of the fastest growing categories in the consumer electronics industry. And musicians who aren’t sticking their name on a pair are starting to seem tone deaf.

At last week’s Consumer Electronics Show, rapper 50 Cent made an appearance. So did LL Cool J, Lemmy from Motorhead, and Ro Marley, son of late reggae musician Bob Marley. Even the “Jersey Shore’s” Snooki and New York Jets quarterback Tim Tebow stopped by. And all of them were hawking really expensive headphones.

Over the last several years, the premium headphone market has exploded. According to retail analyst firm NPD Group, U.S. sales of headphones that cost $100 or more increased 73% year-over-year in 2012, far outpacing sales in the headphone market overall. Premium headphones now make up 43% of all headphone sales, and consumers who make the leap to high-end headphones don’t seem to be regretting the decision: Those who own premium headphones have an average of 2.3 pairs, according to NPD.

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The biggest player in this market is Beats by Dre, the company founded by Dr. Dre, co-founder of the seminal hip-hop group N.W.A., and music producer Jimmy Iovine. The company captured 64% of the $100-and-up headphone market in 2012 (as Dre earned a reported $110 million, thanks mostly to Beats) by ushering in a new way of thinking about music marketing and consumer preferences. But back in 2008, when Beats released its first pair of headphones, it was far from certain that consumers would bite. “People thought we were crazy,” says Beats by Dre CEO Luke Wood. “They said the marketplace would never support a $300 headphone.”

Industry analyst Ben Arnold, of NPD Group, says that the premium headphone market is being driven in large part by the rise of smartphones and tablets. As more consumers shift toward listening to music on mobile devices, high-end headphones — essentially mobile hi-fi speaker systems — are a logical hardware extension for most users. In the early days of this transformation, Beats’ founders had realized that low-fi MP3s, often played through laptop speakers or inexpensive “earbuds,” were becoming the standard mode of consuming music — and that the resulting sound quality was often sub-par and certainly not the way artists, producers, or music lovers wanted their music to be heard.

At the same time, everything else in the tech world was improving: TVs were going high-definition, phones were getting smarter, laptops and eventually tablets were becoming more powerful. Sound, however, was being left behind. “Audio was completely ostracized as graphics cards got better, processing power got better, screens got better,” says Wood. “Audio was put on the back of the bus.” Before the big legacy brands even realized what was happening, Beats was there to fill the void.

It’s unlikely Beats would have come to dominate the category based on sound quality alone, however. Beats by Dre headphones have generally been praised for their audio quality and design (even if some consumers are turned off by the notoriously bass-heavy sound). But the company’s greatest innovation may have been its success at making headphones as much fashion accessories as they are listening devices. “If you’re wearing a pair of Beats, it says, ‘Music’s really important in my life,’ says Wood. “I’ve seen people wearing them at parties with hundreds of people, and they’ve got their Beats around their neck. It’s no different than somebody wearing a Run DMC T-shirt and Adidas shoes, or the guy who always wears a Metallica T-shirt.”

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It helped that the company’s headphones have shown up in countless music videos, including Lady Gaga’s hit “Poker Face,” and in NBA locker rooms, including around LeBron James’s neck. That was another of Beats’ business coups, says Arnold: “They tried something new with the artist endorsement model.” Beats quickly began seeing triple-digit sales growth as Justin Bieber, Lady Gaga, and James all lent their names to headphone models made by Beats.

The question now appears to be whether Beats can maintain its market dominance, the company’s successful formula having spawned the next generation of competitors. Rappers Jay-Z and Ludacris each have their own line of headphones through Skullcandy and Soul, respectively. In September, former “American Idol” judge and “X Factor” creator Simon Cowell released branded headphones made by Sony. Monster has teamed up with rapper Nick Cannon and Noel Lee of Earth, Wind & Fire, and also sells a Miles Davis Trumpet headphone. Just this month rapper 50 Cent announced a new headphone partnership with Timbaland.

Even non-musicians are getting involved. While Beats has created Powerbeats headphones for LeBron James, Soul’s Tim Tebow and Usain Bolt headphones both debuted at last week’s Consumer Electronics Show. And of course Snooki was on hand to hawk headphones at CES. Believe it or not, though, the onslaught of cross-branded premium headphones may be just beginning. Monster recently launched a line of EA Sports-branded headphones for sports video gamers, as well as a pair in partnership with luggage brand Tumi. Denon has released four types of high-end headphones geared toward different lifestyles, including one for exercising.

Meanwhile, Beats isn’t standing still — and doesn’t want to be considered merely a headphone company. It recently expanded into audio systems for cars, computers, and smartphones, and in October released several stand-alone products, including a $200 Bluetooth-enabled wireless speaker called the Beats Pill.

Are there any more big hits in pipeline? CEO Woods won’t say what’s next. “In the music business, you put out a record when it’s done,” he demurs. “And that’s kind of how we look at our product.”

MORE: Dr. Dre Is World’s Highest-Paid Musician: Yes, It’s the Headphones

68 comments
miminuraini23
miminuraini23

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pierdrce
pierdrce

Yet another scheme marketed toward children and the weak-minded. Like any fad they'll fall out of favor soon enough. Do yourself a favor and get a decent pair of noise cancelling headphones; which you can find for around $15. There may be a slight difference in quality, but it certainly won't be a $285 difference.

robilmc
robilmc

Seriously folks, there's probably 15 pairs of cans in that price range that would have you throwing rocks at Beats. Sennheiser, HiFiMan, Grado, PSB...

Take a chance and DON'T follow the herd.

HansFranz
HansFranz

I have a set of Ultimate Ears that will give you 50x the audio quality while saving you a lot of money. I'm an auidiophile. I listen to 2+ hours of highly-discernible music each day. Beats are good for the daily user (over-priced), but if you are serious about music then fashion does not enter the equation. Use Ultimate Ears or maybe Klipsch earbuds. PS. I  haven't used Klipsch earbuds, but I have used tons of their audio products over the years and know they are a committed auidophile brand. Pro quality + from everything I've seen.

I_AM_Finance
I_AM_Finance

The beats headphones are great for iPods, iPhones, and portable audio players. They deliver the full sound that you're supposed to be hearing. Being powered headphones you also get increased volume. The ear cups for beats by dre are well padded, providing a high level of comfort for prolonged listening. The right ear cup has a mute button hidden behind the "b" logo, whilst the left ear cup houses the noise cancelling switch.

lucys
lucys

The Beats and the bose headphones which is better i really want to know.some one tell me i can go for choose the beats by dre headphones from www.usbeatskey.com but i doubt its real or fake.now i saw the news.and i think i can know more about beats headphones

jkantor
jkantor

Real DJs don't use Beats. 

stephon9722
stephon9722

I personally just have a pair of beats solo hd headphones I paid roughly 120 with warranty out of best buy using the gftcards my mom gave me for xmas. I purchased these headphones because A I wanted a product that I could get locally so if anything went wrong I could just get a warranty and take theam back so possible headphones  I could have gotten offline which most likely would have been better where off limits. And B the fact that whenever I was a kid I use to modify my music before burning a cd for my cd player just so I could hear more base. With that being said because I love base the product suited my needs especially for what I payed for the headphones. I was not expecting anything great I mean come on for christ sakes they have a name of a rapper on theam and the way they look to me told me they did not really have anything to offer but a fashion statement. So no im not the typical person who ran out and purchased theam because of the name on them or because lady gaga was wearing a pair for 5 minutes. I'm actually expected theam to break one day o well I knew what I was purchasing. And I plan on buying me a pair of audio technica m50's to replace em. But at the end of the day I love base so they suited my needs. Im happy with what I purchased. Would I recommend them to anyone nope they just have too much base for the average consumer

ThomasKingi
ThomasKingi

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haifisch.9000
haifisch.9000

This article is so misinformed it make me laugh.  Every time I see "premium" in relation to these over priced headphones I can't help but chuckle.

Beats are basically Bose for little twerp kids. "Yea bro my Beats are so sick listen to that sick bass coming from my compressed MP3"

But that's okay, because ignorance is bliss and the people are happy with their crap products and will defend to the death that their $150-$300 purchase was justified because of so called "premium" sound quality that comes out of the headphone jack of their ipod or smartphone...

Meanwhile if you ask them what line out is they don't know, ask them if they use an amplifier and they tell you about the walmart special in their trunk....and forget about asking them if they know what a DAC is or even if their audio is lossless or FLAC.

So I say let the sheep enjoy their Beats, Bose, Souls, or whatever the hell else.

I'll be over here with my BeyerDynamic, Grado, AKG, Fiio, and all the real premium products, enjoying my lossless audio that doesn't sound like someone left a faucet running in the background.

Simkatu
Simkatu

Black guy sells stuff for 50 times actual cost and markets them to the poorest of the poor inner city youth?  Why not?  That's how you become a billionaire.   Wouldn't it be great if you could reward teachers as much as we do rap stars that sell jeans for $200/pair and sell $10 headphones for $300?   

LouAnnWatson
LouAnnWatson

still made in china, where the workers make about $10 a day...guess the tragically hip really don't give a crap after all when creating their "vibe". the joke is on them...most peoples taste is in their mouth. wonder how many owners have an obamaphone? is that a fashion accessory?

DavidPooley
DavidPooley

more shit headphones that going to full to bits like my dre beats pro the only thing bout them that's pro is there the biggest piece of shit going 

RhymesW.Right
RhymesW.Right

What annoys me about these over-priced electronic accessories is that it seems that every third kid at the school where I teach -- a school where 80% of the kids qualify for free or reduced lunch -- is walking around the hall with these cuffed around their necks.  And yet at the same time these kids tell me that they cannot afford basic school supplies like paper and pencils!

JimmiCai
JimmiCai

What Monster had created is not all about the "quality products" that you can buy.
Even though we all want quality products that serves it's purpose, many of us still care about our appearances more.

Putting a name on the product would have people want it more because they think the artist name makes it more special than the rest.
Making the headphone stylish would attract those who are willing and like the style.

You might say "who would spend $300 just for that? That's such a waste of money."
Oh, trust me, people do it all the time. Examples: Coach, Gucci, Rolex.

We all want to look good. Therefore, the headphone is more of an "for show" than for use. So what Monster had created is really what people wanted. This is why Beats by Dre is such a successful part of Monster. It makes sense, because Dr. Dre is a successful producer and is well known in the States.


P.S.
The slogan of the Beats brand, "Sound matters", is such baloney.
The audio quality of Monster is crap for the money.

JaneLimMadjuki
JaneLimMadjuki

Me and my brother had beats by dr dre studio. guess what, it didn't even last for a year or half. lol 

TAZinTLH
TAZinTLH

Because many Americans have to be able to say they have those big name items.  PATHETIC. This is why the rich get richer and the poor get poorer.   DO NOT listen to their propaganda.  

JohnFournier
JohnFournier

So when... oh when are they going to fix the Dr Dre Wirless headphones so they actually work asd they should?  Mine, and others, just dont hookup on BlueTooth as they are supposed to with the iPhone5 and IPad2!  Nice $300.00 gift if they only did what they're supposed to.  And No One is providing a good answer!  Arrrgggg....

benton
benton

I'm buying AKG 450 NC. They're pretty pricey ($250) so I hope they live up to their reviews. At least they aren't Beats.

aurorafisher64
aurorafisher64

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quesomal
quesomal

No thanks, I'll keep my Grado's.

Clark_Nova
Clark_Nova

Anyone with experience with high quality headphones will tell you that these headphones are of phenomenally low quality, all bass with little or no high end extension. Their sales numbers have been a long running joke in the serious audio community, the real joke being the IQ of thjose who buy them. 

LesMorpions
LesMorpions

Actually, anyone walking around wearing big headphones on the street or in social gatherings looks like a complete moron. The only people who think it carries a message are other morons. It's how morons communicate with each other. Through fashion. 

CarlosMendoza
CarlosMendoza

AKG makes some of the best headphones around and they don't look silly and cheap.....

aaronbenedetti90
aaronbenedetti90

@I_AM_Finance

Are you just copy & pasting the advert or something? They are trash, just like everything else that relies on countless celebrity endorsements to get sales......

The artists DO NOT intend you to listen to their music with overpowering bass that distorts the rest of the track.....

RobertHorvat
RobertHorvat

@lucys
Just try some Sennheiser, V-Moda or Audio-Technica headphones.
Beats and Bose are over priced, over hyped and both sound awful for the price they are asking.

robilmc
robilmc

People with good taste and decent hearing don't use Beats.

ThomasKingi
ThomasKingi

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lionofbedstuy
lionofbedstuy

@Simkatu Dr. Dre is the face of the brand but Jimmy Iovine has been the facilitator of Beats' growth. And inner city youth comprises a surprisingly small section of Beats overall consumer base.

kaj.dijkstra
kaj.dijkstra

@JaneLimMadjukiIf you need indestructible headphones with serious quality i would recommend the Senheiser HD 25, I think mine will live longer then myself :D They are the best thing i ever bought in my life Seriously :) It are like the audi's of headphones :) also if something would break(what I can not imagine) you can even buy the parts separately. 

lionofbedstuy
lionofbedstuy

@TAZinTLH Beats are even more popular overseas. Europeans, Asians, Brazilians and Australians are avid consumers of Beats headphones.

Clark_Nova
Clark_Nova

@TAZinTLH The rich get richer and the poor get poorer due to the inherent internal contradictions of capitalism. 

nontonite
nontonite

@Clark_Nova - Do you have any suggestions?  I'd like to get a pair of nice sounding (with bass AND high-end) headphones.

Thanx!

GerardSimons
GerardSimons

@Clark_Nova Agree. Seeing that people want to shell out some more money for headphones to experience life beyond the iPod buds is great. For a little more money, you can improve your audio experience a lot, but for the love of god, don't buy any of these. Obviously all the money goes to the artist instead of the quality of the headphones, why else would they put their names these ridiculous products if not for the money?

ThomasKingi
ThomasKingi

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haifisch.9000
haifisch.9000

That would be why I said lossless or FLAC, same thing but two ways of saying it. Learn to comprehend what you read genius.


Clark_Nova
Clark_Nova

What's your budget and do you prefer open or closed style phones? For cheap, you can't go wrong with Koss Sportapros, Portapros  or KTX-PRO-1 Titaniums. For a bit more, look at Grado SR-60i and SR-80i. If you want to spend some bucks for a totally indestructible and extremely musical set, consider the Sennheiser HD25-1, Mk II. The low impedance version of the AKG K-240 is also a very good deal..  @nontonite @Clark_Nova 

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