From the Fortune article: Is U2 going freemium with Apple a sign of what's to come?
U2 is giving away its latest album through Apple iTunes as the music industry grapples with declining sales.
U2 sent shockwaves across the music industry on Tuesday when it said it would give away its latest album on Apple’s iTunes.
Free would have been inconceivable before the digital age. Now, it may be the future.
Recording artists and music companies are grappling with a rapidly shifting business. Album sales are declining because people prefer to buy individual songs. Music piracy is also taking a huge toll. U2’s strategy may be a sign that the recording industry is ready to take radical steps to survive.
What the Irish supergroup is doing is using its music as a loss leader. Instead of selling albums, it hopes to sell concert tickets.
By releasing its album — Songs of Innocence — on iTunes, U2 can reach a potential audience of 500 million listeners. The group’s previous album, “No Line of the Horizon” suffered from disappointing sales, at least by U2’s standards. A free album is one way to stay relevant and potentially gain younger fans. It also may help fill seats during any future concert tour.
Bono, U2’s singer, said he hoped that partnering with Apple would mean that more people hear his band’s music. “From the very beginning U2 have always wanted our music to reach as many people as possible, the clue is in our name I suppose—so today is kind of mind-blowing to us,” he said in a statement. “It’s exciting and humbling to think that people who don’t know U2 or listen to rock music for that matter might check us out.”
The outlook for the music business looks bleak. This year, so far, U.S. album sales have fallen 14.6% while digital album sales are down 11.7%, according to Billboard, citing a recent Nielsen Soundscan report.
For Apple, at least, the deal with U2 is a marketing coup. The release has the potential to expand the number of iTunes users and potentially help to sell more iPhones and iPods. The album will be available exclusively on the service until October 13 when it’s set for its worldwide release.
“It makes music history because it’s the largest album release of all time,” Tim Cook, Apple’s CEO said.
But will the innovative marketing push be a boon for Bono and the rest of the rock gang, as it was for Beyonce’s own music industry-shattering stealth release months ago? In December, the pop star released a 14-track album exclusively through iTunes, along with 17 music videos. Unlike U2, however, people had to pay for Beyonce’s album. In three days, the novel approach garnered Beyonce 800,000 sales, according to CNBC.
Meanwhile, Apple didn’t say how much it paid, if anything, to get access to U2’s music. Bono told Time that money did, in fact, exchange hands for the free album downloads. “We were paid,” he said. “I don’t believe in free music. Music is a sacrament.”
Of course, U2 can also afford to give away an album for free. The band, after all, sells out huge concerts and doesn’t have to worry much about album sales. U2 apparently has the flexibility to do this with its record label, Island Records, with which it re-signed in 2013. Island Records discovered them in the 1970s. Some Indie bands have also released albums for free in past, including experimental hip hop group Death Grips which released Government Plates in 2013 (although they've since disbanded).
U2 has had a close relationship with Apple over the years. For example, Bono was friends with Apple’s now deceased former CEO Steve Jobs, according to CNET. In fact, Apple released a special edition iPod featuring a copy of the band members’ signatures.
“Working with Apple is always a blast,” Bono said. “They only want to do things that haven’t been done before—that’s a thrill to be part of.”
So whether U2’s Apple partnership is “Bad” for business, as is the title of one of their hit songs, or simply more of Apple’s “Mysterious Ways” in action remains to be seen.