Apple-Beats deal buoys music industry

Insiders say agreement proves tunes still carry cultural power



When Cortez Bryant decided to negotiate a headphones marketing deal for his clients Lil Wayne and Nicki Minaj a few years ago, he turned down more money from other more established companies to sign with Beats By Dre for a simple reason.

“There was a bunch of history there, so at the end of the day I took less upfront money to be part of this deal with people who understood pop culture,” Bryant said. “I try to stick to that because if I lose touch with pop culture, then I’m out of the music business.”

A day after the sale of Beats By Dre on Wednesday to tech giant Apple Inc., members of the music industry were abuzz about what the $3 billion deal might mean for an area thought to be in an irreversible decline. Label executive Jimmy Iovine and business partner Dr. Dre’s move to Apple has those who make their money on music expecting changes that are generally positive for the overall business — though maybe not for every artist trying to make a living.

“It’s all wins,” said Daniel Glass, owner of Mumford & Sons’ label Glassnote Records. “It’s a win for everybody and the fact is the value of a copyright, a master, went up a lot. Think about it: The perception and value of music went up because of the amount of hands this will be in.”

The industry inadvertently opened the door for file sharing when it refused to sign a deal with Napster at the turn of the century. Few people pay for music, and with physical and digital sales declining, the value of music has continued to decrease as members of the industry resisted the new — but different — revenue model from streaming.

In the confusion, some forgot the power of music. It’s now about more than the song, something innovative thinkers like Iovine and Dre have never forgotten.

“Apple wouldn’t have been built, at least not the way it was, without music, without the iPod, without iTunes and everything else that follows since then,” said Billboard deputy editor Yinka Adegoke. “We shouldn’t forget that. It’s quite clear Apple didn’t forget that. There is great value to music and this deal is a great reminder of that. Even if you don’t buy music directly, this shows the importance of music in the modern world.”

The deal, which Adegoke calls a “game-changer,” happens at a time of great movement in the business. Only recently have record labels, artists and managers started to accept the subscription streaming model, which pays artists per track play rather than in a lump sum when an album or track is sold.

With digital sales starting to decline, Apple added a streaming radio component to its digital sales catalog, but was still left out of the subscription market. The addition of Beats not only gives the company cool hardware to package with its devices, but also gives it a streaming service, recently launched with much media attention, without building one from scratch.

Spotify’s success — the streamer recently announced it had reached 10 million paid subscribers — the Beats-Apple deal and YouTube’s impending entry into the market have insiders looking differently at the inevitability of streaming.

“This deal will make music streaming go mainstream,” Adegoke said. “We needed something like this to happen so the average person will see that actually paying $10 a month for music isn’t that big of a deal.”