Doug Morris, Scooter Braun, Daniel Ek, More on the Apple-Beats Deal
Prominent industry executives weigh in on blockbuster deal and what it means for the future of the music business.
With news of Apple's $3 billion acquisition of Beats Electronics breaking today, Billboard reached out to prominent executives and thinkers from across the music industry to get their thoughts on the deal.
This is going to be an amazing bridge between the music business and technology. It’s smart of Apple and it’s going to hasten the success of streaming, which is the future of this business. I’ve got to give Tim Cook and Eddy Cue the most credit. A lot of people aren’t going to even understand this deal. I think they picked up one of the truly unusual people in the business who really thinks outside the box. Steve [Jobs] would be pleased with this.
Doug Morris, chairman/CEO of Sony Music (and former UMG chairman/CEO who approved Jimmy Iovine's bid to start Beats in 2006 while Iovine was still running Interscope)
I support new digital streaming services and like to see investment in their future. The most important thing for songwriters and music publishers is to be paid a fair rate from such services. That can't happen as long as our mechanical reproduction rights suffer under a World War I era compulsory license and our public performance rights suffer under World War II era consent decrees. Record labels are in a free market, which is why they receive a disproportionate share of the revenue from these models.
David Israelite, president/CEO of National Music Publishers Association
We see our business has been changing to a multi-media business and a branding business. It all starts with music and music is the universal language so it can travel. Jimmy Iovine has always been a pioneer and once again we are seeing how he and music can affect culture. This deal signifies that and I commend Jimmy for once again raising the bar and inspiring young guys like myself to take it to another level.
People like consuming music in different ways, someone who enjoys streaming is also going to buy music but people don’t consume music in one way. Someone who discovers music on the radio is very different from someone who finds music in magazines or someone who finds music in streaming or discovers music through iTunes. I think at the end of the day it’s great that people are adapting to change and I think what we are seeing is proof that this is not a dying business — but that this is an evolving business.
Scooter Braun, SB Productions
I’ve always assumed Apple would offer a streaming service at some point — but we’re focusing on building the best possible product and feel pretty good about that. Users know the difference between something that really is the best product and not something that’s just bundled in — and 10 million subs is a good indication of that. We’re not fighting over market share here. The music industry is still smaller than it should be. And in the U.K., we’re seeing that streaming (and we) are already growing the overall pie.
Daniel Ek, founder/CEO of Spotify
(From a Billboard Q&A last week on Spotify's updated user numbers)
Everybody's saying Tim Cook has failed to get out of Jobs' shadow. In some ways, you could say this is Tim Cook saying, '"'m bold enough and brave enough to take the business in a totally different way." It's not the Steve Jobs way of doing things.
Apple has never done this before, almost entirely operating a sub-brand within Apple. I think assuming they don't kill the brand -- a ridiculous thing to do -- I think there's a whole bunch of things they could do with it. Both are aspirational brands with connotations of quality. There's no doubt that Apple's brand and customer base have aged. There's a chance to reinvigorate the brand.
Mark Mulligan, co-founder, MiDiA Consulting
There are two stories here. Music subscription is the key to a healthier sustainable music business and Apple’s strong entry into this space will ultimately drive greater revenues to artists and their investors than music sales ever could. The other story is music quality. The 37 percent growth in vinyl sales this year in the face of double-digit declines of every other music sales configuration indicates that a growing number of people want to experience better audio quality than MP3s. The record-breaking Kickstarter campaign by Neil Young for Pono reinforces this renewed interest in higher-quality audio. Beats Electronics, with 2013 sales of $1 billion, now being acquired by Apple shows that people want a better experience than earbuds. Just hearing the music is no longer good enough. This is the beginning of a march to audio quality that will include high-resolution music files, higher-audio-quality listening devices including earphones and speakers. Look for Apple to be a leader in driving this movement with the Beats acquisition.
Tom Silverman, founder/CEO of TommY BoY, New Music Seminar
For years, Rhapsody has championed the idea of unlimited listening at a modest price. We have built the world’s second-largest music subscription business on the strength of that idea. Now, Apple is thinking differently about music subscriptions. It’s a watershed moment that will grow the entire segment by introducing more people to the joy of hearing anything you want, anytime and anywhere.
Paul Springer, senior vp Americas, chief product officer, Rhapsody International
Apple buying Beats is a very public acknowledgment by Apple that music downloads -- the historic core to iTunes -- are on the decline while on-demand subscription streaming services are significantly on the rise. Apple needed to be in the on-demand streaming world. And, in Beats, Apple found a kindred spirit -- a company, Beats, that is hardware-based (headphones) and uses services (music) to sell more hardware. Apple, importantly, also is buying perhaps the most artist-friendly, connected and “cool” music brand right now in the marketplace.
You can bet that this mega-shot across the music-streaming services bow is being heard all around the world -- in boardrooms everywhere, especially Spotify, Pandora and Samsung. All of those companies -- and numerous others -- will be stepping up their strategic efforts right now.
Peter Csathy, CEO of Manatt Digital Media
Everyone's vying to turn streaming into something that will be profitable, but for the winner, revenue may not come to a music service alone. Apple is fundamentally a lifestyle hardware company. Beats Electronics is a powerful lifestyle brand. The downturn in download sales means Apple has a brief window of opportunity to get into the streaming market with a service that can be easily integrated into their OS. It's still a walled garden, but there may be more walls.
At the end of the day, it costs Apple relatively little to get in the game, because they have a lot of spare cash. What will be interesting to see is whether a successful, integrated hardware and streaming brand under the Apple umbrella will make any long-term difference in artist revenue.
Casey Rae, interim executive director, Future of Music Coalition
(These are "thoughts" rather than an "official comment").
This is another significant investment in the music subscription model. If anyone needed further proof that the $1.4 billion streaming market is booming now with massive upside, this is exhibit A. A diverse, thriving digital music market is good for the business, good for artists and good for fans. More competition, more services investing in music and vying for fans’ attention – that’s a win-win proposition for the music community.
Steve Marks, chief, digital business & general counsel, RIAA
The purchase of Beats is like iTunes on steroids. From a PR perspective, it makes Apple look really current, which is what the company needs. And while music has been Jimmy's platform for a long time, and his access to artists has been so powerful, this allows him to do lots of other things that are creative and innovative and to be an architect for Apple.
Jeff Rabhan, chair, New York University | Tisch School of the Arts | Clive Davis Institute of Recorded Music
I think it's great. … It creates a big outlet for content owners while giving people more choices to listen to music. More music plus more listening equals joy.
Richard Gottehrer, co-founder, the Orchard
This article originally appeared on Billboard.com.
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