Exclusive: Apple's Cook, music mogul Iovine discuss new music service

SAN FRANCISCO/LOS ANGELES Wed Mar 6, 2013 2:15am EST

Apple CEO Tim Cook waves at the end of Apple Inc.'s iPhone media event in San Francisco, California September 12, 2012. REUTERS/Beck Diefenbach

Apple CEO Tim Cook waves at the end of Apple Inc.'s iPhone media event in San Francisco, California September 12, 2012.

Credit: Reuters/Beck Diefenbach

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SAN FRANCISCO/LOS ANGELES (Reuters) - Apple Inc has held talks with Beats Electronics LLC, the audio technology firm co-founded by influential hip-hop producer Dr Dre and music mogul Jimmy Iovine, on a potential partnership involving Beats' planned music-streaming service, three people familiar with the situation told Reuters.

Apple Chief Executive Tim Cook met with Beats CEO Jimmy Iovine during a visit to Los Angeles in late February to find out more about Beats' "Project Daisy", a music subscription service the company announced in January but with scant detail, the sources said.

Apple's Internet products chief Eddy Cue, a key player in setting up its iTunes Music Store, also joined the meeting, at which Cook expressed interest in Daisy's business model and its rollout plans, although the two did not discuss specifics of a deal, the sources said.

The meeting between Cook and Iovine, who is also chairman of music company Interscope-Geffen-A&M, was "informational" and covered a broad range of music-related topics, the sources said.

Apple spokesman Tom Neumayr and Beats declined to comment.

The iPhone maker has been widely reported to be considering a music-streaming service to complement iTunes, the largest repository of music for sale.

Beats, known for its stylistic, distinctive headphones, has a partnership with Taiwanese handset maker HTC Corp, an Apple rival.

In a boost for the company, Beats said on Tuesday it had secured $60 million in funding for Daisy from a group of investors including Warner Music owner Len Blavatnik, Fort Worth billionaire Lee M. Bass, and Australian financier James Packer. The funding will bankroll the music service's launch in late 2013.

Beats reportedly named the project "Daisy" in honor of what it called the first digital, computerized song. At the time, it said in a press release that the service would "bring an emotional connection back to the act of music discovery," referring to the process through which users find, buy and consume music.

HUNGRY FOR GROWTH

The music recording industry has languished through more than a decade of declining revenues and sputtering growth. Industry sources say many of the largest companies are beginning to warm to the idea of collecting fees on music streamed over the Internet, as the use of smartphones and tablets explodes around the world.

It remains a nascent market, dwarfed by music sales via outlets such as iTunes, but one that is attracting investment.

The meeting between Apple and Iovine was set up in January, immediately after Beats announced Daisy without explaining the upcoming project's business model or how it plans to differentiate itself from existing services such as Spotify and Pandora, one of the sources said.

Other players reportedly looking at expanding into music-streaming -- whether fee-based or by paid subscription -- include Google Inc and Amazon.com Inc.

Iovine, a music producer and "mentor" to contestants on Fox's "American Idol" show, has a long association with Apple and was one of the first music industry executives to sign onto what was then Apple's nascent iTunes initiative, announced in 2001.

In a January interview with technology website AllThingsD, Iovine said he subsequently pitched a subscription service to Apple's late co-founder Steve Jobs in 2003, but the mercurial Silicon Valley icon was not keen on it right away.

Iovine said Jobs didn't want to pay the record companies enough, and thought the price would come down eventually.

(Reporting by Poornima Gupta and Ronald Grover; Editing by Edwin Chan and Edwina Gibbs)

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Comments (5)
gee.la wrote:
Sad to say, American music is not music at all. It is not even arts. The reason is inside the sounds, the notes, you cannot find the feelings, the understandings, the renderings of the beautiful nature and insights or the prettying. And there is no innovation, either. The modern electronic sounds and instruments are totally unnatural in that they and their players cannot produce or reproduce the richness or infinity that the natural music instruments or their players or conductors can convey. The voices are not good for enjoyment, either. The most unbearable is the deficiency of dynamics and it is the central point.

Mar 06, 2013 12:20am EST  --  Report as abuse
Snowpine wrote:
If I see a song I want on iTunes, but its 1.29$, I probably can find it for 99c elsewhere. If I cant find it for 99c then I simply don’t buy.

iTunes has lost a lot of my business for the past year or two.

Mar 06, 2013 6:41am EST  --  Report as abuse
jscott418 wrote:
The problem with streaming services is that its a service. Just like Netflix or Hulu or Spotify. They provide you with a service for content but in reality you decide you do not want that service anymore you take nothing from it. You own nothing. I am sure Apple would love this ideal as they would be able to again lock you into another Apple ecosystem product. I totally think though people are moving away from owning stuff. I actually would much rather buy a CD then download that same content from the likes of a iTunes store. The quality of that CD is by far much better then the best sampling rate of iTunes. So for me its a bargain. I don’t like being tied to a service or devices. Streaming music services are just that. But if you do not really care about collecting music content or owning it. I guess it will be a good option. Its probably going to be cheaper but I think it also means less revenue for artists.

Mar 06, 2013 8:41am EST  --  Report as abuse
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