Jimmy Iovine Says Free Streaming Music is Bad Business

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Jimmy Iovine says Apple Music could have a lot more subscribers if it had a free streaming tier, but that’s not a path Apple is willing to go down. Musicians need to get paid, he says, and free streaming doesn’t allow for that.

Dr. Dre, Lady Gaga, Jimmy Iovine

Jimmy Iovine (right) says free streaming music services are a bad business move

Speaking in an interview with Music Business Worldwide, Iovine said streaming services aren’t where musicians make money today. “Musicians believe right now that there’s very little money in the recorded music business,” he said. “So a lot of them are aiming their goal to be nothing but promotion – and that means having a No.1 record.”

Convincing listeners to pay for streaming services, however, is a hard sell today. According to Jimmy, the quality and features in free services are so good there isn’t any incentive to pay. To get that to change, he says, “free has to become more difficult or restricted, and the paid services have to get better.”

Exactly how many subscribers could Apple Music have with a free tier? Currently, Apple has more than 20 million subscribers, buy Iovine says that would be over 400 million. Apple offers a three month free trial, after which subscribers pay US$9.99 a month for unlimited streaming.

Apple is working on pushing its subscriber numbers higher by following the strategy Iovine laid out: make the paid service better. Right now, Apple has original shows such as Carpool Karaoke and Planet of the Apps set to launch this year, and just bought the exclusive rights to the Clive Davis documentary. The company is also reportedly on the hunt for a programming director.

That’s all because the real money, at least from Apple’s perspective, is in paid streaming music subscriptions. That said, Apple is going up against Spotify and its free offering that includes commercials. Free is hard to overcome in the consumer space, so Apple and Jimmy Iovine better have a good plan if they expect to overtake Spotify and convince more listeners to pay for streaming music.

5 Comments Add a comment

  1. BurmaYank

    $5/month? Mayyyyyybe
    BUT!!!! ONLY!!!!!!!!!!!!!!! IF major classical music houses, like Deutsche Grammophon or VOX etc. added their ENTIRE COLLECTIONS to the streamable selection list.

    Otherwise, the subscription would never be worth it to me. Nor to probably many tens or hundreds of millions of other still-waiting potential subscribers. … Jimmy.

  2. BurmaYank
    Never have I agreed with a post as much as I agree with this one.
    As long as they concentrate on the Rock/HipHop genres I simply have no interest. And the price. $2/mo yes. $5/mo mmmmmaybe if they had absolutely everything I wanted.
    But $10/mo. Nope. It’s simply a non starter for me. DOA.

    To get to Lovine’s point though. Free streaming is such a bad model that it has worked for the last 100 years and is working today. It’s called commercial radio. Musicians get publicity and they get paid and I can get what I want to hear at no cost other than listening the Maple Ridge Chrysler ad a few times per hour.

  3. I don’t know, I think the Music Industry should have stuck with the download model. Just shut the streaming companies out. I can’t see a viable market for this. At least with downloads you actually buy something. They could even renegotiated their deals to make downloads album only if they were worried about just the single model. Steaming seems weird to me (but then again I’m in my 50s so what do I know about the newer gens buying habits) its like paying for radio. At least Sirius/XM has multiple channels, I’d rather pay for that.

  4. This is the same Jimmy that made, literally, millions on ad-supported, free radio for several decades.

    But that doesn’t pay Apple’s bills.

    There is room for both types of services and still earn revenues for the artists. Apple can choose to support it or not.

  5. Yes, musicians DO need to be paid. Subscriber numbers are literally nothing if no one is making music because they are too busy at their day job. If ad revenue got passed on to artists, that’d be fair, but it doesn’t. Musicians are not indentured servants that exist solely to profit their distributors and to entertain us. The consideration for musicians that Apple has is something I really applaud them for. I don’t disagree about the paying for radio comparison, and I think it’s absurd to count streams as one would album or single sales, but this all is what it is. If you have never tried to make a living as a performer, if you are just a consumer, I don’t really care for your opinions about it, you aren’t coming from a place of credibility. The arts in generally are something we woefully take for granted.

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