black people and money

Cheap? Beats by Dre Headphones cost just $14 to make

Cheap? Beats by Dre Headphones cost just $14 to make

by Dr. Boyce Watkins

It looks like Dr. Dre might have pulled off the heist of the century.  The rapper became big news after signing a massive deal with Apple to sell his “Beats by Dre” line of headphones for a stunning $3.2 billion dollars.  The headphones have been branded as “premium” in a series of ads and celebrity endorsements that have created the perception among consumers that they are among the highest quality.

But this may not be the case.  Although the sound quality is considered good by those who love the brand, the product can also be put in the same category as Air Jordan sneakers, products that have a modest production cost, (and could be sold for a lower amount) but have been branded to urban consumers as enough of a fashion statement that people (even the poor) are willing to pay as much as 20 times the value of the original asset.

A New York Times  story estimates that the headphones, which sell for as much as $450, only cost $14 to make.   Also, Time Magazine ranks the headphones as the second to worst out of 18 brands that they reviewed in a recent article. 

The moderate quality of the product hasn’t stopped consumers from eating them up, primarily because they have become a status symbol.  The brand had $1.8 billion in sales last year, and have made Dr Dre, Jimmy Iovine and The Carlisle Group filthy rich.  

Financial Juneteenth lessons from this story:

1) Marketers are trained to play with your head.  They create value where there is none and sometimes play on your own inadequacies or need to impress the people down the street to get into your pockets.  The more you are easily influenced, the more they will get you to let go of your money.  This works well on black people because we’ve been taught to believe that we can purchase our dignity.  This is not a mentality that leads to wealth building, and will only lead to the accumulation of material possessions of questionable quality.

2) African Americans are often fooled by over-priced brands, largely because hip-hop has bred a culture of mass materialism.  Making matters worse is that many of the companies that charge high prices for low value commodities are not very interested in hiring black people, working with black suppliers or giving back to the communities from whom the wealth is extracted.  So, while Dr Dre may be able to benefit handsomely by selling his Compton-based street credibility around the world, he and his handlers scoff at the idea of using their vast resources to solve the very serious social problems which exist in the city of Compton.  They are able to get away with this because many black people are naive enough to allow it.

Dr Boyce Watkins is a Finance PhD and author of the book, “Black American Money.”  To have Dr Boyce commentary delivered to your email, please click here. 

  • black people and money

    FJT aims to be the information hub that empowers Black wealth creation. We are behind FJT's fresh & insightful content that helps you think, learn, laugh, and move towards action to create a stronger Black community.

    More in black people and money

    rich_2

    America’s 100 Richest People Control More Wealth than the Black Population as a Whole

    sstantonFebruary 12, 2016
    screen_shot_20160210_at_10_1.png.CROP.rtstoryvar-large

    Serena Williams Helps Build A School In Jamaica

    sgreyFebruary 11, 2016
    2016-02-05-1454691629-7626899-HarryH.PaceBlackSwanRecords

    Financial Lessons Learned From The First Ever Black Owned Record Company

    sgreyFebruary 11, 2016
    featured-image

    Do State-run Welfare Systems Hurt Black Families?

    sstantonFebruary 10, 2016
    th

    Dr. Sinclair Grey III – Put Your Black Dollar With Black-Owned Businesses

    sgreyFebruary 10, 2016
    PHOENIX - DECEMBER 19:  (FILE PHOTO) Gilbert Arenas #0 of the Washington Wizards sits on the bench during the NBA game against the Phoenix Suns at US Airways Center on December 19, 2009 in Phoenix, Arizona. Arenas was charged with a felony after he brought a handgun outside of his home without a license to the Verizon Center on December 21, 2009 in Washington, DC. NOTE TO USER: User expressly acknowledges and agrees that, by downloading and or using this photograph, User is consenting to the terms and conditions of the Getty Images License Agreement.  (Photo by Christian Petersen/Getty Images) ORG XMIT: 95653773 GTY ID: 42043CP021_WASHINGTON_WI

    Dr Boyce Watkins: Gilbert Arenas might go to prison for being a complete idiot

    FJT StaffFebruary 5, 2016