Jimmy Iovine Already Polishing Apple;
Former Unknown Scoring Massive Hit;
a Radically Altered Chart in the Works
TWO WORLDS COLLIDE: When Apple announced its $3.2b deal with Jimmy Iovine and Dr. Dre’s Beats Electronics in mid-May, UMG chieftain Lucian Grainge alluded in conversation to the "unintended consequences" of said deal, which he expected to occur down the line. On Tuesday, the first of these unintended consequences arrived with a bang, as Apple gifted its more than 500m iTunes users with a free download of U2’s long-awaited album, Songs of Innocence, ahead of its 10/14 official release on Interscope, in a five-week window of exclusivity to iTunes and Beats Music. 

Naturally, Iovine’s fingerprints are all over this deal, as he parlays his connections across the music and tech worlds into a colossal twofold launch—that of Apple's new line of devices, cross-marketed with U2’s album and upcoming tour. It’s not unreasonable to conclude that no one other than Iovine could have orchestrated such a symphony of synergy. The agreement between the tech giant and Universal will result in an outlay of more than $100m, encompassing marketing/advertising expenses and payment for the album, which will be split between the rights holders—UMG and the band. Most believe that foremost among the big winners of this deal will be Michael Rapino’s Live Nation and band manager Guy O, who are in the planning stages of the worldwide stadium tour, as the U2 brand gets a dramatic lift from this huge exposure.
RENEWING RELEVANCE: While U2’s surprise move has its share of detractors—inevitable in the wake of a grandstand play of this magnitude—the band is to be commended for in effect embracing a radically altered marketplace rather than resisting it, as so many of their contemporaries continue to do. They’re one of a handful of rock acts, along with the Rolling Stones, Paul McCartney and Bruce Springsteen, who have been able to remain a stadium-level draw over decades, and the renewed relevance they’ve achieved in one fell swoop will only enhance their appeal.

Can U2 possibly sell significant numbers on the new album despite having given it away on such an astounding scale? The fact is, Songs of Innocence still has a sizable potential audience. Consider those millions of Android users who didn’t get the album, and all the subscribers to streaming services apart from Beats Music and iTunes Radio who can’t even hear it, as well as the fact that iTunes has far less penetration in other countries than it does in the U.S.—and today’s business is global in scale. What’s more, who’s to say that the band’s core constituency won’t readily spring for the deluxe package, with its cache of additional tracks? It’s not outside the realm of possibility that U2 can actually have it both ways with this album. In a broader sense, the freebie can be seen as the trigger for a broader orchestrated co-marketing initiative between Apple and U2, as the band’s catalog goes on sale at iTunes, with a major ad campaign on the tenth anniversary of the now iconic iPod-"Vertigo" commercial rollout surely to follow.

THE HOT LIST: Two massive singles are dominating the sales charts on the eve of Q4. "Shake It Off" from Big Machine’s mighty Taylor Swift has sold another 275k, bring the tally to nearly 1.2m in just three weeks. More surprising is the fact that "All About That Bass" from Epic newcomer Meghan Trainor is even bigger, selling 310k to bring the total to just south of 1.7m in nine weeks—and despite the fact that this already gigantic record is #1 in sales and about to top the Mediabase Pop airplay chart as well, it’s just getting started, like a rocketship that has just cleared the launching pad. By coming out of nowhere to achieve all but instant stardom, Trainor is quickly becoming one of the stories of the year, and that won’t change no matter how many albums and singles Ms. Swift moves this fall and winter.
Meanwhile, John Janick continues to put his stamp on the post-Iovine Interscope era as he nears his second anniversary at the label, basking in U2’s dramatically enhanced visibility, scoring the week’s #1 album with Maroon 5, and signing Selena Gomez with the charge of turning the 20-year-old into a full-fledged pop diva, following the groundwork done by Hollywood Records. A&R star Aaron Bay-Schuck will soon join Janick’s team in a high-level A&R capacity; the 32-year-old Bay-Schuck signed Bruno Mars and A&R’d both his albums while Janick was heading Mars’ then-label, New Elektra. And before year’s end, along with U2, Interscope will release the follow-up album from Kendrick Lamar (one of Janick’s earliest successes), a Lady Gaga-Tony Bennett duets LP (in conjunction with Columbia) and a collection from Eminem’s Shady imprint.

Cameron Strang
faced an even bigger challenge when he took the reins at Warner Bros. Records in December 2012: how to instill a winning attitude at a once-great label that had been robbed of its mojo during the toxic Bronfman-Cohen years. Twenty months later, Strang is well on his way to accomplishing the mission; under his watch, WB’s frontline marketshare has grown from an anemic 2.8% to 4%+, and a robust 5.8% in TEA. Expect the company to continue moving in a positive direction with the addition of marketing expert Howie Gabriel to Strang’s executive team, complementing EVP/promotion head Peter Gray, who is having a tremendous year, and A&R-centric President Dan McCarroll.

Steve Bartels’ remarkably smooth steering of Def Jam through the transition to standalone status becomes more impressive by the week, with a possible chart-topper from Jhené Aiko following right on the heels of Jeezy’s #2, 112k bow. And all this on top of one of 2014’s biggest breakthroughs in Iggy Azalea, whose song of the summer candidate "Fancy" has sold 3.6m, while her follow-up "Black Widow" has just passed 1m. Is Alesso next up?

CHARTOLOGY: The music business is bracing itself in anticipation of the so-called consumption chart Billboard and SoundScan are jointly creating, with endless questions about how said chart will impact and possibly alter their marketing methodologies. The weekly chart will combine album and track sales with audio and video streams, assigning an equivalent-album value to each, as in the TEA metric, theoretically providing a more accurate and comprehensive representation of modern-day music consumption. It’s expected to make its debut the first week of January, or as close to it as possible, so that the full year can be measured in this new way, with year-to-date totals accompanying the weekly figures. That time frame also gives the two companies time to get their systems in place; for now, streaming is being measured by hand, a dauntingly labor-intensive task. Billboard’s album sales chart will remain in place, but most observers believe it will take on decreasing importance over time as the business acclimates itself to the new system. 

In some respects, the consumption chart will mirror the present sales charts in that sales and streaming tend to correlate, with certain exceptions. For example, Cherrytree/Interscope’s Disclosure album Settle, released in 2013, continues to generate a high volume of YouTube views and audio streams on Spotify and elsewhere, but sales have yet to follow suit; U.S. sales are at 125k. "Latch" is doing considerably better with 1.7m, but Sam Smith’s vocal has been a key factor in the single’s success. In a mock-up of last week’s consumption chart, the Disclosure album, which placed #213 in pure sales with a modest 1.8k, vaults to #64 with a total album equivalent of 8.9k, thanks to 3.3m streams and 48k sales of "Latch." An even more dramatic example is Tove Lo’s debut EP Truth Serum on Island, which is #302 in album sales but has a total consumption rank of #48, the result of 4.3m streams and 64k singles sales on "Habits (Stay High)."

Overall, the most dramatic effect of the consumption chart will be to lengthen the tails of bona fide hits by measuring their aftermarket impact, potentially providing the labels with additional time in which to market these hits. Katy Perry’s PRISM (Capitol), for example, moves up 45 slots from its pure sales ranking of #61 to #16, while Jason Derulo’s Talk Dirty (WB) goes #82-22.

Among the myriad questions being asked around the business, perhaps the most common is, will people still care about pure sales charts once the consumption chart is established as the standard? More intriguingly, in what ways will attempts be made to manipulate the new chart, and what new games will labels play in order to get a leg up on the competition? Will the consumption chart mean the end of the SoundScan-era emphasis on the first week of release, or will the majors figure out new ways to max out that total?

, Arthur Fogel, Steve Berman, Boyd Muir, Doug Davis and Scott Borchetta.

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