Why Ian Roger’s Departure From Apple Music Puts It In A Bad Place

It’s been reported today that Apple Music executive Ian Rogers has left the company to pursue other interests in an “unrelated industry.” That bodes ill for Apple as Rogers was the operational brains behind both Beats Music and its transition to Apple Music.

Rogers has been a long-time digital music insider, having run Beats Music, Topspin (a direct to consumer marketplace for artists and bands) and Yahoo Music. He’s also one of the smartest and level-headed guys in an industry with a dearth of those attributes.

It’s been long speculated that Rogers was a key ingredient in Apple’s acquisition of Beats. Jimmy Iovine may be a vaunted music exec, but he’s been compared to a New York street hustler by many that have done business with him through the years. Dr. Dre is great producer, but he’s seen as a marketing foil for Iovine. Together they were able to turn some cheap Chinese headphones into gold thanks to a licensing deal with Monster Cable, then flip it for a huge profit to Apple.

Rogers was the guy behind the scenes that quietly created the Beats Music service, which was always going to be limited because of the Beats brand and its tie-in with the headphones. He had his finger on the market and the down-in-the-trenches everyday music consumer much more so than Iovine or Dre ever did, and that’s one of the reasons why Apple bought the company. He was just the kind of guy they needed to run the next iteration of iTunes.

I had the pleasure of hearing Rogers speak many times and even interviewed him for a previous edition of my book Music 4.0: A Survival Guide For Making Music In The Internet Age. I always came away much more enlightened than before, both in local and global views of the music market. Ian knew his customers very well, the tools they were using, and the music they were listening to. Read more on Forbes. 

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Apple Will Kill Off The Beats Music Brand Sooner Or Later

There have been recent conflicting reports that Apple is about to kill off one of it’s most recent acquisitions, the Beats Music service, leaving the tech world to ponder what will eventually happen with the service over the long term. Regardless of which side of the rumors you care to listen to, it’s probably fair to say that at some future date Beats Music as a brand will be no more, although the backbone of the service will still live on.

Apple actually gave us a hint that Beats Music wasn’t exactly a priority when it wasn’t included in the new iOS 8, and was only referred to in passing during the recent iPhone 6 introduction event last week. This was quite curious for a product that seemed to be right in the sweet spot of event.

Actually, retiring the Beats Music brand would strengthen the theory that the acquisition of Beats Electronics/Music was more about getting Jimmy Iovine on board than anything, although the company also got an extremely savvy digital music exec in Ian Rogers, who was CEO of Beats Music and is now in charge of iTunes Radio. There may be more to the acquisition than that simple supposition however.

The Apple sources have been pretty emphatic that regardless of what happens to Beats Music, the company was is not about to abandon the interactive streaming business. That said, Apple has a bit of a conundrum on its hands in that it still wants users to buy songs on iTunes, and it no doubt has promised ongoing support for this to the various record labels as well. Read more on Forbes.

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Apple Beats Winners And Losers

Now that Apple has officially announced that it’s acquiring Beats Electronics and Beats Music for $3 billion, the media speculation engine can finally begin to wind down. While that happens, let’s take a quick look at the prospective winners and losers in the deal.

Winners

Apple: In Beats Music it gains the infrastructure it needs to move away from music downloads into streaming, in Beats Electronics it gains an entry into a market segment where it had no presence (high-end audio accessories), and by adding Beats co-founder Jimmy Iovine to the executive team it adds some sorely needed vision (see my previous post). 

Beats Music: It gets saved from swimming against the current of more established music services like Spotify and Pandora, which have a considerable head start. Although the company had some relatively deep pocketed investors in billionaire Len Blavatnik’s Access Industries and the Carlyle Group, that’s still not enough to compete with Apple, Amazon and Google in the long run when they enter the market.

Beats Electronics: Gets purchased at its peak or just beyond, so it’s saved from having to worry about market attrition. Plus it now gets to take advantage of the engineering and manufacturing expertise of Apple.

Tim Cook: Makes an attempt to fill a hole left in the company after the passing of Steve Jobs, which makes him look somewhat visionary himself.

Jimmy Iovine: Makes the leap from the music business to big-time tech while cashing out from Beats. Now he’ll get to have a say in the direction of the tech giant, which may be the ultimate in industrial glamour these days.

Dr. Dre: Raises his status in the urban community by cashing out to become the first near-billionaire hip hop artist/producer, and is able to escape the music business if he wants. Read more on Forbes.

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The Puzzle Piece That Apple Really Bought

Now that the announcement has been made that Apple’s acquisition of Beats Electronics has been completed for $3 billion, and that Beats co-founders Jimmy Iovine and Dr. Dre will join Apple in yet unspecified executives roles, it’s important to take a step back and examine what has really gone down here. There’s much more than meets the eye.

As I alluded to in a previous post, there were just as many reasons for Apple to avoid the Beats deal as there were to make it. That said, just about everyone (myself included until now) has missed the big picture point of the purchase. The deal really isn’t about Beats music service or its headphone business. It’s all about Iovine.

Apple CEO Tim Cook realized that while he may be a great operations guy, he doesn’t have the market vision of his predecessor Steve Jobs (who could?). Music has been responsible for the resurgence and subsequent market rise and dominance of Apple, not so much from a revenue point of view (although the sales from music are substantial), but as means to an end to sell what really makes the company money - its hardware. Apple needs someone who is capable of looking into the future in a way that no one else at Apple has been able to since Jobs passed nearly three years ago.

While it’s too much to expect Iovine to be another Jobs, he has proved to be quite deft at navigating the minefield that is the entertainment industry - enough so to build a substantial billion dollar company in a mere seven years. This was done by seeing a hole in the market (high-end headphones), then recruiting the well-respected hip hop producer Dr. Dre to provide credibility and marketability to an underserved market. He then granted an exclusive manufacturing and distribution license to Monster Cable, a company perfectly suited to instantly provide widespread availability of the product. The distribution deal we terminated at the beginning of 2012, at which time Beats took the manufacturing and distribution in-house. All the hard work of establishing the brand had already been done. Read more on Forbes.

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Beats Music To Launch In January 2014

We've been hearing a lot about Beats Music, especially over the last 6 months, but now it looks like its introduction is at hand, with word that it will finally launch in January 2014.

According to a blog post by CEO Ian Rogers, “When I joined Beats Music in January I’d expected we’d get this out the door before the end of the year. Thankfully I work with people who have patience and are more concerned about getting Beats Music right than pushing it out the door. In retrospect we’ve accomplished far more this year than I’d imagined possible.”

Beats Music has a lot going for it, being owned by Dr. Dre and Jimmy Iovine, and being run by industry veteran Rogers with creative director Trent Reznor. The service is based around the MOG streaming service, which Beats purchased earlier in the year. It's also backed by a $60 million investment from billionaire Len Blavatnik's Access Industries and Texas billionaire Lee Bass, so its pockets are potentially deep enough to battle it out with the likes of iTunes Radio, Spotify and Pandora.

That said, the differentiating factor between Beats Music and other services is the fact that it's based around curated content by music celebs and professionals. In fact, a new feature just revealed allows you to listen along to the same content as your favorite celeb in real time. It's yet to be seen if music curation is actually the attraction that the company thinks it is though.

Beats Music holds a lot of promise as a streaming music game changer. Very soon now we'll see the reality first-hand.

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Follow me on Forbes for some insights on the new music business.

You should follow me on Twitter and Facebook for daily news and updates on production and the music business.

Check out my Big Picture blog for discussion on common music, engineering and production tips and tricks.

Beats Music Launch Getting Closer

Dr. Dre and Jimmy Iovine's Beats "Project Daisy" streaming music service appears to be getting closer to reality. Not only does Beats Music now have a website (although there's nothing on it), but it's hired a number of high profile people as music "curators." It's also openly advertising for engineers and designers.

According to Billboard, among the new hires include:
   Scott Plagenhoef, former Pitchfork Media editor in chief
   Carl Chery, former digital content director at XXL
   Suzy Cole, a radio music director from Detroit
   Arjan Writes, Recording Academy music blogger
   Mason Williams, former Rhino Records A&R director
   Fuzzy Fantabulous, LA hip hop radio personality
   Ken Tucker, a country music writer

They all report to new hire Julie Pilat, a former top exec at Clear Channel.

As I've posted before, the big hook for the new service will be content curation, which Iovine believes is something missing from the other services. The human element promises to provide a better way to discover new music, something that's not only vital for the service but the music industry in general.

The new curators certainly are experienced in their genres, which is a good place to start. Whether high profile and experienced curators will be better than ordinary people steeped in their particular scene is yet to be determined, but it's a good place to start.

There's no date for the launch of Beats Music (or Project Daisy, or whatever it will be called), but it looks like it's not that far away now.

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Help support this blog. Any purchases made through our Amazon links help support this website with no cost to you.

Follow me on Forbes for some insights on the new music business.

You should follow me on Twitter for daily news and updates on production and the music business.

Check out my Big Picture blog for discussion on common music, engineering and production tips and tricks.

There's A New Music Service In Town

There are a lot of music services online vying for a piece of the pie that iTunes is leaving behind, but for every single one of them it's a tougher go than what meets the eye. The license fees demanded by the major labels makes it almost prohibitively expensive to get into the market, then the royalty payout makes it even harder to stay there.

That's why when headphone manufacturer Beats by Dr. Dre purchased the streaming service MOG earlier in the year for only $14 million, the collective industry reasoning was - why? After all, MOG only had 500,000 active users and the purchase didn't even include its advertising network.

But Beats founders Dr. Dre and Interscope exec Jimmy Iovine were apparently looking at the MOG acquisition in a different way from the rest of the industry. On Thursday they named Topspin CEO Ian Rogers as the new CEO to join Nine Inch Nails founder Trent Reznor, who had been previously hired to act as creative director, of a new unnamed music service going by the code name of "Daisy."

Ian and Trent are two of the smartest guys in digital media today, and right away you have to think that they'll come up some something out-of-the-box that hasn't been tried before.

But here's where the brilliance of the MOG acquisition comes in. Basically Beats could care less about the MOG infrastructure I'm guessing. Nothing special there. But the licenses with the labels hold real value. With licenses in hand, the company doesn't have to go through the elongated and expensive negotiating process (at least not until they have to be renewed), so that leaves them free to design their own platform on a more timely basis. And both of those guys know about software development and the user and artist experience, which is why we can look forward to what they come up with.

There's yet another big advantage that Daisy could have and that's the connection to Beats. There's a lot of customers who love the product and would be predisposed to trying a new service. Plus it could be offered with the purchase of a new Beats headphone in the future.

You can read an excerpt of an Ian Rogers interview that he did for the Music 3.0 guidebook. It's quite enlightening as to his outlook on the music business.

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Help support this blog. Any purchases made through our Amazon links help support this website with no cost to you.

You should follow me on Twitter for daily news and updates on production and the music business.

Check out my Big Picture blog for discussion on common music, engineering and production tips and tricks.

Beats Buys MOG

Here's something I don't think anyone saw coming. Headphone maker Beats Electronics, owned by rap artist/producer Dr. Dre and music exec Jimmy Iovine, has acquired the digital music service MOG Inc. What's particularly interesting is that the purchase price was reportedly "less than $10 million" for a service that has 500,000 registered users. Sounds like a bargain to me.

The deal makes sense at that price since Beats is trying to create an ecosystem built around their headphones. If you have a supply of high-quality tunes to listen to (MOG uses a very good 320kbs codec), that side of the company can feed the headphone side and vice versa. With Iovine being the ultimate music industry insider, any licensing problems should be easy to overcome, especially since both Universal and Sony were owners in MOG (beside 3 venture capital groups).

Beats is an interesting story in that they take some more or less crappy Chinese headphones, jack up the price to way beyond what they're worth, and somehow get people to buy them. It sort of reminds me of Monster Cable, who does the same thing. The company has now taken over more than 43% of the headphone market, I'm sure much to the chagrin of quality headphone manufacturers like Audio Technica, Sennheiser, Shure and others. You snooze you loose, guys.

Let's see if Beats continues with their magic touch as they proceed with MOG in the fold.

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Help support this blog. Any purchases made through our Amazon links help support this website with no cost to you.

You should follow me on Twitter for daily news and updates on production and the music business.

Check out my Big Picture blog for discussion on common music, engineering and production tips and tricks.