Apple must know something about beats that nobody else does, otherwise there is no way it's genius.

Again, this is false. Its not about "know something" its about "do something". A market-expansion play into high-growth (new) demographic is all about leveraging the existing asset base @ apple. It's not about "knowledge", its about "leverage"...and the only people who can leverage apple's existing products and asset base are...apple.

The counter-argument to targeting the "urban market" if you believe (potentialy race-tinged) NY/london advertsining and marketing professionals....is lack of buying power in this "non abc1" demographic.

But Beats has succeeded--seeling expensive price-point goods (ie, apple's specialty) into this market. That is a HUGE mark of success for beats...the fact that they are selling "junk" at high-mark-ups just underscores their marketing genius.

TLDR (1) apple is buying the marketing genius; (2) that genius already selling at Apple-esque price points; and(3) into a growth-demographic where apple lacks strong histrical expertise.