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Jimmy Iovine calls freemium “a shell game”

dollar-sign-cufflink-canvasThe freemium streaming model has taken a lot of fire in recent months. The latest to lock and load is Jimmy Iovine. The Apple/Betas exec spoke at Vanity Fair’s New Establishment Summit and had some pointed words for the freemium approach to music, calling it a shell game. “These companies are building an audience on the back of the artist,” he said. He contrasted that with Apple Music, which has developed a reputation as an artist-friendly choice for online media. Iovine pointed to the response when pop queen Taylor Swift asked for a policy change on royalties during the service’s free trial: “They dealt with it on the spot on a Sunday morning,” he said. “They moved like lightning and they did the right thing.”

It is true that many artists and songwriters have a strained relationship with streaming since the back-end business is so different, so that critique of Iovine’s is a fair one. But it is perhaps telling that so many of the most aggressive critics of freemium have vested business interests in subscription models. And Apple is no angel in this industry either. For instance, it has actually been investigated in the U.S. and the EU for potentially colluding with the major labels to cut music support for streaming services’ free tiers.

Iovine’s comments need some context. The latest wave of the freemium debate has seen several music business pros coming out with a softer approach toward the model, acknowledging that free is not ideal for the businesses but paying can be a barrier for listeners. Even UMG CEO Lucian Grainge, a tough sell on in the past, has more recently come out in favor of a balance between the free and paid approaches. “Freemium alone is inadequate to support our critical ecosystem of artists, labels and the platforms themselves,” he said in an August interview. “What that means is that we must seek the proper balance between ad-supported and paid subscription.”

The need for balance is born out in the research. Highlights from this year’s Nielsen 360 Music Report showed huge numbers of online music listeners, but cost was the top factor in their choosing a streaming service.

Anna Washenko

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