“Beats Electronics has done a very good job at making expensive headphones a mass-market item. And that’s what makes them a good candidate to crack open the music subscription business, says CEO Jimmy Iovine,” Peter Kafka reports for AllThingsD.
On early efforts to get into the subscription business, and pitching former Apple CEO Steve Jobs on the concept:
I always felt that our content was really valuable, and that it could help the tech guys with differentiation. The tech companies really didn’t see that. The guy that smelled it the most was Steve, obviously… So I met him and we hit it off right away. We were really close. We did some great marketing stuff together: 50 Cent, Bono, Jagger, stuff for the iPod — we did a lot of stuff together. But I was always trying to push Steve into subscription. And he wasn’t keen on it right away. [Beats co-founder] Luke Wood and I spent about three years trying to talk him into it. He was there, not there … he didn’t want to pay the record companies enough. He felt that they would come down, eventually. I don’t know what [Apple media head] Eddy Cue would say — I’m seeing him soon — but I think in the end Steve was feeling it, but the economics …he wanted to pay the labels [for subscriptions], but [the fees were] not going to be acceptable to them.
More from Iovine in the full article here.
Beats headphones are overpriced crap sold to undiscriminating suckers who fall for fancy marketing. The only people who go for Beats stuff listen to bass-heavy, overproduced mass-market rubbish. It’s a good thing SJ saw through Iovine’s schpiel and refused to go the subscription route, I want to own my music, not rent it with the possibility of the record companies pulling my rights to access the music I’ve paid for.
Like Amazon and Kindle ebooks.
Steve knew how much his business was actually valuable to the labels. There was a reason why his fee offer was so low — he was bringing hundreds of millions of registered users with a credit card on file, and not just any users, but noticeably above average spenders, with plenty of disposable income. The fees he offered were extremely low because he knew the volume generated by the legions of loyal Apple customers (spenders) would be drastically more than all the subscription-based revenue so far, from all other current sources.
The labels simply don’t get it; they continue to exist in the middle of the last century (when Album was the king…).