More than a year after leaving Apple, Jimmy Iovine, who co-created the Apple Music streaming platform, has spoken to the New York Times about the streaming industry.
When asked about why he left Interscope Records and sold Beats to Apple, Iovine said that he says the need for the tech and music industry to come together, and he wanted to play a roll in making that work:
It’s all a response to Napster. I saw how powerful that technology was, and I realized we had to switch gears. The record companies were not going to exist without tech … I didn’t want it to be the other side. I wanted it to be all one thing. I wasn’t bailing on music. I always thought that technology was going to get people to listen to music in a better way, and you were going to promote it all through a streaming service. But it would all be in the same house.
Iovine says that 20 years ago, the record industry was “putting up a moat” and suing people to protect its interests. “So I said, ‘Oh, I’m at the wrong party,'” he explains. “And I met a bunch of people in tech. I met Steve Jobs and Eddy Cue from Apple. And I said, ‘Oh, this is where the party is. We need to incorporate this thinking into [my record company] Interscope.'”
The former executive went further to say that “the streaming business has a problem on the horizon, and so does the music business.” When pushed further, he explained that the music streaming business is turning into a commodity:
It doesn’t scale. At Netflix, the more subscribers you have, the less your costs are. In streaming music, the costs follow you. And the streaming music services are utilities — they’re all the same. Look at what’s working in video. Disney has nothing but original stuff. Netflix has tons of original stuff. But the music streaming services are all the same, and that’s a problem.
According to a new report from IFPI, the global recorded music market generated $19.1 billion USD in revenue in 2018, of which 46.8 percent was from streaming. Additionally, lat year’s streaming revenue was 34 percent higher than that of 2017.
Despite this increase in music streaming revenue, Iovine notes that streaming services aren’t getting any cheaper:
And the streaming music services are utilities — they’re all the same. Look at what’s working in video. Disney has nothing but original stuff. Netflix has tons of original stuff. But the music streaming services are all the same, and that’s a problem.
What happens when something is commoditized is that it becomes a war of price. If you can get the exact same thing next door cheaper, somebody is going to enter this game and just lower the price. Spotify’s trying with podcasts. Who knows? Maybe that will work.
Since leaving Apple, Iovine helps runs the XQ Institute, an educational initiative founded by Steve Job’s wife Laurene Powell Jobs. While he devotes himself to passion projects, Iovine still thinks about where the music industry is going, and how the record labels need to adapt to support artists in order to survive:
If I were still running Interscope, I would be signing artists and encouraging them. Right now there are a lot of people running around saying, ‘What’s making noise on TikTok?’ That’s fine. But I’m more encouraged by the people who are saying, ‘Whoa, this artist has something to say. I’m going to support them, because I believe that in the end they’re going to win, and that will make all of us win.’
You can read the full interview over at the New York Times.