Beats by Dr. Dre

NEW YORK (AdAge.com) -- "Fuck sneakers, let's sell speakers." That was Jimmy Iovine's reaction when his friend and multiplatinum recording artist and producer Dr. Dre told him his lawyer had just informed him that a sneaker company inquired about partnering on a shoe line. "Romantic start to the company, right?" Mr. Iovine joked. Maybe not romantic but, like Mr. Iovine, it was right to the point. And aside from helping launch a line of headphones, it helped launch a crusade to fix the entire ecosystem of music, which Mr. Iovine describes as a "disaster sonically." Understanding that the majority of society's entry into music was via portable devices such as iPods, Mr. Iovine said his and Dr. Dre's goal was to create a headphone that would bring listeners as close to the recording studio experience as possible. Over the past year, the high-end Beats headphones, which cost anywhere from $99 to $450, have slowly started replacing the ubiquitous white ear buds sold with iPods. Working with consumer-electronics accessories manufacturer Monster, the two co-founders spent two years perfecting the product. And, as is usually the case with anything related to the hip-hop industry, the headphones became a hot commodity through organic means. Everyone from Michael Phelps and the entire USA Basketball team to Lady Gaga and will.i.am was seen wearing the headphones. "We aren't buying a lot of ads," Mr. Iovine said. "We market it our way. We're from the music business where you never get a lot of money to market." The approach is certainly working. In 2009, the first year the products were available, the company moved 400,000 pairs. This year it expects to sell 1.3 million pairs. Beats is also the top-selling headphone in the 17- to 35-year-old demographic. But Mr. Iovine and Dr. Dre aren't stopping at headphones. The two are now working with Hewlett Packard and will be releasing 5 million PCs equipped with HP Beats Audio inside. Beats also has partnerships with Apple and Best Buy and has had artists and celebrities such as P. Diddy and LeBron James design their own line of Beats headphones.

Beats by Dr. Dre

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