Good morning from New York, where executives from Los Angeles and San Francisco have descended for the annual NewFronts. Twitter, Hulu, Google and Vice will spend the week pitching advertisers on their best shows just a couple weeks before CBS, NBC, ABC and Fox do the same.
One player who won't be hosting a party is Apple, but the world's most valuable company is attracting a lot of attention with its recent investments in original programming. Just last week, Apple announced it had acquired a couple of documentaries screening at the Tribeca Film Festival, one about music impresario Clive Davis and another about Bad Boy Records, the house that Diddy and Biggie built. Apple Music honcho Jimmy Iovine told Alex Webb and me that Apple Music could release as many as 10 original series by the end of the year, including will.i.am’s Planet of the Apps and Carpool Karaoke, a spinoff of James Corden’s popular celebrity singalong segment. For the moment, Iovine is mostly focused on music-related video, including a possible sequel to R. Kelly’s rap opera Trapped in the Closet. But eventually he plans to go beyond music and has discussed possible ideas with his friend Brian Grazer, producer of Empire and Genius, and director J.J. Abrams. So why, after years of speculation that Apple could buy a movie studio or Netflix, is the company finally making shows? “A music service needs to be more than a bunch of songs and a few playlists,'' Iovine said. ``I’m trying to help Apple Music be an overall movement in popular culture, everything from unsigned bands to video. We have a lot of plans.” With iTunes sales in decline and streaming services such as Spotify on the rise, Apple Music is an increasingly important part of the Apple universe. It's vital to keeping customers loyal to the iPhone (as opposed to phones from Samsung or Google). That's why Apple paid $3 billion for Beats Music, why it revamped the service last year and why Apple is indulging Iovine's efforts to turn Apple Music into a one-stop shop for pop culture. Video and music belong together, Iovine says. That's the only way for a music service to attain real scale. Apple Music has signed up more than 20 million subscribers, making it the second-largest paid music streaming service in the world. Spotify is first, boasting more than 50 million subscribers. Yet the size of those companies pales in comparison to YouTube, the video site owned by Alphabet. YouTube has more than one billion users every month (though almost none of them pay). Over the course of an hour-and-a-half conversation, Iovine repeated one phrase at least a half dozen times: ``we are competing with free.'' When Iovine says free, he means YouTube. YouTube is the bete noire of the music industry, an industry in which Iovine grew and to which he ultimately still belongs. YouTube is an invaluable marketing tool for artists, beloved by fans and loathed by record labels. More than one billion users go to YouTube every month to watch videos, many of them music videos. It is the most popular destination for music in the world. YouTube has all but replaced MTV, once the paragon of youth culture. And yet, the music industry makes very little money from YouTube (relative to its size). Just look at this chart:  YouTube influences almost every decision at major music companies. Record labels are fighting to get copyright legislation changed because they feel it protects YouTube. They are trying to convince Facebook to take music more seriously because Facebook is the only platform with scale that surpasses YouTube. Record companies have even let players like Amazon and Pandora offer lower-priced subscription offerings because getting people to pay something is better than the alternative. Meanwhile, YouTube’s competitors are pulling out all the stops to lure consumers away from the site. Spotify offers an appealing free service, much to the chagrin of most record labels. Spotify says the free tier is the only way to funnel customers into the pay tier. If people can listen to a huge library of songs for free on YouTube, why would they pay for Spotify? YouTube has helped convince millions of young consumers that they can be entertained for free. Like Spotify, Apple Music is making high quality videos to give consumers a reason to pay for a music service. Apple Music’s foray into video programming could be a temporary dalliance. Like many tech companies, Apple long resisted getting into the content game, opting instead to sell other people’s music, TV shows, and movies and making money flogging hardware. But then Netflix and Amazon producing award-winning television, and Silicon Valley smelled opportunity. YouTube is funding dozens of TV shows for a subscription service and has built production facilities around the world. Facebook is starting to fund original video series. Even Twitter is buying the rights to sporting events If Iovine succeeds, the world’s wealthiest company could increase its investment, routinely competing for top projects. “We have the freedom, because it’s Apple, to make one show, three shows, see what works, see what doesn’t work until it feels good,” Iovine says. Turning Apple Music into a viewing destination will take time. Video production is slow and labor-intensive. Getting people to watch video on a music streaming service will require a sustained marketing campaign. Spotify has commissioned at least a dozen series and hired a former TV executive to oversee its video business. Yet those shows have come and gone with little fanfare. Apple says it will market its projects like TV shows. With all the competition for viewers' attention -- and so much available for free -- will that be enough to turn Apple Music into a player in original programming? We'll soon find out. | 
