Now that Apple’s $3 billion acquisition of Beats Electronics has officially been announced— and Dr. Dre is hip-hop’s first billionaire (I know we can all breathe a sigh of relief that he’s good financially now), Apple will now not only acquire Beats Headphones and Beats Music, it is also getting Dr. Dre and Interscope head Jimmy Iovine in the mix (Interscope COO/president John Janick will ascend to chairman/CEO when Iovine departs in September).
Here are five results we'd like to see come about from the deal:
1. Beats Music forces all streaming services to be more artist and songwriter friendly. We’ve all seen the horror stories about how little Spotify pays artists and the ongoing Pandora suits. Beats and Apple have an opportunity to do the right thing here and make sure artists gets their fair share. The other services would hopefully fall in line and both the lawsuits and the proposed changes to legislation could end.
2. iTunes become more artist friendly. The main reason for the acquisition of Beats Music (in addition to Beats headphones) is that Apple needs a streaming service, especially as downloading purchases start to slow. As Apple’s world gets even bigger, there’s no reason to not give a little back to the artists creatively and let them decide how they want their music to be sold: let it be their decision if they want an album to be available only as a full album instead of picked apart with consumers allowed to buy individual tracks. Most artists don’t care, but several would like to have the option of singles being sold individually, but the rest of the album remaining in tact. Artists should also have more say in the pricing options. Maybe they want a full album to sell for $7.99 instead of $9.99. The last great holdout on iTunes is Garth Brooks. Wouldn’t it be nice if for his next studio album, iTunes let him sell it as album only since that’s the only way he’ll come aboard?
3. Apple creates a label that takes on the majors. Apple is in the business of selling hardware and it distributes music (and other content) as a means to sell more hardware, so starting a label is probably not in its best interest. However, if you’re going to bring on Jimmy Iovine and Dr. Dre to run your music division, they are going to want to continue to keep their hand in music discovery.
4. Find a role for Trent Reznor. Oddly, in all the talk about the Beats acquisition, I haven’t seen the Nine Inch Nails’ founder mentioned, even though he’s Beats Music’s chief creative officer. Is he still part of the team? If so, he’s someone who has been very willing to experiment with different distribution models and is fearless when it comes to letting go of the old guard and trying new ideas.
5. Figure out how to synergize iTunes, Beats, and iTunes Radio. iTunes Radio launched last fall—and to its credit— pays a decent performance rate and gives labels a revenue share. Having said that, I don’t know anyone who listens to iTunesRadio— Clear Channel's iHeartRadio seems to have all the momentum. Here’s a chance to have all three distribution models—free streaming with iTunesRadio, subscription streaming through Beats, and song purchase through iTunes Store— leverage their services from premiering tracks on iTunesRadio and Beats to offering exclusives on full album purchases, as iTunes did for the first week with Beyonce's latest.
A few other random thoughts:
I largely left out any ideas about integrating Beats headphones because that seems ridiculously easy: how long before we see iTunes gift cards bundled with Beats headphones? Beats Music subscriptions bundled with headphones, etc? For that matter, how long before Beats Music is rebranded iBeats?
I know this is crazy, but when rumors of the deal first leaked a few weeks ago, I wondered if this had been the Beats game plan all along. Iovine worked very closely with Apple and Steve Jobs on the development of iTunes, which ultimately helped kill the album market and hurt labels in some ways more than it helped. Though this is pure speculation on my part, I wonder if the thought was all along to develop a streaming operation while Apple continued to falter in its development of one and then Iovine, Dre, et al would sell to Apple and everybody wins. Iovine gets the ultimate thank you from Apple for helping iTunes become such a monster… We’ll never know if my theory is true, although in a statement about the merger, Iovine said, “I’ve always known in my heart that Beats belongs with Apple.”
How do you think the merger will change how you consume music?