Tim-Jim-and-Dre

Tim, Jim, and don’t forget about Dre

This won’t be the first time someone suggested Apple could start its own record label. But with Dr. Dre and Jimmy Iovine, two music industry heavyweights that have built some of the world’s biggest record labels rumored to be getting creative roles at Apple, it’s interesting to imagine what influence Iovine and friends could have on Apple’s approach to content.

If Apple is ever going to move on from simply being a music distribution hub taking its 30 percent cut to a record label of sorts fostering, promoting, and investing more in artists, Iovine is as good as it gets. Having built Interscope Records, the label behind some of the biggest artists of the last 20 years from Dr. Dre to Lady Gaga, Iovine’s real expertise is building labels, growing artists and selling music. Iovine himself admits the streaming service and even the headphone business were always a way to get control back to the labels and empower the artists, and that seems to be his main focus. Jimmy on building the Beats streaming service from a February 2013 interview:

“The artists aren’t going to get back there one song at a time. iTunes was great but it needs a step forward now. I really believe that. I believe that as a record producer, I believe it as a record company guy…”

We still don’t know for sure what Apple plans for Beats. Many have justified the rumored $3.2 billion purchase price by noting the Beats headphone business brings in around $1 billion annually. Throw in the newly launched streaming service and the talent behind it, it’s not hard to see the value in the purchase. I’m not saying Apple purchased Beats to start a record label—we still don’t know the exact reason behind the strategy—but with Jimmy Iovine sticking around at Apple there’s never been a better time for it to happen.

Iovine also appeared to have big plans for the streaming service in terms of working directly with artists that his unique position in the music industry would make possible. In that same interview from the D conference, Iovine describes plans for Beats features that sound a lot like the type of support a label would normally provide to its artists:  “We have to make it user friendly for the artist. They have to be able to build businesses on it. They have to be able to have information about who is using their music, where they are… Right now they have all the information and the artists have no information. I run a record company, I would die to know who bought my record at iTunes.”

The latest report from The Wall Street Journal claimed Iovine’s role at Apple would be to “revamp and run its whole music strategy.” Billboard noted today that its sources say Iovine willoversee all of Apple’s music strategy and handle relationships with labels and publishers,” while reporting that Dre and Iovine would make an appearance at Apple’s upcoming WWDC developer conference. If there was ever going to be a time that Apple started focusing more energy on considering what’s best for the artist, having Iovine revamp its music strategy would certainly be the time to do it.

I’d imagine if Apple were to start a record label of sorts it probably wouldn’t be a lot like a traditional record label. That is, perhaps the goal wouldn’t be to invest in developing artists in order to sell downloads and ticket sales, but rather to invest in artists to differentiate iTunes and its streaming companion from the competition. From Iovine’s comments above, we know that’s something he’s interested in doing with Beats.

One thing hasn’t changed much since the success of iTunes and now streaming services, artists and labels are still generally unhappy as Spotify, iTunes, and others try to figure out a model that pleases both consumers and artists. The distribution platform that figures it out—and in the process has an easier time getting exclusive content—could surely build a better service and even potentially attract artists away from distributing music through competing platforms.

YouTube-Streaming-Service-01The concept of developing content isn’t entirely lost on all the companies currently competing with iTunes. While most of the still relatively young streaming services do little more than pay out approximately 70% of revenues in the form of royalties to artists, some see the value in doing more. Back in 2011, Google announced the Google Play Music Artist Hub, allowing artists to go independent and sell music directly on Google Play without a label. That’s one small piece of the puzzle that Apple has yet to embrace, but even more interesting is the rumored upcoming subscription music service from YouTube.

It’s no secret how important YouTube has become to the music industry; Billboard started including video plays in its Hot 100 rankings last year. Iovine and music industry execs credit the service to breaking many of its biggest artists in recent years. In the interview mentioned above, Iovine credits the video service in breaking Lady Gaga’s career, for example. Up until now record labels have been using YouTube to help break new artists and drive sales of downloads to services like iTunes. But a YouTube streaming service would put Google in a unique position in terms of helping both develop and distribute music from new artists. It would would also put Google in a unique position of being able to sell music to young people where they discover new music most often: YouTube.

Apart from Google Play, most artists not on a record label are currently forced to use services like TuneCore, which charge annual fees ranging from $10 a song to $50 per album. TuneCore alone experienced a 75% increase in downloads and streams on the content it distributes to the various music services this year and it paid out around $34 million to artists in Q1.

It’s interesting that Jimmy seems to mostly attribute his success with Beats to his expertise as a record producer and music industry executive—something he thinks the tech companies will never quite understand on their own: “Most technology companies are culturally inept. I don’t care what they do, they’re never going to get curation right. That’s not what they do. The way content companies never get technology right, they never get culture right… They’re not going to get curation right… We’re going to be miles ahead of them.”

Steve-Jobs-Iovine-U2

From his position as record label chief long before Beats, Iovine and his companies have been at the forefront of embracing the digital music distribution revolution. That includes being an early supporter of iTunes and convincing Steve Jobs to do iPod marketing campaigns with artists like 50 cent and U2.

Read any interview with Iovine in which he talks about about the music industry, Apple and the takeover of digital music, or his work at Beats, and it’s clear his passion is with building a better music business, not just headphones or a streaming service.

“I learned a lot from Steve, and we helped him a lot as well. We went up there and we threw the building at it cause I really wanted legitimate music online. It was a real passion of mine. We started the original content on iTunes, we did the Pepsi commercial, we went and got Pepsi to do that, and we put the first iPod ever in a music video… I called him and I said Steve, you’re promoting Apple with a guitar, but unfortunately there’s no more guitars in the recording studio… let me put the iPod in the next 50 cent video… he says whatever it costs do it, just tell Eddy Cue it’s done. That was the first time an iPod had ever been in a music video. It was the biggest music video in the world and he felt it.” -Jimmy Iovine in a 2010 interview.

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31 Responses to “With Dre & Iovine on board, Apple could become most powerful record label in the world”

  1. which video was that? the one with 50cent, and the iPod?

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  2. drtyrell969 says:

    Epic picture of Tim. I’m sure Dre has hundreds of platinum albums left in him. The music industry always keeps 20 year old veterans on the front lines.

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  3. The iPod is going nowhere…well, it’s not going to die, it’s just going to be built directly in headphones.

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  4. I don’t think this will happen but if it does, Apple also has full legal rights to use the logo, and the name from one of the biggest, best labels that ever existed … Apple records.

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    • rahhbriley says:

      The issue you’re referring to is what I was wondering about when I started reading the article. I know they had FINALLY resolved the issue a while back, but I wasn’t aware they had full legal rights to use their own logo and name, as a record label. I tried googling the specifics of that but haven’t found it. Can you fill me here, this is what I know/believed to be the case:
      -Apple Computer and Apple Records originally had a small spat, ultimately agreeing Apple computer could use the Apple name, but had to stay out of the music business.
      -iTunes happens. Resume spat. Apple Computer/Inc sells digital music, Apple Records claims foul based on their agreement, Apple Computer says no, we’re just selling it as a media retailer, we don’t produce music.
      -The Beatles aren’t on iTunes for a long time, but eventually it is settled and The Beatles are now on iTunes.

      Soo…what ware the terms of the new arrangement, Apple Records gave Apple Inc a pass to enter the music producing industry? That just seems so opposite of the stance they took for so long. I could see them “finally forgiving” iTunes, but I can’t imagine they just dropped it all together, and are allowing Apple Inc to use the Apple Records’ logo and name. Not that they would want to use that logo and name anyway. I could see if Apple Inc is allowed to enter the music producing industry, but I cannot fathom for a second that they would be able to use the name and logo of Apple Records.

      Maybe I’m missing something in your brevity?? I just don’t quite get it. Please expand or link.

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  5. so Apple owns the Apple record label?

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  6. Kris404 says:

    Mad photoshopping skillz man :p

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  7. Would Apple want the very best audio experience on their iPhone? I think so. At the moment HTC’s Beat’s stereo front firing speakers blows away the competition. My bold prediction….Look for the iPhone 6 to have Beat’s front facing stereo audio. Afterall no one has ever said HTC’s stereo speakers were aesthetically ugly.

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    • rahhbriley says:

      Not to rain on your parade Bill, but with as late as we’re hearing about this, and how near we are to an iPhone 6 launch, I would be greatly surprised if they could implement Beats speakers into the phone at this point. Some would argue that they wouldn’t want Beats speakers in the phone anyway, just better, louder, and improved. I don’t want to speak for everyone, but the desire for that I think is pretty mixed. I doubt Apple ever brands their phone, tablet, or computers as having beats speakers or sound in them. I do think Apple will keep improving the speaker sound quality (duh right?), and that they’ll mention how their purchase of Beats and team has helped improve it. And, footnote, but I doubt Beats had much of anything to do with the aesthetic quality of the HTC stereo speakers. I could be wrong, but HTC has a pretty strong industrial design language, and I’m guessing they came up with that on their own? Maybe not tho?

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  8. “No more guitars in the recording studio”. What a joke. The music industry goes further then R&B Lovine.

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  9. This makes total sense. with digital download sales dwindling, what better way to increase revenue then to cut out the middle-man by becoming a record label and sign artists to those “devil’s contracts” directly. They can increase revenue and still offer artists a better deal.

    This fits perfectly into Apple’s strategy of vertical integration…owning everything from top to bottom…from record label to distribution. I can also see Apple going after TV and movies in this manner.

    There have been rumors of this for quite sometime and it had the rest of the RIAA scared.

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    • rahhbriley says:

      This article also made me think about how if they do this in music, they could be setting up a plan of attack for video as well.

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  10. macmann1980 says:

    Napster, Kazaa and the like taught the record labels a good lesson. With iTunes I hoped we were moving to a system which would empower the artist and consumer more and take away the power from these rich, old, record label bosses who have been ripping consumers off left right and centre for decades. Today music is more accessible and more affordable, not as a result of the record labels, but technology companies.
    If this article is correct I’m worried this is all about giving back power to these mega-rich, greedy record labels to once again inflate prices.

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  11. Jake Becker says:

    And what would this label do? Why, sign and promote and bloat more awful versions of the same 2 or 3 genres that “everybody” supposedly likes far more than everything else, because that’s the “future of music”. Sure, count me in.

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  12. Jake Becker says:

    Iovine doesn’t have a clue. Being a businessman does not = being a music man. But if music is your business you better know your shit before you open your mouth.

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    • rahhbriley says:

      Dude, are you aware of his music industry experience? He has produced some of the greatest musicians. WTF are you referring to that he doesn’t have a clue about music? Let me help you out; Tom Petty, Springsteen, John Lennon, Kansas, Stivie Nicks, U2, Lady Gaga, Dre, EM, 50, and a shiiiiiiit ton more. Care to explain what you mean?

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    • bboysupaman says:

      What rahhbriley said…

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  13. Gene Munster doesn’t get why Apple should be purchasing Beats, so he tells his clients it’s not a good deal. That’s Munster’s problem. He probably doesn’t even listen to music and probably thinks Dr. Dre isn’t worth anything. All Munster sees is there is no reason for Apple to acquire Beats because of the $3.2 billion cost doesn’t quite add up in his head. Stupid dude who can’t see further than his own nose. He doesn’t understand what Apple is trying to do to influence the music industry and Dr. Dre certainly is a good chunk of it. A good face man. With the Beats acquisition there are intangibles which can’t be analyzed with a spreadsheet. Forget about the Beats hardware. Apple can fix that. The Beats acquisition offers an image shift for Apple which Apple can’t fix quickly by itself. Apple needs some powerful insiders in the music industry and this is a good way for them to get it.

    Forget Gene Munster’s stupid nonsense about how Beats isn’t worth $3.2 billion. Apple makes nearly that much in reserve cash every month. This deal isn’t about up-front cash layout. This deal is about long-term hooks into the music industry. Apple appears to be ready to shake up the music industry again and it will pay off very well in the tens of billions of dollars over a few years period. Gene Munster would have been one of those who would have said not to invest money in Lady Gaga because she’s not that great a singer and didn’t finish her arts training at NYU. That’s why Steve Jobs was so good at what he did. He was able to see beyond the simple fundamentals. Beats is a profitable company with a solid customer base regardless of how some people dislike their products.

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  14. Len Williams says:

    Not exactly a good shot of Tim. He looks like he’s pissed and getting ready to do some whup-ass on Dr. Dre from behind. I have no idea why they selected this shot for publication.

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