U2's Surprise iTunes Strategy: the Industry Reacts

Record store owners, artist reps and U2's manager Guy Oseary weigh in on the band's plan to distribute 'Songs of Innocence' direct to iTunes

U2 Credit: Gregg DeGuire/Getty Images

U2's deal to release its new album Songs of Innocence for free via iTunes is not without precedent, but in combining Beyoncé's surprise-album strategy with Jay Z's corporate partnership with Samsung for 2013's Magna Carta... Holy Grail, is this the future of big-event releases?

Apple paid the superstar band and its record label, Interscope, an undisclosed, but hefty, check, and committed a nine-figure marketing budget to promoting the album, say sources close to the negotiations. Are U2 pointing to a new way of doing things in a business where sales are plunging and free and cheap streaming services are taking over? The jury's still out.

"It's much more akin to a stunt than a new business model," says Lee Trink, Kid Rock's manager and former president of Capitol Records. "The old way of releasing records for a big artist is gone and the new way has yet to reveal itself — what you see are different artists making different attempts. Jay Z is one version, Beyonce is a different version and now U2 is a new version."

"It's not a game-changer, but it's a part of the game being changed," adds Tim Smith, a manager for Skrillex, Zedd and other top dance-music DJs, pointing to Beyonce's surprise iTunes release last year and Skrillex' album-via-game-app this year. "I would highly doubt that this is something that Apple's going to repeat. But if there was a [similar] opportunity for other artists, mine included, for sure, it's viable."

Apple unveiled the U2 announcement during its iPhone 6 and Apple Watch product launch in Cupertino, California, on Tuesday. The company wouldn't comment on the marketing campaign budget, but the Wall Street Journal reported that the total budget was approximately $100 million. "Whenever something's never been done before, there's a little concern," says Guy Oseary, U2's manager. "None of it was as big as the upside."

U2 came up with the idea after finishing Songs of Innocence. "The question came up, 'How do we share this with the most amount of people in the world?'" Oseary recalls. "And that's the beginning of the conversation, and there's a longstanding relationship with Apple." Ten years ago, the band worked with the late Steve Jobs on a U2-branded iPod; its longtime record executive, Jimmy Iovine, recently joined the computer giant as the head of Beats by Dre and Beats Music, purchased in a multibillion-dollar deal this year.

U2 took minimal financial risk in the deal, although not everyone is onboard with the band's decision to have their album immediately appear in all iTunes' users libraries (the Washington Post called it "rock 'n' roll as dystopian junk mail"). If Songs of Innocence had come out via CD release in physical and retail stores and streaming services, it likely would have made like Bruce Springsteen or Madonna and racked up decent first-week sales numbers then dropped. "There's so many ways to listen to music today that have nothing to do with the traditional," Oseary says. "Some guy in Nashville who only has country artists maybe now has U2 on [iTunes]. Some guy who likes jazz, some guy who likes punk — everybody has U2."

The iTunes exclusive means other retailers won't get to sell the album until October 14th, which, like many non-traditional releases that exclude record stores, has annoyed some of Apple's competitors. "Obviously, I don't like it. It seems like it's unfair — you can't give one person an advantage over somebody else," says Ish Cuebas, vice president of merchandising-music for record chain Trans World Entertainment, who hasn't decided yet whether to sell an upcoming deluxe version of the album in his stores. "I'm sure they made more money on this deal than they did if they'd gone through regular channels. They're still an important artist, don't get me wrong."

But Trink, Kid Rock's manager, sees that as old-school thinking. "U2 got their big bang. Apple got a monumental hit for their big launch," he says. "We need to stop lamenting it. Those days are gone — music is free, and legitimately free, in many different ways."