Ex-Beats executive to step back from daily responsibility at
streaming business
By Tripp Mickle and Anne Steele
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (March 22, 2018).
Apple Inc. is losing the public face of its music operations,
just as its streaming service is finding its beat.
Executive Jimmy Iovine will transition into a consulting role in
August and step back from daily involvement with the company's
streaming-music business, according to people familiar with his
plans.
Mr. Iovine is one of the last of a team of prominent music
executives Apple gained when it bought Beats Electronics LLC in
2014 for $3 billion. Former Chief Executive Ian Rogers, Beats
co-founder Dr. Dre and Nine Inch Nails frontman Trent Reznor,
another top Beats executive, have all left or distanced themselves
from the company since the Apple deal, people familiar with the
business said. Beats President Luke Wood, who oversees the
headphones business, remains.
The departures raise questions about the lasting value of
Apple's largest deal at the same time its acquisitions strategy is
attracting new interest with the planned repatriation of some $250
billion in cash it has held overseas.
While the Beats deal jump-started Apple's music-streaming
business and eliminated a competitor, Apple had to revamp the first
version of Apple Music because of design problems. Original video
programming later pushed by Mr. Iovine also received critical
reviews.
Beats's headphones and speaker business has diminished in
significance as Apple launches and pushes its own audio products,
including AirPods earbuds and HomePod speakers. Beats's share of
U.S. Bluetooth headphone sales has declined to 37% from 41% in
2014, according to NPD Group, a market-research firm.
"If you ask the question, 'Did they need Beats?,' the answer is
no," said Gene Munster, managing partner at Loup Ventures, a
venture-capital firm specializing in tech research. "They didn't
need it to get to where they've gone in music, and the existing
Beats business has not done well."
Several media outlets in January reported that Mr. Iovine was
leaving Apple, but he said publicly he planned to stay.
More recently, Mr. Iovine, a former producer of Stevie Nicks and
U2 who founded Interscope Records, has told people close to him
that he plans to spend more time with his family while supporting
Apple Senior Vice President Eddy Cue, who oversees Apple Music, as
needed, the people said.
It isn't unusual for executives to leave after their companies
get acquired by a bigger competitor. Many key executives have
departed Apple after buyouts, finding it difficult to adapt to the
tech giant's well-defined culture and sprawling operation after
leading smaller, independent operations.
For Mr. Iovine and his colleagues, transitioning from the edgy
culture they established at Beats to an Apple Music culture that is
more focused on appealing to the masses was a particular challenge,
the people said.
The timing of Mr. Iovine's move, however, is linked to the Apple
shares he received in the Beats acquisition, which will fully vest
in August, they said.
Apple's music business has been gaining momentum and is poised
to overtake rival Spotify Technology SA this year in U.S. paid
subscribers. That is mostly because of Apple Music's reach across
many of Apple's 1.3 billion devices world-wide -- on which its app
is included by default -- rather than the exclusive content
agreements delivered through Mr. Iovine's close relationships with
artists, according to music-industry executives.
Apple Music's Mr. Cue has leaned on a trio of executives for
day-to-day leadership, people familiar with the operation said.
Mr. Iovine has led the Los Angeles music office, regularly
holding meetings with Apple Music employees and with artists and
entertainment executives such as the Black Eyed Peas member
will.i.am and former NBC television executive Ben Silverman, the
people said.
But most of Apple Music's operations were left to senior
executives Robert Kondrk, who oversees the business of Apple Music
and iTunes, and Jeff Robbin, who oversees the product and
engineering teams, the people said. The pair assumed a more active
role at Apple Music after the streaming service was plagued by
design and engineering issues following its launch in 2015. It was
redesigned and rereleased a year later.
Mr. Cue now will have to determine whether to continue dividing
responsibilities between Messrs. Kondrk and Robbin, elevate one to
a more public role, or look externally for someone with
music-industry ties to assist with artist relationships, people
familiar with the matter said.
While other Apple executives have close ties to the music
industry, none has the stature of Mr. Iovine, who after succeeding
in rock became a forerunner in hip hop, a genre that has only
continued to gain in popularity.
Mr. Iovine's planned departure further distances the Apple Music
division from the company's push into video content. The executive
had championed Apple's support of documentaries and shows such as
"Carpool Karaoke," saying the combination of video and music would
create "a fuller experience" that attracted more subscribers.
Apple last year hired Jamie Erlicht and Zack Van Amburg, who
oversaw Sony Pictures Television productions such as "Breaking
Bad," to lead a different division pushing into original content.
They have a $1 billion budget and report to Mr. Cue, who has taken
an active role in developing that business.
Write to Tripp Mickle at Tripp.Mickle@wsj.com and Anne Steele at
Anne.Steele@wsj.com
(END) Dow Jones Newswires
March 22, 2018 02:47 ET (06:47 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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