Senior VP Internet & Software Services, Apple Last Year's Rank: 10
ROBERT KONDRK, 54
VP Apple's Media Apps & Content, Apple Last Year's Rank: 10
TRENT REZNOR, 50
Executive, Apple Last Year's Rank: —
On June 21, 2015, Eddy Cue started Father's Day with a brisk awakening from Taylor Swift. Rising, as he usually does, at 5 a.m., he discovered that the superstar had written an open letter to Apple on her Tumblr page to say she would withhold 1989 from Apple Music because the company wasn't planning to pay royalties during the free, three-month trial period it offers to attract subscribers. "This is not about me," Swift wrote. It was about the creators "that will not get paid for a quarter of a year's worth of plays."
Cue immediately called "the only other person I know who is up that early" -- Apple CEO Tim Cook. Next was Jimmy Iovine, the former producer and head of Interscope Records who, with Trent Reznor, joined Apple in 2014 to launch its on-demand streaming service. Cue and Iovine called the head of Swift's label, Scott Borchetta, and then the three of them called Swift. Within hours, Cue tweeted that Apple would pay royalties on trial-period streams.
This rapid-fire maneuvering didn't merely head off a PR disaster -- it showcased the unique combination of business savvy and music-industry connections Apple now commands with Cue, Iovine, Reznor and Robert Kondrk on one team. Iovine runs the creative side with Reznor (neither have official titles) from Apple Music's Culver City office, while Kondrk, who lives in the Hollywood Hills and splits his time between Culver City and Apple's Cupertino, Calif., headquarters, handles day-to-day management and business development. Iovine and Kondrk report to Cue, who, in addition to Apple Music and the iTunes Store, oversees everything from Apple Pay to Siri in Cupertino.
Apple has been the biggest music retailer in the United States since 2008, and Billboard estimates that last year, the tech giant was responsible for 40 cents of every dollar that music retailers and digital services paid to labels for U.S. sales and streaming. But until 2015, Apple's power depended almost entirely on download sales, which, industrywide, declined 12.5 percent last year, while total U.S. song streams doubled. Its move into streaming through the acquisition of Beats Electronics, which brought aboard co-founder Iovine and chief creative officer Reznor, signaled Apple's intention to work with labels and their artists at a time when all parties have a vested interest in Apple Music succeeding.
Iovine and Cue's responsiveness to Swift sent a pro-artist message -- and she reciprocated, giving her 1989 concert film to Apple Music as a Christmas exclusive. (Says Cue: "I think it surprised her that someone would reach out on Father's Day.") Drake and Beats' other founder, Dr. Dre, also supplied short-term album exclusives -- a testament to the company's market share (and deep pockets) and the relationships Iovine developed in his 25 years at Interscope. "I came to Apple because they believe in artists and understand what they do," says Iovine, who lives in Malibu and Holmby Hills, Calif., with his fiancee, British model Liberty Ross. (They plan to marry on Feb. 14.) Still, asked if he imagined working in an office with Reznor back when he first heard Nine Inch Nails' Pretty Hate Machine, Iovine, who later signed the band, says, "I couldn't imagine that guy in my house!"
Labels like Apple Music because it markets itself with a free trial period instead of a free tier that pays lower rates to rights-holders on an ongoing basis. "Businesses are being built on the backs of musicians, songwriters, producers, engineers," says Iovine. "If we had a free service, that would be good for Apple, but not for artists or songwriters." Adds Reznor: "We're building an ecosystem from the ground up to add value back into music."
Spotify, the leading proponent of using a free tier to market a subscription service, is estimated to have at least 25 million paying subscribers worldwide. After just six months, Apple has 10 million, partly thanks to its Beats 1 online station and its DJs, who include Zane Lowe, Drake, Dre, Elton John and Pharrell Williams. Perhaps more important, Apple has direct access to 800 million consumers -- and their credit card numbers -- through iTunes. "The future of music is streaming and subscription, but that doesn't mean sales are going away," says Cue. "We can leverage that, and we do."
There's still plenty of opportunity for Apple Music and its competitors because the streaming business is still, on a global basis, fairly small. "The way I talk about it," says Kondrk, "we're at the end of our beginning."