In case you’ve been living under a rock for the past week, or studying for finals, you should know Apple (AAPL) is currently pursuing a deal to acquire Beats Headphones. Made iconic by celebrity co-founder Dr. Dre, and countless athletes, Beats headphones have become a popular consumer device among young Americans. If the deal were to go through, Apple would spend $3 billion of its cash reserves. While this may not seem like much, given Apple holds roughly $150 billion in cash, experts are hesitant to label the deal a “sure thing,” mainly because of Apple’s reluctance to acquire companies, especially popular brands.

Investors have recently increased pressure on Apple CEO, Tim Cook, to spend, and not sit on, its $150 billion. Apple has since earmarked about $30 billion to repurchase its stock, which has led to a sharp rise in the value of Apple shares – now approaching the $600/share mark. However, shareholders also want to see continued growth and innovation. While Apple is still the most valuable company in the world, its products have become somewhat redundant. Apple’s acquisition of Beats could give it much-needed cultural resurgence.

Beats was envisioned by entrepreneurs Dr. Dre and Jimmy Lovine, who have both made the company an easily recognizable brand. Since its founding, Beats headphones have been publicly paraded by countless athletes, from LeBron James to Richard Sherman. The customized lower case “b” emblem embodies the iconic Beats brand, much like Apple’s logo. Even more impressive, Beats has accomplished this without any formal sponsorships. For example, according to ESPN, the company gave a free pair of Beats headphones to basketball superstar LeBron James before the 2008 Olympics. When the 2012 games rolled around, James asked Beats to make a custom pair for everyone on the team.

Such advertising brilliance did not stop there. Given this concept, Beats has continuously produced numerous custom headphones. At the request of Spike Lee, Beats built customized headphones for the entire New York Knicks basketball team. By giving popular athletes free headphones, Beats has cheaply monetized its brand. Athletes, idolized worldwide, can now be seen wearing Beats headphones wherever they go.

Regardless of this marketing phenomenon, why would Apple really purchase Beats? Some reports state that Apple wants to introduce a new, cheap smartphone that incorporates Beats’ technology (much like HTC did during its partnership with Beats). Others speculate that Apple plans to turn Beats headphones into smart headphones, so as to be paired Apple’s upcoming iWatch.

However, most believe Apple is interested in Beats because of its popular, subscription-based streaming service. There is no doubt that iTunes, and the concept of buying music, is outdated; the evident future of the music industry involves the streaming of songs. In 2013, streaming services accounted for 21% of revenue in the music industry. This is triple the mere 7% streaming services accounted for in 2010. If Apple were to integrate the Beats streaming service into its phones, millions of iPhone users would have a top music streaming service at their fingertips.

Beats is currently a small player in the music market, with some 200,000 paying members, compared to market leader Spotify’s six million paid subscribers. Although Spotify rules the streaming market as of now, Beats’ streaming service on Apple devices could easily become the most used music application, worldwide.

In just a few years Beats has gained control of the market for high-end headphones, selling more than twice the products of its closest competitor, Bose; not to mention that Beats is also highly profitable. If analysts think Apple’s purchase is crazy, then Facebook is “insane” for buying WhatsApp, a profitless messaging company, for $19 billion. Beats is a leader in many appealing markets, and Apple is a revolutionary company (or is it?). Thus, such an acquisition appears highly feasible.

If Apple is looking to diversify its product portfolio, purchasing Beats is a step in the right direction. The music industry is a huge part of Apple’s business. By purchasing Beats it receives a revolutionary streaming service, large revenue stream, and massive brand awareness, not to mention headphone designs and patents. For Apple, this deal has only upside potential. Beats has made incredible progress over the past decade, it took the headphone industry, and now the music industry, by storm. Apple could capitalize on Beats’ success and use its own marketing muscle to make Beats even more powerful. Additionally, if they are able to enhance Beats’ streaming service, and place it on iPhones, this acquisition could revitalize Apple’s identity.