Boy, Jimmy Iovine can talk.
The Apple Music boss and Interscope founder speaks for just a few segments of the 30 minute video below, but manages to aim multiple fierce potshots at freemium music models.
That, for those who aren’t keeping up, means Spotify.
Iovine was interviewed at the Vanity Fair New Establishment Summit in San Francisco this week, alongside the CEO of HBO – and an exec who briefly worked with Iovine in the past – Richard Plepler.
Before we examine what was said, you should probably know that Jimmy Iovine’s friend and a man who’s shown circumspection about freemium in the past, Lucian Grainge, was in the audience.
Where to begin?
“Free is a real issue. The whole thing about ‘freemium’; maybe at one time we needed it. But right now, to me, it’s a shell game.”
Jimmy Iovine, Apple
Iovine starts off placid enough, remembering an era around the turn of the century when he’d just sold to Universal.
“It was an extraordinary time,” he says. “Then all-of a sudden the great invader from the North, Napster, came along.
“And it was, ‘Okay. What do we do with this? I panicked. I started to get into tech… I met all the companies, tried to understand it.”
From there, Iovine launches a flagrant attack on Spotify (without mentioning Daniel Ek‘s company by name).
The Apple exec, whose service has a free trial but not a free tier, blames an acceptance of the freemium model in the music biz for, amongst other things, contributing to the death of the worldwide superstar artist and the fact the album is being “beat up”.
“We have a problem in the [music] industry, I believe – this whole ‘free’ issue,” says Iovine. “The television industry doesn’t have it, the movie industry doesn’t have it, but the record industry has it.
“[Spotify and other freemium companies] are building an audience off the back of the artist.”
“In my personal opinion – this is not Apple’s opinion – free is a real issue. You have to build a service [like Apple Music] in order to get over ‘free’.
“This whole thing about ‘freemium’; maybe at one time we needed it, but right now, to me, it’s a shell game.
“What these companies are doing is building the old-school traffic.
“They realise, okay, Snapchat has 100m people, it’s worth $16bn. So if I have [100m] people and a model that has subscription as well, what’s my company worth?
“They’re building an audience on the back of the artist.”
He continues: “That bugs me. It’s a shell game. It’s like ‘we need this’, but they don’t really need it because we [Apple] don’t have a free service.”
Iovine then makes the super-confident claim that if Apple did launch a free music service to rival Spotify “we’d have 500m people” using it.
“But we don’t want to do that,” he says. “We believe we’ve built something powerful enough and strong enough to work.
“If you’re an artist and you put out a record – most artists only have one or two hit records – that has 100m streams, on certain services you only get paid on 75% of those streams.
“How’s an artist going to live like that? So then they say: ‘Okay, I’m not going to make any money out of records, so I’m going to go on tour.”
“If apple had a free [music] service, we’d have 500m people using it.”
“I had some really big acts about five or seven years ago [at Interscope] and I’d say, ‘Come off the road.’ And they’d say, ‘But we don’t make any money on our records.’
“And I’d say: ‘Well your next record’s going to be a flop, because Bruce Springsteen, Pink Floyd, The Rolling Stones – all those records you love – those guys took a year, year-and-a-half off to make their albums.’
“What I’m hearing now from the labels is ‘We don’t have enough worldwide superstars.’
“Well there’s a good reason for that: the records are taking a backseat to all the touring. And they should at least be equal.
“They’re not right now, and you’re seeing the album being really beat up.”
Spotify would surely counter that, when it comes to the record labels, its model is working.
Not only has freemium encouraged 20m people to pay for the Swedish service so far, amongst a total active audience of 75m, but the recent record fiscal results of Universal, for example, show the impact that this growth – low-overhead growth for the music business – is having on the bottom line of record companies.
Iovine is inevitably asked where Apple Music is up to in terms of subscribers. And, inevitably, he doesn’t give much away.
“I can’t bullshit,” he says. “I have an express [train] from my brain to my mouth, so I have a problem. But Apple has taught me to not to give out numbers really well.
“I wouldn’t be here if apple music wasn’t going really well. We have a couple of issues, some stuff we really have to work on.”
“I can tell you I wouldn’t be here if it wasn’t going really well. We have a couple of issues, some stuff we really have to work on, but we’re three months old.
“When you work at Apple, everything you do is [publicly scrutinized]. You’re in the window of Bloomingdale’s, there’s no beta…”
Just for the ledger; he said it. “We have a couple of issues… some stuff we really have to work on.”
The wider argument from Iovine at the Vanity Fair event hung on the idea of cultural incompatibility between tech companies and music companies, something he says Apple is trying to bridge by hiring “300 lunatics” – presumably referring to those with some kind of curation/A&R responsibility – to work on Apple Music.
He doesn’t miss the chance for one more dig at Spotify here.
“Bottom line is most media companies are technologically inept, and most technology companies are culturally inept,” he says. “Just because you go to Burning Man, it doesn’t make you Hunter Thompson.
“The media business needs to have real tech people and give them stripes, and the tech people stripes in their company, otherwise it’s always going to be [conflict]… it’s going to keep being the Star Wars bar in Tatooine.”
He adds: “The thing we’re trying to do at Apple Music is merge utility with culture. Most of these services are [just] utilities.
“Subscription in music in my opinion will not scale, in my opinion, just a utility. You have to merge these worlds. And when you do you’ll become of service.
“And therefore people will pay for it.”
(Is Spotify just a ‘utility’? That all comes down to whether it’s becoming ‘of service’ to music fans beyond simply providing millions of tracks. A billion plays for its Discover Weekly feature so far challenge Iovine’s assertions.)
Iovine also isn’t shy in addressing Taylor Swift-gate: the fateful Sunday when the superstar publicly told Apple that she would refuse to put her music on its service if it continued to refuse to pay musicians a bean during Apple Music’s three-month free trial.
“Just because you go to burning man, it doesn’t make you hunter thompson.”
Apple buckled, signing deals with independent labels the following week that included a guaranteed royalty payment for the trial.
Some suspect that the Taylor Swift open letter was something of a PR stunt; that Apple and the artist’s team had already agreed the Cupertino giant would fix the problem before Swift’s blog was issued.
But Iovine doesn’t tell it that way. He says the process was an allegory for Apple’s friendliness towards creatives.
“It was Father’s Day; for Father’s Day I got espadrilles and Taylor Swift.
“Eddy Cue called me up and said: ‘Wow, that’s an incredible letter, look at this thing. I said ‘yeah’. I looked at it at 6.30am. I said, ‘What are we going to do?’ And he said: ‘Well we’re going to respond.’
“He called up Tim. This is Apple, the biggest company in the world. We worked all day Sunday – Eddy, Tim and [me] – and they dealt with it on the spot on a Sunday morning on Father’s Day.
“It was unbelievable. They moved like lightning. I was really impressed, Taylor was impressed. And they did the right thing, more importantly.”
Any other digs at Apple Music’s rivals up Iovine’s sleeve? Sort of.
He expresses concern at the over-sharing nature of many modern artists online.
“Music [used to be] No.1 and No.2 in most young people’s hearts. If you said to a teenager, okay, you failed math and [as a punishment you’re only allowed] two apps on your phone – neither one of them would be music.
“That scares me. I have no research but I just feel that from living every day.
“A lot of that is because [music] is so ubiquitous… First of all, Instagram is not the greatest thing [for artists]. Do I really want to know that Jim Morrison is shopping right now?
“No! I want to think he lives like [the image of a rock star]. That chips away at mystique… the label’s responsibility is to figure out a way… to rebuild that thing.”
“[YouTube] is 40% of the consumption of music and 4% of the revenue. That’s a problem. That’s bullshit!”
It’s a convincing statement – but quite an odd one from a man whose new music app contains a channel, in Connect, specifically designed to allow artists to share moments from their day across various media.
Iovine is also asked about the idea of tech giants like Apple becoming content owners – a decision he and Plepler both joke is “above our pay grade”.
However, Iovine does comment on the future of record labels and the rise of the self-releasing artist.
He says the fate of the record labels “is up to the labels” themselves.
“The labels have to reinvent themselves,” he comments. “They have to keep their importance in the artist’s life. It’s that simple.
“And I think they are doing that. My old company is doing that.”
Nice nod to Lucian G, and we move on to another of his former boss’s pet peeves: YouTube.
“They’re 40% of the consumption of music and they’re 4% of the revenue,” Iovine estimates, admitting his numbers might not be bang on, but that his sentiment is.
“That’s a problem. That’s bullshit! They’ve got to get it together. They know that doesn’t work.
“But do they care? I have no idea.”
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