Apple Music's Jimmy Iovine says services like Spotify & Pandora can't be profitable

Apple Music executive Jimmy Iovine once again criticized the business models of rivals in an interview published on Wednesday, this time arguing that streaming services without other attached businesses are inherently unprofitable.

"The streaming services have a bad situation, there's no margins, they're not making any money," Iovine explained to Billboard. "Amazon sells Prime; Apple sells telephones and iPads; Spotify, they're going to have to figure out a way to get that audience to buy something else. If tomorrow morning [Amazon CEO] Jeff Bezos wakes up and says, 'You know what? I heard the word "$7.99" I don't know what it means, and someone says, 'Why don't we try $7.99 for music?' Woah, guess what happens?"

Spotify is the world's most popular on-demand streaming service, with over 60 million paid subscribers and many more listening to a free ad-based tier. Apple Music has over 30 million customers in total, with no free option beyond a three-month trial.

Spotify, however, has struggled to achieve profitability, funneling any revenue increases into cementing its foothold. Apple Music is effectively a "halo" project, used as much to keep people buying iPhones as generate new revenue. Conceivably Apple could slash subscription prices and still come out ahead because of the large profits it makes off hardware.

Iovine has been highly critical of companies like Spotify and Pandora, for example saying that their free tiers don't generate enough royalties for artists.

36 Comments

darkpaw 212 comments · 15 Years

About 6 years ago

"Apple Music is effectively a "halo" project, used as much to keep people buying iPhones as generate new revenue."

Who buys an iPhone because of Apple Music?

Off-topic: Apple Music ballsed-up my iTunes library. My carefully-curated, fully-ID3-tagged library started since the first version of iTunes was mangled so much I had to wipe it and start again. Thanks for that, Apple.

jdb8167 626 comments · 16 Years

darkpaw said:

"Apple Music is effectively a "halo" project, used as much to keep people buying iPhones as generate new revenue."

Who buys an iPhone because of Apple Music?
Someone with an AppleWatch too? Using Apple Music and an LTE Apple Watch is pretty awesome.

lito_lupena 116 comments · 8 Years

jdb8167 said:

darkpaw said:

"Apple Music is effectively a "halo" project, used as much to keep people buying iPhones as generate new revenue."

Who buys an iPhone because of Apple Music?
Someone with an AppleWatch too? Using Apple Music and an LTE Apple Watch is pretty awesome.

even on non-lte apple watches, actually. as long as you’ve set up which songs or playlists you want stored on the apple watch. pretty awesome imo. i love it paired with airpods.

tjwolf 423 comments · 12 Years

darkpaw said:

"Apple Music is effectively a "halo" project, used as much to keep people buying iPhones as generate new revenue."

Who buys an iPhone because of Apple Music?

Off-topic: Apple Music ballsed-up my iTunes library. My carefully-curated, fully-ID3-tagged library started since the first version of iTunes was mangled so much I had to wipe it and start again. Thanks for that, Apple.

Obviously nobody buys an iPhone *solely* because of Apple Music, but lots of people buy iPhones at least partially because of the additional Apple services - including Apple Music.

Off-topic: I don't use Apple Music, but I love Music Match! For $25/year, I got a high quality version (ie. Apple's version) of my 300 CD collection I ripped (at low quality) a long time ago. After I signed up, I subsequently deleted my local library (backed it up of course), and Apple rebuilt it with the high-quality version :-). I could stop the service and end up with a much better library :-) But I have kept it - because it lets me keep stuff in the cloud without using up my storage allocation.

tzeshan 2350 comments · 14 Years

jdb8167 said:

darkpaw said:

"Apple Music is effectively a "halo" project, used as much to keep people buying iPhones as generate new revenue."

Who buys an iPhone because of Apple Music?
Someone with an AppleWatch too? Using Apple Music and an LTE Apple Watch is pretty awesome.

Using AppleWatch LTE to listen to Apple Music is not suitable to everyone. You have to say the song and singer to Siri. Most driver listen to whatever the DJ plays. And this model has worked for years.