Eddy Cue, Jimmy Iovine, Apple, Beats Music, Code Conference

Asa Mathat

Media


Liveblog highlights

  • Apple offers three reasons for its $3 billion deal to acquire Beats: the talent, the headphones and the subscription music service.
  • The deal represents a culmination of a decade-long relationship between Apple and veteran music industry veteran Jimmy Iovine
  • Iovine says he will attempt to bridge two cultures: desperately insecure Hollywood, and overconfident Silicon Valley.
  • Eddy Cue dismissed speculation that Apple is buying “cool.” Rather, it represents an opportunity to create great products together.
  • Iovine said the Beats/HTC partnership crashed because of a culture clash.
  • Cue talks about how the TV viewing experience “sucks,” but addressing the problem is a hard challenge to solve. He promised continued improvement with the current product, Apple TV.
  • Asked about Apple’s cloud service, Cue said it will continue to play a background role as a “faceless” feature that works seamlessly.
  • Iovine said Beats Music will continue to be available on Android phones. It now boasts 250,000 subscribers.
  • Cue praises CEO Tim Cook as a tremendous leader, says great new products are coming.
  • Cue says current product lineup is the best in his 25 years.

We can say this about the Apple/Beats deal: It will bring Apple watchers a completely different kind of Apple executive to watch.

Beats co-founder Jimmy Iovine is a quick study — “I’m at Apple now. I can’t say anything”, he announced, midway through his onstage interview at the Code Conference — but he hasn’t quite mastered Apple Omerta yet. So the former music executive had lots to say about the state of the music business, the distrust between Hollywood and Silicon Valley, and the prospect for rival streaming services like Spotify.

Apple SVP Eddy Cue, meanwhile, is excellent at saying very little, and mostly stuck to talking points his boss Tim Cook had already laid out regarding the reasoning behind the deal. But Cue still offered a bit of insight into Apple’s mindset: He asserted that the company hasn’t had to “reset” after Steve Jobs death, and that the company’s upcoming product line is the most impressive one he’s seen in 25 years.

As Walt Mossberg pointed out, Cue has now set a very high hurdle for himself and his company. If he clears it, the fact that Apple spent $3 billion on a headphone and streaming company may seem like an afterthought.





Peter Kafka May 28, 20148:04 pm

Good evening! Musician/producer Don Was has joined us. You may know him from this

Peter Kafka May 28, 20148:06 pm

Don has introduced Ryan Adams, who makes a bitcoin joke. And now a song.

Peter Kafka May 28, 20148:07 pm

Pretty sure Ryan Adams is wearing a Black Flag t-shirt under his jean jacket. Excellent.

Peter Kafka May 28, 20148:09 pm

Did you think you’d be reading a liveblog that attempts to describe what it’s like to hear Ryan Adams cover the Pointer Sisters? I know. Didn’t think I’d be writing it. 

Peter Kafka May 28, 20148:09 pm

It’s pretty great, by the way.

Peter Kafka May 28, 20148:10 pm

And we’re off. Walt and Kara are here. Time to vamp a little.

Peter Kafka May 28, 20148:10 pm

The good news: This session is pretty timely.

Peter Kafka May 28, 20148:11 pm

Bad news: No audience Q&A. Apple blames the lawyers for this. Kara blames Katie Cotton. Lawyer does not get a chair.

Peter Kafka May 28, 20148:12 pm

And now, Eddy Cue and Jimmy Iovine. (Cue: Pixies “Gigantic.” Get it?)

Peter Kafka May 28, 20148:12 pm

Kara: Why did you do this deal?

Peter Kafka May 28, 20148:12 pm

Cue: You just heard why we did this deal. It’s about music. Begins to repeat press release and Tim Cook’s comments from earlier.

Peter Kafka May 28, 20148:13 pm

We love Beats for 3 reasons: 1) Talent. Jimmy is the most talented person I’ve met in the music business. Dre is great. Team is great.

Peter Kafka May 28, 20148:13 pm

2) Their headphones are awesome. “They’ve done an amazing job of making the audio and making it sound incredible.”

Peter Kafka May 28, 20148:14 pm

3) Beats Music. Subscription music done right.

Peter Kafka May 28, 20148:14 pm

Walt: Okay. But Apple knows how to make great hardware and software. Why couldn’t you have done headphones on your own? Or do the service on your own?

Peter Kafka May 28, 20148:15 pm

Cue: We don’t do everything. We try to do a few things. We think Beats’ talent can accelerate us. It was a no-brainer. This isn’t something that just happened overnight. Jimmy and I have talked about working together for a decade.

Pete Mall May 28, 20148:15 pm

Peter Kafka May 28, 20148:16 pm

Iovine: Dre and I come from similar backgrounds. My dad was a longshoreman in Brooklyn. Dre’s from Compton. We shared the dream of music — it could change our lives, get us out of our neighborhoods and make money. 

Peter Kafka May 28, 20148:17 pm

People aren’t doing that anymore. They’re doing other things. We met the guys at Apple. They get it. When I met Eddy and Steve, in 2003, 2005, I came back and said “these guys get it.” They respect what we do. They respect copyright. They respect the entire food chain. “We built Beats. We built Beats Music, and we got lucky.”

Peter Kafka May 28, 20148:17 pm

Kara: Yes you did.

Pete Mall May 28, 20148:17 pm

Peter Kafka May 28, 20148:17 pm

Kara: It seems like Hollywood, and music people, and tech don’t really mesh.

Peter Kafka May 28, 20148:18 pm

Iovine: All the business guys in entertainment are desperately insecure. “And the guys in Silicon Valley seem to be somewhat overconfident.”

Peter Kafka May 28, 20148:19 pm

We think that streaming services need curation. The album is going away. We all know that. The sequencing of an album used to be important. You need an hour’s worth of music. Some of the other services are just based on algorithms. That doesn’t work. Kids listen to programmed radio, and it doesn’t work. We wanted to fix that.

Peter Kafka May 28, 20148:20 pm

The music business is the ghetto of entertainment. And we wanted to move to a better neighborhood. So we sold to Apple.

Peter Kafka May 28, 20148:20 pm

Walt: You went to a company that’s helped compress audio, which is part of the problem.

Peter Kafka May 28, 20148:21 pm

Cue: Compression isn’t the problem.

Pete Mall May 28, 20148:21 pm

Peter Kafka May 28, 20148:21 pm

Iovine: I talk to the engineers all the time. The problem is with the recording.

Peter Kafka May 28, 20148:21 pm

Kara: You moving to Cupertino?

Peter Kafka May 28, 20148:21 pm

Iovine: I’m going up there a lot. I’ve been going up there a lot – 10 times a year.

Peter Kafka May 28, 20148:22 pm

Walt: Apple has made a huge mark on music. You have too. So what’s next?

Peter Kafka May 28, 20148:23 pm

Cue: Like I said, both Jimmy and Dre have an incredible ear for sound. You have to know what the next sound is. I grew up listening to albums. “Music is dying, in the way that we all want it.” Smallest number of new releases we’ve ever had in iTunes this year.

Peter Kafka May 28, 20148:23 pm

Walt: We’ve talked about Beats Music, and I get the concept. Humans + computers. But it hasn’t caught on.

Peter Kafka May 28, 20148:24 pm

Iovine: We have 250,000 subscribers.

Peter Kafka May 28, 20148:24 pm

From what I understand in the tech business, you get to try something out for awhile before you figure out if it works.

Peter Kafka May 28, 20148:25 pm

So Apple is going to help us. “Who doesn’t want a product made by Apple?” And we’ll work on the model. “We don’t know the exact model yet, but we need to put steroids into this thing.”

Peter Kafka May 28, 20148:25 pm

Cue: We have 800 million customers.

Peter Kafka May 28, 20148:25 pm

Kara: Are you buying cool?

Pete Mall May 28, 20148:26 pm

Peter Kafka May 28, 20148:26 pm

Cue: I don’t think you buy cool. But Beats is really cool. We make great products, and we’re going to make great products together. I don’t know what being cool means. 

Peter Kafka May 28, 20148:26 pm

Walt: Are you keeping the Beats brand?

Peter Kafka May 28, 20148:26 pm

Cue: Yes. 

Peter Kafka May 28, 20148:26 pm

Walt: That’s unusual for you.

Peter Kafka May 28, 20148:27 pm

Cue: We have other brands, like iTunes.

Peter Kafka May 28, 20148:27 pm

Walt: You made that brand.

Peter Kafka May 28, 20148:27 pm

Cue: True. We’ll see where this takes us.

Peter Kafka May 28, 20148:27 pm

Walt: You guys used to dislike streaming. But now download sales are down, and streaming is up. Isn’t this related to that?

Peter Kafka May 28, 20148:28 pm

Cue: The rate of downloads has leveled off. But downloads aren’t going away. We just sold our 35th billion song.

Peter Kafka May 28, 20148:28 pm

Remember, this isn’t something that came about in the last day.

Peter Kafka May 28, 20148:28 pm

Kara: What’s your title?

Peter Kafka May 28, 20148:28 pm

Iovine: Jimmy and Dre. We report to Eddy on the music side, and Phil on the product side.

Peter Kafka May 28, 20148:29 pm

Walt: Will he get an office in Cupertino?

Peter Kafka May 28, 20148:29 pm

Iovine: “They’re going to give me the whole thing.”

Pete Mall May 28, 20148:29 pm

Peter Kafka May 28, 20148:29 pm

Walt: Okay, give me some idea of what you’re going to do. We get what you do now. Give me some kind of example.

Peter Kafka May 28, 20148:30 pm

Cue: I’ll tell you what we have, and you can come up with your own ideas. We have a lot of customers. They know how to pay for things. We have great relationships with artists, and we know how to market them. (Makes another steroids reference)

Peter Kafka May 28, 20148:30 pm

Kara: Who’s your competition. Spotify?

Peter Kafka May 28, 20148:31 pm

Iovine: We don’t think about competition. We run our race. Apple has a lot of information about what people listen to, we’re going to use that. But competition isn’t a part of the creative process. Except sometimes, I guess.

Peter Kafka May 28, 20148:31 pm

In consumer electronics, you copy what someone does something successful. In music, that’s embarrassing.

Peter Kafka May 28, 20148:31 pm

Walt: You sold the company once, to HTC.

Peter Kafka May 28, 20148:32 pm

Iovine: We needed a partner. We had 5 employees. Now we have 500. I felt like the only chance that music had was through the phone. So we picked a smartphone maker. But it was a culture clash.

Peter Kafka May 28, 20148:32 pm

Kara: Why didn’t you work with Apple?

Pete Mall May 28, 20148:33 pm

Peter Kafka May 28, 20148:33 pm

Iovine: Are you kidding? I asked these guys forever! “These guys make deals like they make products.” (Makes painstaking wrenching motion)

Peter Kafka May 28, 20148:33 pm

Walt: You also did a branding deal with HP.

Peter Kafka May 28, 20148:34 pm

Iovine: Yup. That deal will end soon. We didn’t like the sound of computers. Computers are made for talk. Apple is the only one with good sound. Every other computer sounds like a portable television.

Peter Kafka May 28, 20148:34 pm

Kara: What’s up with headphones? Where’s that going? Can you do other stuff?

Peter Kafka May 28, 20148:35 pm

Cue: We’re not going to talk about new product ideas. But headphones are great. They’re great when you want to remove noise. I love that Kevin Garnett ad. (Kara nods, has no idea what he’s talking about.)

Peter Kafka May 28, 20148:35 pm

Iovine: Our dream is that everyone who buys a phone around the world, upgrades to good headphones. They have earbuds.

Pete Mall May 28, 20148:36 pm

Peter Kafka May 28, 20148:36 pm

Walt: Apple makes those earbuds.

Peter Kafka May 28, 20148:36 pm

Iovine: They make those to see if the sound works.

Peter Kafka May 28, 20148:36 pm

It’s not their responsibility to make good headphones. They make phones.

Peter Kafka May 28, 20148:37 pm

“When people talk about the headphone business, they look at it like ‘that’s some type of business.’ But there’s a possibility that everyone who buys a phone will upgrade, to get the experience right.”

Peter Kafka May 28, 20148:37 pm

We’re doing speakers as well right now. We have a long way to go to turning the audio market around.

Pete Mall May 28, 20148:37 pm

Peter Kafka May 28, 20148:38 pm

Walt to Cue: You made speakers. Then you pulled them. Because they weren’t selling well, right?

Peter Kafka May 28, 20148:38 pm

Cue: We didn’t think it was a good idea then. Now we do.

Peter Kafka May 28, 20148:39 pm

Kara: Let’s talk more broadly about Hollywood and tech.

Peter Kafka May 28, 20148:40 pm

Iovine: The industry feels that the tech companies don’t care about copyright. “There’s a bridge that needs to be … there’s a fear, there’s an intimidation.”

Peter Kafka May 28, 20148:41 pm

Cue: “There’s a lack of respect between the two sides.” Tech guys think what Hollywood does is easy. And the tech business thinks that Hollywood doesn’t get what tech has done for them — CDs, DVDs, etc. “There’s been a lack of appreciation for the work that each side does.”

Peter Kafka May 28, 20148:42 pm

We’ve had an advantage, because we have relationships with Disney and Pixar, and we sit at the intersection between technology and liberal arts.

Peter Kafka May 28, 20148:42 pm

Walt: Can we talk about the cloud and TV? Those are both your responsibility. Apple has been trying to do a big TV project for years. Steve Jobs talked about it generally. Tim Cook says it’s an area of interest. We haven’t seen a new product, though. Why not?

Pete Mall May 28, 20148:43 pm

Peter Kafka May 28, 20148:43 pm

Cue: Apple TV has taken off — 20 million sold. It’s a billion dollar a year business. Bigger this year. We’re adding more content. “It’s doing great.”

Peter Kafka May 28, 20148:44 pm

The reason there’s so much interest in TV in general is that “the TV experience sucks. … all we have today is glorified DVRs.”

Peter Kafka May 28, 20148:45 pm

I have to program the DVR, if I forget to do that I can’t watch it. It’s not like the experience with Apple TV. “The experience has been stuck.” I wanted to watch TV on my iPad today. It’s hard to do that. I think it can be a lot easier. “I think there’s a long way to go with TV.”

Peter Kafka May 28, 20148:45 pm

Walt: But why haven’t you given us a TV that doesn’t suck?

Peter Kafka May 28, 20148:45 pm

Cue: “TV is a hard problem to solve.” No global standards, lots of rights issues. “It’s a complicated landscape to solve.”

Peter Kafka May 28, 20148:46 pm

Walt: Is it an issue of wanting to do both hardware and programming?

Peter Kafka May 28, 20148:47 pm

Cue: I’m not going into details. “The problems aren’t complicated. Solving them is complicated, because there are lots of parties involved.” Music is much easier, because rights are pretty much set at this point. TV isn’t there.

Peter Kafka May 28, 20148:47 pm

Walt: So do you just coast with Apple TV?

Peter Kafka May 28, 20148:47 pm

Cue: Apple TV is going to continue to evolve. I’m a Comcast subscriber. I can watch ESPN, I can watch HBO Go. We’re going to keep improving it.

Peter Kafka May 28, 20148:48 pm

Kara: Jimmy, what are you going to do about TV?

Peter Kafka May 28, 20148:48 pm

Iovine: I’ve got an enormous job with music. I’m not going anywhere near TV. 

Peter Kafka May 28, 20148:49 pm

But, that said, my bigger problem is with movies. I wanted to watch a movie the other day with my girlfriend. Too hard to pick a movie. We need curation.

Peter Kafka May 28, 20148:49 pm

Kara: You just said you left the music industry four hours ago. Are you really leaving the music business?

Pete Mall May 28, 20148:49 pm

Peter Kafka May 28, 20148:49 pm

Iovine: Yup.

Peter Kafka May 28, 20148:50 pm

But still, I’m very interested in the business, which is in terrible shape. “It’s all being devastated.”  “I had an extraordinary life in music. So did Dre.” Now we have a chance to get things right. 

Peter Kafka May 28, 20148:51 pm

Kara: Would you make content for Apple?

Peter Kafka May 28, 20148:51 pm

Iovine: Not even thinking about it. I’m trying to get the delivery right. I keep hearing that these guys who run these services love music, so that’s why they’re doing it. I love chocolate, but I’m not Willy Wonka.

Peter Kafka May 28, 20148:53 pm

This is the new album. To create a listening experience that goes 30 minutes, 45 minutes that moves people? That will work. … “They’re not going to pay for access.”

Peter Kafka May 28, 20148:53 pm

Walt: Spotify seems to be working.

Peter Kafka May 28, 20148:53 pm

Iovine: They cost a fortune. They’re a very good service. But all of these free services are being funded by venture capital. There’s not a real business model beneath it, and when that money goes away, “it’s going to cave.”

Peter Kafka May 28, 20148:54 pm

“We’re in America. Spotify should have 10 million people in America. Not worldwide.”

Peter Kafka May 28, 20148:55 pm

Walt: Sorry, I have a non-music question. Eddy: iCloud doesn’t have a visible face. If I have Dropbox, or Google Drive, etc., I can put things in the cloud, I know where they are. Are you going to do that?

Pete Mall May 28, 20148:55 pm

Peter Kafka May 28, 20148:56 pm

Cue: “We’re not trying to make iCloud to have a face. We’re trying to make services that seamlessly connect with hardware and services.” People are using iCloud multiple times a day, and they don’t need a face on it.

Peter Kafka May 28, 20148:56 pm

(Shout out to Eddy Cue’s exposed chest, by the way.)

Peter Kafka May 28, 20148:57 pm

Kara: What does this deal signal on a bigger scale? Is this a change in attitude? Are you going to buy more things?

Peter Kafka May 28, 20148:57 pm

Cue: “We’ve never had a rule that says ‘thou shall not buy.’ But it’s a big purchase, there’s no doubt about it.

Peter Kafka May 28, 20148:58 pm

We just looked at this as a great opportunity for us to partner with Beats.

Peter Kafka May 28, 20148:58 pm

Kara: Come on, tell me about other deals.

Peter Kafka May 28, 20148:58 pm

(Guess what Cue said?)

Peter Kafka May 28, 20148:59 pm

Walt: You have services like iPhoto, but they’re not cross platform, will you make them?

Peter Kafka May 28, 20149:00 pm

Cue: Some of these things, like iMessage, are really integrated deeply into the hardware. Those types of opportunities are more difficult to do with other hardware, but we’ll keep providing some services to other platforms. Like Beats, for instance. It’s on Android now and we want to keep it that way. (Apple would almost certainly be wary of regulatory issues if it took Beats off of Android.)

Peter Kafka May 28, 20149:02 pm

Now Iovine is talking about doing smart advertising that integrates music into spots. Doesn’t like Geico preroll ads.

Peter Kafka May 28, 20149:02 pm

Walt: Who approached who about this deal?

Peter Kafka May 28, 20149:03 pm

Iovine: “How does somebody date for 10 years and then get married? All of a sudden it just happens.”

Peter Kafka May 28, 20149:03 pm

Kara: Tell me.

Peter Kafka May 28, 20149:03 pm

Iovine: “I’m at Apple now. I can’t say anything.”

Peter Kafka May 28, 20149:04 pm

Kara: You said Tim was involved. How is he as a leader?

Peter Kafka May 28, 20149:04 pm

Cue: I’ve been working with Tim for many many years. “He’s extremely thorough. He has tremendous vision.” 

Pete Mall May 28, 20149:04 pm

Peter Kafka May 28, 20149:05 pm

“Later this year, we’ve got the best product pipeline that I’ve seen in my 25 years at Apple.”

Peter Kafka May 28, 20149:05 pm

Iovine: “I get to see it tomorrow! When I walk around with these guys, they put tarps on everything.”

Peter Kafka May 28, 20149:06 pm

Walt: Seriously? In 25 years? iMac, iPhone, iPad, Macbook, etc.

Peter Kafka May 28, 20149:06 pm

Cue: “I believe the products we’ve got coming are great.”

Peter Kafka May 28, 20149:08 pm

Walt brings up the notion that Apple is in a “reset.” 

Peter Kafka May 28, 20149:08 pm

Cue: I’ve never felt like we’ve had a reset. Steve was sick for a while, so we had a long transition. 

Peter Kafka May 28, 20149:09 pm

“Steve was a great friend, a great mentor. I miss him. It’s very meaningful [that he’s gone] from that standpoint.” But if he could see what we’re building now, he’d be very proud.

Peter Kafka May 28, 20149:10 pm

Iovine: Any team that loses its point guard needs to bring new people in. Angela Ahrendts from Burberry is amazing. 

Peter Kafka May 28, 20149:10 pm

And we’re done. Ugh, those lawyers.

Peter Kafka May 28, 20149:11 pm

Thanks all for reading. And now, a self-plug: Kara Swisher and I will be interviewing Netflix CEO Reed Hastings at 830 pt tomorrow. My colleague Dawn Chmielewski will be live-blogging that. See you soon!

Peter Kafka May 28, 20149:48 pm

Cue: “We’ve never had a rule that says ‘thou shall not buy.’ But it’s a big purchase, there’s no doubt about it.”



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