Apple (AAPL) Paid $500M for Beats Music

Nothing 'beats' a good deal. Just ask Apple (Nasdaq: AAPL).

The WSJ said Apple is shelling out $500 million for Beats Music and $2.5 billion for Beats Electronics. Beats Electronics had sales near $1.3 billion in 2013 and was profitable.

However, Beats Music has just 250,000 paying subs (which is likely to increase with the Apple deal over the next few months) which pay $10 per month for the service. Comparatively, Spotfiy has 10 million paying subs globally and recently raised $250 million for a valuation around $4 billion, or about $400 per subscriber. That valuation would translate to Beats Music being worth around $100 million.

Those with knowledge of the deal caution that valuation behind Beats Electronics and Beats Music should be taken lightly as both are backed by different investors.

Additionally, Apple CEO Time Cook said that deal wasn't about growing the current Beats business model so much as it was about getting the right people.

In any case, $3 billion is really just a blip on the screen for Apple and investors are surely confident in the company's long-term strategy. Bolstering iTunes with the right talent to ensure its growth might also be a priceless undertaking for the company.

Shares of Apple are up in early trading.

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