Beats Dumps Monster Over Headphones

Peanut butter and jelly, unicorns and glitter, Beats Electronics and Monster. One of these things just doesn’t belong, one of these things is not like the others. After a five-year collaboration, the two companies have terminated their relationship but do hope to remain friends.

According to Businessweek, the breakup came about due to an irreconcilable dispute between Beat’s Jimmy Iovine and Monster’s Noel Lee over which company deserved more credit for the brands 53-percent share of the $US1 billion headphone market during the last year. As such, Beats has opted out of renewing its manufacturing contract with Monster when it expires later this year.

Monster takes credit for the design and production “They wanted to do speakers and I said, ‘The new speaker is the headphone,’ ” says Lee. Beats, on the other hand believes its celebrity connections helped market the devices as high-quality status symbols. “Now a big part of what you’re paying for is the brand and fashion,” Ben Arnold, director of industry analysis for NPD, told Businessweek.

It’s still too soon to see who will ultimately come out ahead from this. Beats Electronics remains the preeminent brand for twentysomethings. Monster on the other hand will have to find a way to replace the lost revenue — reportedly 60 per cent of its of privately held revenues and profit. Its recently announced partnerships with fashion brand Diesel and Radio Shack should do nicely though. Those products are expected to hit shelves later this year. [Businessweek via CNet - Photo by Elsa/Getty]