Iovine helped Apple launch its streaming service back in 2015. Since then, Apple Music has grown dramatically, acquiring 30 million paid subscribers, second in the world behind streaming powerhouse Spotify, who yesterday announced hitting 70 million subscribers.
The music site Hits Daily Double first reported that Iovine’s departure will happen later this year, and Billboard followed by reporting Iovine will leave when his stocks become vested (agreed upon time for Iovine to get rights to his Apple stocks).
Iovine didn’t have have a formal title while leading Apple Music, but the co-founder of both Interscope Records and Beats (a streaming and headphone company Apple acquired in 2014) brought nearly unmatched industry savvy to Apple’s new streaming service. It’s unknown what the 64-year-old music mogul will do next.
“The streaming services have a bad situation, there’s no margins, they’re not making any money.”
An Apple Music subscription, like Spotify, costs $9.99 per month and plays ad-free music. Apple says it has 40 million songs in its catalog — while Spotify has about 30 million.
But while these subscriptions numbers are impressive, Iovine wasn’t convinced that streaming companies, in their current form, could be profitable. At a dinner event in September 2017, Iovine took questions from reporters about the state of the streaming service, and he answered candidly.
As Billboard reports, Iovine was skeptical about how streaming companies (or divisions within a company) can be profitable on their own — without the backing of massive tech firms that sell other tangible products:
The streaming business is not a great business. It’s fine with the big companies: Amazon, Apple, Google… Of course it’s a small piece of their business, very cool, but Spotify is the only standalone, right? So they have to figure out a way to show the road to making this a real business.”
Indeed Spotify, while having generated billions of dollars, reported a $601 million dollar loss in 2016. Its sales in 2016 did double — but there are still questions about longer term profitability. In 2017, the still-private company’s losses are assumed to have continued, though it had recorded an impressive $2.2 billion in just the first half of 2017.
While Spotify’s growth hasn’t been hampered by a slew of copyright infringement lawsuits, Iovine suggested last year that the streaming business is generally in a precarious place — though hardware giants like Apple can weather the losses. Perhaps, mused Iovine, Amazon might simply come along with its own cheaper streaming service, and dominant the streaming industry — perhaps without making any money.
“The streaming services have a bad situation, there’s no margins, they’re not making any money,” he said. “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?”