Apple and U2 Leverage Disruption

After hearing U2 announce, during Apple’s keynote last week, that their surprise new album, Songs of Innocence, would be available for free on iTunes, I was impressed but dubious. Was this just a shrewd corporate maneuver? Did the band recognize that their long-enduring popularity was now waning, along with their musical relevance? Perhaps this is a brilliant example of innovation.

Here is why this is a smart move for U2 as artists. The disruption of the music business by the internet and downloadable music is complete. Remember Napster and their brash attack on the music industry? Everyone fought them and MP3 internet piracy, trying to keep the current model of album sales intact. It was a mess and no one was benefiting. There was now a better way to distribute and access music. However, it was not aligned with artist rights to their creative content. Then, Steve Jobs and Apple came up with a new model that changed the way we purchase and consume music. When was the last time you went to a record store or bought a CD?

Today, artists no longer make their money selling albums. The revenue comes from promotional events like concerts, merchandise and corporate sponsors. As a business, musicians are creating content that is monetized through their ability to capitalize on their popularity, not receipts from album sales.

Not everyone is a U2 fan. There is already a backlash of people complaining that U2 surreptitiously penetrated their personal iTunes purchase queue. But, there are still plenty of U2 followers and there is a lot of overlap with the consumers of Apple products. So how many of the 500,000 iTunes accounts can Apple and U2 reach with a free album? And, how does this change consumer behavior in relation to U2? Hint – the sales of their extensive back album catalog have already jumped.

Here are the facts of the market. U2 has been around and have aged, along with their audience. They have a reputation for self-promotion, celebrity status, and huge, money making tours. The maturity of U2 audience allows them to sell tickets to a built-in fanbase who have the disposable income to pay higher ticket prices. Meanwhile, U2 is finding it harder to record relevant material and connect with their audience. While their popularity is permanently established, their recent album sales have been steadily declining.

So, if U2 wanted to reach their target audience to promote their album, how would they do that today? If they had taken a traditional path, through radio interviews and articles in Rolling Stone magazine, along with an appearance on the late night talk shows, there would be little notice. We have seen them there many times, as well at the Grammys, Oscars and White House. They could have released an incredible new album and no one would have given it a chance. Like the Stones, we would still see them in concert for their hits, even if we are unfamiliar with their latest album. As much as we may pay top dollar to go to a U2 concert, who has time to see if their latest album is better than the last one? Since they no longer fit the format of most radio stations, we might not even know they have a new album.

Meanwhile, Apple needs to remind us that they are still relevant, and not aging as fast as Microsoft. New gadgets are great and people will still stand in long lines for the new watch and giant iPhone, but this hardly supports an image of thinking differently and being revolutionary. Can they make a hip commercial with rock music and people paying for coffee with their wrist-computer? I am not sure you can even do a cool commercial with people using giant phones, just like you can’t look cool carrying your wife’s purse.

What if they do all this and the album is terrible? Then we really feel duped and manipulated. None of this works if the product is bad. If they go to all this work to get us to listen, we must be rewarded and inspired. It is not my job to be a music critic, but this would be a different article if the album was going to flop. U2 found a way to leverage their age and experience by reflecting on their early influences, rather than trying to imitate their youthful angst. The songs are as potent as any they have produced and will remind their fans why they became U2 fans.

The new Apple commercial, embedded above, features U2’s first single on the record. It talks about their awakening when they heard the Ramones. Bono realized that Joey Ramone made it possible for him to be a singer. It is meta-advertising at its best. A brand advertisement (Apple) that features a different creative brand (U2) that is referencing a former creative brand (The Ramones.) That is pretty cool.

U2 has successfully leveraged the disruption in the music industry to reestablish their relevance. Fans will be thrilled. Others are generating publicity by complaining. Apple wins with a great promotional tie in that boosts the excitement around their product launches. Long live rock and roll.

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  • WeeklyKurt Thies is a visionary executive who has developed software solutions for the Fortune 500. He helps companies develop and execute innovative strategies.  Follow him @klthies

Kurt Thies




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