From left: Zane Lowe, Larry Jackson and  Jimmy Iovine photographed Sept. 18 at Apple Music’s Beats 1 Studio in Los Angeles.
Magazine Feature

Apple Music's Long Game: Why Jimmy Iovine Thinks They're 'Not Even Close' to Success With Streaming

“I don’t believe that what exists right now is enough.” Jimmy Iovine, who runs Apple Music -- originally Beats, the music service and electronics business that he and co-founder Dr. Dre sold to Apple for $3 billion in 2014 -- is on a tear about the deficiencies of streaming services, ­including his own. Sitting on a couch in his sunny office at Apple’s Los Angeles ­headquarters, he admits he wouldn’t be here if he weren’t “extremely” optimistic: “I believe we’re in the right place, we have the right people and the right attitude to not settle for what exists right now.” But ultimately? “Just because we’re adding millions of subscribers and the old catalog numbers are going up, that’s not the trick. That’s just not going to hold.”

Apple Music tells Billboard that it now counts well over 30 million ­paying ­subscribers, helping fuel a 17 percent revenue jump for the U.S. recorded-music business in the first half of 2017 over the same period a year ago, according to the RIAA. Meanwhile, Goldman Sachs issued a report in August predicting that ­subscription streaming would drive the global record business to nearly triple to $41 billion by 2030.

But the 64-year-old Iovine, whose ­expansive career was chronicled in HBO’s recent four-part documentary series The Defiant Ones, is an unlikely bear in a bull market -- he says the Goldman Sachs report “just doesn't work for me.” The ­forecast, he claims, fails to properly account for the easy money that older ­catalog music currently pulls in, not to ­mention the ­competition from free ­platforms like YouTube, a problem that video ­subscription service Netflix doesn't face. (Apple also has big plans for video apart from Apple Music: It will be ­investing $1 billion annually in it.) The veteran record executive -- who got his start sweeping out recording studios, later produced hit records for acts from Bruce Springsteen to U2, and then co-founded Interscope Records, which he ran until 2014 -- is working to crack what he sees as the music industry’s biggest challenge: how to inject enough “soul” into subscription streaming services so that fans will pay $10 a month instead of listening to their tunes on free services, which are also growing fast.

To do it, he’s relying on BBC Radio 1 ­veteran Zane Lowe, now creative ­director and L.A. anchor for Apple Music’s free radio service Beats 1, and Apple Music head of content Larry Jackson, a former A&R ­executive at Interscope and other labels. All three are focused on creating ­exclusive content, from films and ads to radio shows and glossy magazines, to help artists tell the stories behind their music in an age of shrinking attention spans and fast-changing playlists. Drake alone has created TV ads, a short film and his own Beats 1 station, OVO Radio, where he debuts new songs.

“What’s really going to make you want to go on this journey with these artists?” asks Lowe, whose hundreds of lengthy, revealing interviews with superstar artists represent one potential answer (though marketing those interviews remains one of the many challenges facing Apple Music). 

Apple, which has about 800 million iTunes ­customers around the world, has more levers to pull: The company recently started promoting Apple Music ­subscriptions more heavily through ads (one coming in October will feature Lena Dunham) and on its iTunes Store, where it began selling 99-cent singles in 2003. (Music downloads have been ­plummeting steadily since 2013, down ­24 percent in the first half of this year in the United States, ­according to the RIAA.) It has been ­spending ­seven-figure sums to secure exclusive rights to more than a dozen ­documentaries on ­artists from Harry Styles to Diddy, some of which have garnered more than 500,000 first-week views, on par with HBO’s ­premiere of Beyoncé’s Lemonade, a source tells Billboard. And Iovine, Lowe and Jackson are hoping to funnel more paying fans in through Beats 1, a live feed that’s free because it doesn’t offer songs on demand. The trio is also hoping for changes to the way Billboard ­calculates its charts -- where a free stream on YouTube counts equally to a paid stream on Apple Music -- which could ­incentivize artists and labels to promote their music on higher-paying platforms, rather than racking up free streams to win the No. 1 slot. The three men spoke with Billboard last week about, as Iovine puts it, “what streaming has to become.”

Michael Kovac/WireImage
Iovine (right) with Apple CEO Tim Cook.

How must streaming change?

Jimmy Iovine: There has to be much more ­engagement between the artists and the audience. We have big plans and a long way to go. It’s just impossible to do it all in two years.

Zane Lowe: We need to put context and stories around music. The song itself is obviously the primary passion point -- it’s a key that opens the door. But what’s inside the room that is going to make a fan a super fan? Music has become quicker, faster, and there’s more of it. That doesn't mean you shouldn't create a story around something that is beautiful and that lives and breathes. 

Iovine: I just don’t think streaming is enough as it is. I don’t agree that all things are going to be OK [just] because Apple came into streaming and the numbers went up. Look at the catalog: It’s a matter of time before the ’60s become the ’50s and the ’50s become the ’40s. The people that are listening to the ’60s will die -- I’m one of them. Life goes on. So you have to help the artists create new stuff that they would never be able to do on their own.

Do you mean video content and not music?

Iovine: [More like] an environment where they can do creative content. We're experimenting. This is a new business. We’ve loaded as many creative people as we can into one place. What will happen, in my ­experience, is something really cool.

Can Apple do more to drive customers to Apple Music?

Iovine: The new Apple Watch ad is ­completely about Apple Music. Everybody likes Apple Music and wants it to ­happen. [But] this is about making it more than what it is. We fight every day to come up with creative things. On Friday nights, Q-Tip has a broadcast that is just extraordinary, mind-blowing. We have to market that.

Lowe: Elton John is talking to Matthew Vaughn tonight on his radio show about his involvement in Vaughn’s new movie [Kingsman: The Golden Circle] -- this is Elton John. Lars Ulrich just interviewed Dave Grohl for two hours, and they traded stories about Metallica, Nirvana and Foo Fighters. I believe there are more listeners who want to be fans. We want to create something that drives the fan experience.

Larry Jackson: An artist that Zane and I have been really passionate about over the past year is Sampha. A couple of days ago, he won the most ­prestigious award in the British music business, the Mercury Prize. One of the things that shaped the ­trajectory over the past year of what Sampha has become -- and he’ll probably be up for best new artist this year at the Grammys -- is this piece that we made with him called Process, which we screened at MOCA [the Museum of Contemporary Art, Los Angeles] and at MoMA [the Museum of Modern Art]. Lauryn Hill came out with him at MoMA.

Joe Scarnici/Getty Images for Apple
Lowe with Haim's Este Haim (left) and Alana Haim. 

How did you discover him?

Jackson: I bumped into him in a studio at Kanye [West’s] house late one night. I was just leaving Interscope at the time [in 2014].

Lowe: Everyone in the U.K. knew Sampha was a complete angel -- we were just waiting for the record. He was just ­taking his time. This leads into the idea of ­creating context around the artist. I love making playlists, and I use a lot of ­playlists. But it’s a bucket. Artists don’t think like that. Artists think, “It took me years to make this record.” He doesn't want it to just go in a bucket. He wants the flow to go from the studio to the fan in the most loving way possible. [Marilyn] Manson comes to me, and he goes, “This is my comeback record. I want to tell the story.” Great. Then sit down and tell the fucking story. What would ­happen if Manson didn't have a place to tell that story and his record was just a pea in a ­playlist? Would you be getting the best out of Manson? Not even close. Drake changed everything. He taught me and everyone working at Beats that this is how you take control in a ­collaborative space. He walks the line between giving us as fans a sense of ownership, but equally, he owns the story, controls the story so beautifully with his team.

Jackson: The first day that Drake launched his radio show, all his music just vanished off SoundCloud [where it had been available for free] and he started releasing on Apple.

The Billboard Hot 100 counts a free stream the same as a paid stream. Why do you think it’s important to change that?

Iovine: An artist will come into my office and say, “They have 500 million people on YouTube. [YouTube now counts more than 1 billion users.] I don’t want to have to give my music away, but I have to promote myself. [A YouTube stream] counts the same as your paid stream. And Spotify’s.” That’s ­disincentivizing for the musician. Musicians still believe that their money isn’t in recorded music. That’s not good. [We should] encourage them to say no and promote where music has value. A lot of people want a No. 1 record, and if you can get it by the same old-school hustling nonsense that the record ­business has been doing for a thousand years [including promoting free streams], what’s the point?

Lowe: What do you get out of a No. 1? Two years of solid touring and a very tired artist. That’s why hip-hop is so ­successful, because they’re making records ­proactively. They’re constantly recording.

Why are the hip-hop artists able to do that better?

Lowe: Pop artists do it, too. Dance-music DJs do it. You have to make music on the fly, you have to go, go, go, go. It’s tough when you have to go out on the road and tour all the time. [But] they are doing just fine. [Look at] what Gucci Mane’s done since he came back [from prison]. He’s got like six albums out, he has a book ­coming. It's unbelievable. It’s constant, and the quality is great. 

Hip-hop is the most popular genre now, especially in ­streaming -- R&B/hip-hop constitutes 30.3 percent of ­on-demand audio streams. Why is that?

Iovine: Hip-hop was built by very ­progressive artists -- they are always going to take the most advanced lane. But a lot of it had to do with Apple Music’s push into hip-hop. That doesn't mean that we ­created something. We saw it coming.

Jackson: Our ­ideology, which Drake ­happened to agree with, is that this music has value. A lot of hip-hop artists’ music used to come out through free platforms [for mixtape downloads and streaming].

Iovine: That’s all they had.

Jackson: We said, “Hey, we’re building this completely new ecosystem where it’s not going to be free. It’s behind a paywall. And we promote it.” That’s why. On top of the fact that these artists make music at a quicker clip.

Lowe: I’ve never seen artists with a ­stronger work ethic than some of the hip-hop artists that I’ve crossed paths with or ­interviewed, or that I promote. I’ll ask Lil Uzi Vert how many songs he has, ­unreleased, and he’s like, “Two thousand.”

Jeff Chiu/AP/REX/Shutterstock
Drake (right) high-fives Apple senior vp of internet software and services Eddy Cue. 

What’s the next genre on the horizon?

Lowe: If I knew, it would be boring. I like being shocked and surprised when something comes along. The first time ­anyone heard Skrillex, they probably checked their computers for a fault, and within a year, the guy gets three Grammys and changes the shape of pop music. 

Jackson: The next victors will be a group of people who have a similar work ethic.

Iovine: I don’t know, but we could use some more young, ­international superstars.

Goldman Sachs predicted that the worldwide record business will almost triple by 2030. What did it get wrong?

Iovine: They’re not thinking about new artist deals. [Labels now give some ­artists higher royalty rates than they did in the CD era.] They’re not thinking about what happens to the old catalog [when it loses popularity] or if free music keeps going the way it is. Netflix is scaling, but it doesn't have any free [competition].

What do you think of Spotify’s plan to go public?

Iovine: I think [Spotify CEO] Daniel [Ek] is a talented guy and smart as all hell, but the margins are too tight. The costs are extraordinary. It’s going to get bigger and bigger and bigger, and the costs are going to get higher, not lower. Going into new countries means localizing everything. It’s going to cost a lot of money. They have a problem that [a diversified company like] Amazon doesn't have.

Courtesy of Apple
Taraji P. Henson in an AppleMusic TV ad that also featured Mary J. Blige and Kerry Washington. 

Do you ever think about getting back into the record business?

Iovine: Not a chance. I can help from here. I can’t help from there. Let them make the music exciting and interesting. We will try to do everything that we can to create content around it, and make the delivery of it as exciting as possible.

What’s the reception been like at Apple to The Defiant Ones?

Iovine: They’re very respectful. They know who I am. They’ve got much bigger fish to fry. 

What do you want to do after Apple Music, Jimmy?

Iovine: I’m 64 years old. I have no idea. There’s just a problem here that needs some sort of solution, and I want to ­contribute to it. Goldman Sachs may think it’s solved, but I don’t. We’re not even close. 

Photographed by Miller Mobley

This article originally appeared in the Oct. 7 issue of Billboard.