MOG Founder Sues Beats For More Than $20 Million (Report)

 

 

 

 

 

 

 

By Paul Bonanos, San Francisco

for Billboard.com

David Hyman, the founder of streaming music service MOG, has sued Beats Electronics for more than $20 million, claiming that Beats fired him to avoid giving him an equity payout, according to a report from Courthouse News Service.

News of the suit arrives as Apple is reportedly closing in on a deal to acquire Beats for $3.2 billion. Best known for its headphone and portable speaker business, Beats also operates streaming music service Beats Music, which stems from its acquisition of MOG in 2012.

MOG creator David Hyman, a serial entrepreneur who was also once CEO of Gracenote, claims in the suit that Beats dismissed him in bad faith, knowing that he would receive 2.5% of the company under an incentive plan based on the duration of his employment, according to the report. The suit names Daisy LLC as a co-defendant, the report said; Beats Music was code-named Project Daisy before its launch in January.
The first 1% was to arrive on his first anniversary as CEO, according to the report. Hyman's LinkedIn profile says he was employed by Beats for seven months, from May to November 2012. He has since revealed that he was interim CEO of Pono, the high-quality audio project of Neil Young, for four months before becoming chief executive at stealth start-up Chosen.fm last September.

Instead of retaining him until he received his equity stake, Beats reportedly fired Hyman for attempting to terminate a problematic employee. But Hyman claims Beats was intentionally depriving him of his fair equity compensation in the process, according to the report.

Hyman's departure from Beats was considered a surprise at the time. Beats hired former Topspin CEO Ian Rogers to replace Hyman in January 2013.

It's not yet clear how Hyman arrived at the $20 million-plus figure he􀁠s reportedly seeking as compensatory damages. The suit says he would be due 25% of the company's shares if it reached a fair market value of $500 million, the report said.

Hyman and Beats could not be reached for comment at press time.

Will Dr Dre and Jimmy Iovine Become Apple's Newest Execs?

 

Dr. Dre and Jimmy Iovine

 

by M. Quintero-Moore

According to sources close to the Apple/Beats' $3.2 billion acquisition talks, Apple may announce Dr. Dre and Beats’ co-founder, Jimmy Iovine as its latest recruits during the Worldwide Developers Conference (WWDC) scheduled for June 2-6 in San Francisco. The event is an opportunity for engineers and application developers to get a first look at Apple's most recent developments with their operating platforms.

The much talked about deal is expected to be announced later this week, and insiders are fairly certain Dre and Iovine will join the makers of the iPhone and iPad in some sort of executive roles, which has yet to be determined or confirmed.

Billboard Magazine's sources believe that Dre and Iovine would likely oversee all of Apple's music strategies, and handle relationships with labels and publishers. Which makes sense since Apple's download sales took a 13% nose dive in Q1 2014 and has continued a slow but steady decline. Not a promising future for Apple's iTune store is the leading digital music store within the U.S. with over 70% of song and album download sales. Now, Apple is looking to get a share of the subscription streaming market as part of their portfolio.

Dre is no stranger to WWDC (sort of). It was almost ten years ago that he appeared in a live video link to congratulate Steve Jobs when Apple launched the iPod and the iTunes store.

The Apple/Beats deal is expected to take about two months to close, and the company might wait till the closing to unveil the executives as Apple employees.