Cue on the right, Iovine on the left
Earlier today, Apple announced that it has acquired Beats Electronics and Beats Music for a total of $3 billion. Tonight, two of the masterminds behind the deal will be interviewed about a range of topics at the Code Conference. Apple Senior Vice President of Software and Services Eddy Cue along with Beats co-founder and music mogul Jimmy Iovine will be interviewed by Re/code’s Walt Mossberg and Kara Swisher. Previously, Cue was scheduled to be interviewed alongside Apple Senior Software Vice President Craig Federighi, but it appears that the acquisition’s announcement changed up the plans. We are on hand for the interview and we will be providing live coverage below. The interview starts around 8PM Pacific/11PM Eastern Standard time:
– We’re in our seats, waiting for the interview to begin.
– Currently a pre-interview song is being played by an artist.
– Walt and Kara are out!
– This deal is about us continuing to invest in music.
– Cue says Iovine is the “smartest music person I ever met.” Cue says “Dre is an incredible artist with an incredible ear.” The “team is sensational… it will fit perfectly with Apple.”
– Cue: “Beats makes amazing headphones.” “Hugely successful.” Cue cites great audio.
– Cue: “Beats Music is the first subscription music service done right.”
– Cue: “It’s about the things we can do together.”
– Walt asks why Apple could not build its own premium headphones and streaming music service without acquiring Beats. Cue: “Apple can do anything, but we don’t do everything.” Cue calls this a “no brainer.” Cue says he has known Jimmy for well over a decade. This was not an overnight thing, Cue says.
– Walt: What do you envision doing together? Iovine says he shared the dream of music with Dr. Dre. Talking about their similar upbringings.
– Iovine says when he met Eddy and Steve, he realized that Apple “Gets it” and has culture. Apple knows what [Beats does]. “Apple respects the entire food chain.” “Since then, I always wanted to work with them.”
– Kara: The meshing of Hollywood and tech seems possibly odd. Iovine: “Everyone in Hollywood is desperately insecure.” But the guys in Silicon Valley seems to be slightly “overconfident.”
– Iovine: In the services area, you need curation. Streaming music is affecting music. “We’re starting to see massive change.” Other music services do not understand music, says Iovine. “We said no.” “We have to have the right feel of one song leading into another.”
– Iovine: I worked for 10 years with Apple engineers to try to make the sound of iTunes better.
– Iovine says he is not moving to Cupertino, but he is going there often. He travelled there 10 times in the past year.
– Walt: Apple has already made a huge mark on music, Jimmy has made a huge mark on music. Now that you’re unified, what are the possibilities? Cue: First of all, both Dre and Jimmy have an incredible ear for sound. As Jimmy mentioned for curation, you have to know what the next song is. Bringing curation is important to music. Music is dying in the way that we know it. It hasn’t been growing in the way that we want it to. Cue says smallest number of new releases this year iTunes has ever had. “It’s not 2 + 2 = 4, it’s going to be much bigger than that.”
– Iovine: Beats Music has 250,000 subscribers. Iovine says there were 5 million Beats Music downloads, but not enough free trial to paid conversions because Beats Music did not use Apple’s in-app-purchase service.
– Iovine: Who doesn’t want their product made by Apple? We have a lot of dreams for the streaming music service. It is important to everyone. We have to get this right. We have to get this model right. We need to be steroids into this thing, and Apple is the best company in the world.
– Cue: iTunes has 800 million customers. “It doesn’t hurt either.”
– Kara: How do you respond to people saying Apple is “buying cool?” Cue: I think Beats is really cool because they make great products, and Apple + Beats will make better products together.
– Cue: We’re keeping the Beats brand. Walt: Why? Cue says “we’re just beginning.”
– Walt asking about download numbers slowing, notes Spotify growing. Does the deal have to do with that? Cue: I think that number 1, the fact that music sales going away or severely going down is way overrated. Apple just crossed 35 billion songs sold this past week. 40 million iTunes Radio listeners in U.S. and Australia, and we’re going to grow internationally.
– Kara asks what their titles will be: Iovine says music side reports to Eddy, hardware side reports to Phil Schiller. Cue says Iovine and Dre will get offices and badges. Iovine: “they’re giving me the whole thing (laughs!).
– Walt pressing for what can come from this acquisition. Cue says “we have a lot of customers, curation, and algorithms, customers that have an easy way to pay, we deal directly with artists.” “We think that everything together (Apple + Beats) this is on steroids.” “Better opportunities for artists, better products for customers.”
– Kara: Who is the competition? Iovine: We don’t think about competition. Competition is not how people what I do think. I am talking about the creative process. It is embarrassing to copy. We don’t look at competition.
– Walt: Why did HTC + Beats fall apart? Iovine: at that time, we had 5 employees. Now we have 500. I always felt that the only chance music had was through the telephone, so we picked a smartphone maker. It was really a culture clash. It crashed and burned. “I asked Apple [to buy us] everyday for 10 years.” “Apple makes deals like they make products.” Cue on why he didn’t step in and buy it then: “It wasn’t the right time.”
– Walt: HP deal? Iovine: The contract ends when it ends. We did that because we didn’t like the sound of computers. Computers are made for talk. Apple is the only computer that actually had good audio. Every other computer sounds like a portable television. Unfortunately they get used for music. We wanted to fix the audio on their computers.
Kara: Let’s talk about headphones. Eddy: We like headphones a lot. My daughter wears them while studying, I wear them while exercising. Cue talking about Kevin Garnett ad with Beats. Eddy says there is a huge opportunity. It’s not just headphones, but also speakers. They just started that. There is a huge opportunity there. Eddy spent a lot of money in his house because he wanted great sound.
– Iovine insulting Apple earphones: “they make earphones to see if the machine works.” “It’s not Apple’s responsibility.” Cue says “Apple makes the best earphones that come in the box.”
– Walt: You did a speaker once at Apple (the iPod HiFi). I presume because it wasn’t selling well. Cue: We started focusing on other products. And we think right now, going into speakers is a great idea. We have portable devices, iPads etc. People want portable speakers that can go with them.
– Walt: Is their tech going to be integrated into speakers on Apple devices? Cue: They got the best ears on the planet tuning everything. At the same time, Apple has audio engineers. Combining the two together will make the best products.
– Cue talking about Silicon Valley and Hollywood not understanding each other. Apple has a great deal of respect for what Hollywood does.
– Walt: Apple has been interested in doing some TV project now for several years at least, before his death, Steve talked about it in very general terms as he always did. Tim has said it is an area of interest. But there’s only been some additional programming on the existing Apple TV box, it seems that sales have increased, but we don’t see a new product, a TV, a new set-top-box on a different scale. Have you decided not to do it.
– Cue: Apple TV has taken off. We have sold 20 million units total. It is an over billion dollar business per year business. Will be bigger this year. We have added live content, news, weather, great sports. We have tied it to things in the cloud, we have photos, it’s doing great.
– Cue: There’s a lot of talk about TV because using a TV “sucks.” All we have today is glorified VCRs, I don’t have to set the clock when the power goes out. I still have to manage storage. Did I remember to record it? It’s not the way the Apple TV experience works. I think there’s a lot of TV viewing. The experience has been stuck. It’s hard to watch my TV on my iPad. I have to authenticate, but the channels are hard to deal with. I think there is a long way to go in TV.
Walt: So why haven’t you presented a TV that doesn’t suck. Kara: the bar is low.
– Cue: TV is hard. There is no standards, either locally in the US, in some regions, certainly globally. There are lots of right issues down to rights issues. It’s a complicated landscape.
– Walt: Is it not just enough to provide a better device, will there need to be an accompanying content service. Cue: Solving the problems are complicated because of all the companies involved. Cue says content on TV carries widely.
– Walt: Will the current Apple TV evolve. Cue: It will continue to evolve. It’s a great way to experience ESPN. We’re going to keep improving the experience. Cue is a Comcast subscriber.
– Walt/Kara asking what TV Apple should do? Iovine: My bigger problem is with movies. I was with my girlfriend the other day, her kids, and we were trying to watch a movie. It took us 20 minutes to try to find a movie. I came from a place of curation.
– Iovine says he retired from the record industry today. He says music albums aren’t as interesting anymore. I made records for 41 years, that’s along time. I’m not even thinking about making content for Apple. I am thinking about getting the delivery and curation right.
– Iovine: Spotify is a very good service, but needs to push on curation. When you have these free services, they cost a fortune.
– Iovine: The only conduit that music has for emotion is sound.
– Walt: Onto iCloud. Walt: iCloud has no visible face, like Google Drive and Dropbox. Will Apple ever do something like that? Cue: We’re trying to make services that seamlessly integrate with hardware and software. Everyone of our customers are using iCloud multiple times a day… whether they’re using iMessage, iWork, Find my iPhone, changing contacts… all of these things happen seamlessly and customers aren’t thinking about it from a cloud perspective. Cue: We understand the storage problem, and we’ll see what we can do (referring to seeing files like they are seen in Dropbox, Google Drive).
– Kara asking about buying companies. Eddy: We’ve bought 27 companies in the past year. We’ve looked at companies big and small. Cue says Apple looked at Beats as a great opportunity, and we’re going to make incredible products together.
– Walt: Why are iCloud not cross-platform? Cue says many of the things are deeply integrated with our hardware and software. Cue says iMessage is well integrated into the hardware and software. Those are more difficult or impossible on other platforms. Cue says that Beats Music will be cross-platform.
– Iovine: Eddy and Tim were incredibly involved in the deal. The record industry loves Eddy Cue. We didn’t spend a penny on marketing our first three years.
– Kara: How is Cook as a leader? Cue: I have been working with Tim since 1997. We started the online store together. Cook is extremely thorough, he has tremendous vision. He cares tremendously about building great products. Looking at the executive team, the reason we are successful is because of our focus. We are not smart enough to do 100 great things. We want to do a few incredible things, and that hasn’t changed. We’re going to keep going down that path.
– Cue: We have the best product pipeline at Apple that we’ve seen in 25 years at Apple.
– Cue: When Steve came back to Apple, we always talked about Apple lasting 100 or 200 years. And that is the culture that he created at Apple.
– Cue says there was a transition, but no true reset. Steve was a great friend and mentor, and I miss him. You can’t say it doesn’t mean anything.
– Iovine says everyone on the team is incredible, Jony is incredible, Angela meeting was great.
– Interview over.