Apple as a Record Label

Apple unveiled  new products as usual, and this year it put out the iWatch  and a new iPhone. But its partnership with Irish rockers U2  garnered all the headlines  and pulled off the largest album launch in history. U2’s first album in five years, Songs of Innocence, was made available free to half a billion iTunes users and the album downloaded automatically.

The rise of innovative releases

There’s no doubt that music distribution is changing as fast as the rapidly evolving industry. August saw the lowest weekly album sales ever recorded by Nielsen SoundScan. So far this year, US album sales have fallen 14.6%, while digital album sales are down 11.7%1. Artists and labels are grappling to find feasible revenue models in the new music business. Because of the rather bleak state of affairs, artists are looking for more creative and innovative ways of releasing music.

U2’s album launch has been compared to several recent music marketing campaigns, including Jay Z’s partnership with Samsung, in which one million copies of Jay Z’s Magna Carta Holy Grail were released to Samsung Galaxy owners for free through an app2, and Beyoncé’s surprise album drop, which, like Songs of Innocence, was considered disruptive to traditional industry release models. Fans actually had to pay for Beyoncé’s album.  Unlike U2 and Jay Z’s albums, however, her unique approach still garnered 800,000 sales. Additionally, music-identification app Shazam, and social networking sites Facebook, and Twitter have released songs, and music videos for artists including Fifth Harmony, Bruno Mars, and Michael Jackson. Lastly, CBS.com debuted Bruce Springsteen’s High Hopes album before its worldwide release as part of a marketing campaign for the CBS show The Good Wife. Has the novel marketing push worked well for Bono and the rest of the rock band, as it did for other artists?

Apple’s collaboration with U2 garnered a much less enthusiastic response than previous innovative marketing stunts. In fact, the marketing ploy received quite a bit of criticism, prompting Apple’s release of a tool to remove U2’s record from users’ iTunes library3. In general, people want pull, not push. Contrasting Jay Z and Beyoncé, U2 didn’t give users a choice, and essentially forced the album upon them. This sparked many privacy concerns and issues, as many users believed that they had an “unwanted musical virus planted” in their iTunes library.

The Cost of Free Music

U2 is using its music as a loss leader; instead of selling albums, U2 hopes to sell concert tickets. Through the album launch, they have reached a potential audience of 500 million listeners. Their ultimate goal was to reach as many people as possible, gain younger fans, and help fill seats during future concert tours, even though the band regularly sells out huge concerts. The idea of reaching someone on the other side of the world excited them.

Despite U2’s rationale behind the release, many have argued that U2 is damaging the music industry by giving their music away for free4. In actuality, however, the music was not entirely free. Apple paid the band and Universal a blanket royalty fee and committed to a marketing campaign worth up to $100 million. Even though the rock stars were paid, music industry professionals believe that the giveaway still undermines up-and-coming artists since the end-users are still getting the music for free. The music industry changed back in 1999 when Napster was founded. It changed the way most people obtained music and altered the perceived value of music by lowering the average album price from around $12 to nothing. U2’s unconventional album release may have “devalued” music, but it offers a new union between technology and music to embark on innovative and creative projects.

Future Collaborations

What’s next for Apple and U2? They hope to revolutionize the music-listening experience with yet another collaborative project – one they hope will assist artists in selling more albums and singles by building creative capabilities and making the music experience more digitally immersive5. A few media outlets claimed that the tech giant and Irish rock band were creating a new digital music format, when, in reality, the project is actually an “audiovisual interactive format for music that can’t be pirated and will bring back album artwork in the most powerful way,” according to Bono. This project comes at a time when musicians are exploring new ways to distribute and market music, all while fighting declining sales in the age of streaming and downloads. U2 is also planning to storm through the criticism with a 2015 arena tour to promote Songs of Innocence. In the meantime, U2 are preparing for the physical release of the album, which will include exclusive acoustic versions of many songs to appease traditional retailers who weren’t too happy with the giveaway.

When thinking about Apple’s plans for Beats Music, the future is unclear6. Analysts claim that Apple would shut down Beats’ streaming service, but in a public statement, an Apple spokesman denied it. Wall Street experts and industry analysts predict that the Beats Music brand will eventually be retired and streaming music will be incorporated into iTunes. By integrating Beats, Apple could offset their declining digital download sales and find new ways to fuse technology and music projects through streaming.

Technology can’t do without music, which has been evident through Samsung’s project with Jay Z and Apple’s partnership with U2. Technology firms are buying music directly and offering users this music for free or through a freemium model. This cannot be neutral to the music business. If the record labels can no longer be relied to break releases by stellar recording artists, and instead share their cash cows with the technology sector, the old pillars of the music industry are, at the very least, not doing the job they once did.

By Anahita Bahri


1. Snyder, Benjamin. “Is U2 Going Freemium with Apple a Sign of What’s To come?” Fortune. 9 Sept. 2014. http://fortune.com/2014/09/09/is-u2-going-freemium-with-apple-a-sign-of-whats-to-come/

2. Carroll, Katie. “Why Jay Z Rocked and U2 Flopped: Apple’s Misguided Quest for Cool.” The 405. 23 Sept. 2014. http://www.thefourohfive.com/news/article/why-jay-z-rocked-and-u2-flopped-apple-s-misguided-quest-for-cool-141-3

3. Owsinski, Bobby. “Analyzing Apple’s U2 Mistake.” Forbes. 18 Sept. 2014. http://www.forbes.com/sites/bobbyowsinski/2014/09/18/analyzing-apples-u2-mistake/

4. Resnikoff, Paul. “Let Me Explain Why U2 Is Damaging the Music Industry.” Digital Music. 16 Sept. 2014. http://www.digitalmusicnews.com/permalink/2014/09/16/let-explain-u2-damaging-music-industry

5. Hampp, Andrew. “Exclusive: Guy Oseary on U2’s $100 Million Deal With Apple, And What’s Next for the Group.” Billboard. 12 Sept. 2014. http://www.billboard.com/articles/business/6251220/guy-oseary-interview-u2-apple-deal-songs-of-innocence

6. Sisario, Ben, and Brian X. Chen. “Months After Buying Beats, Apple’s Plans for Its Music Service Remain Unclear.” The New York Times. 22 Sept. 2014. http://www.nytimes.com/2014/09/23/business/media/months-after-beats-purchase-apples-plans-for-music-service-are-still-unclear.html

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Comments

One Reply to “Apple as a Record Label”

  1. Dennis Wenrich says:

    This is an example of history repeating itself. The “spray and pray” method hardly worked in the 50’s and 60’s. Apple’s acquisitions are correct at heart, but how, in the long run, does any artist expect to win over fans with when you’re not entirely relevant. I could see if this were the new Taylor Swift album. It could very well! They were much better off just offering their fans with the option of an interactive app, complete with artwork, at a low rate. In the vain of what they were considering now. They would have been moving forward with less criticism that their receiving. I just hope they have learned from this experience.

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