Business side of Apple's exclusive launch of U2's 'Songs of Innocence' album
As part of its iPhone and Watch unveiling, Apple also released U2's "Songs of Innocence" album for free to all its iTunes users. Though U2 will benefit from Apple's promotion of its latest release, the band is not giving its album away for free. As reported by the Wall Street Journal, Apple that is footing the bill for this massive release in a carefully negotiated business deal.
Using the influence of Jimmy Iovine and leveraging its traditionally close relationship with U2, Apple likely had the negotiating clout to forge a favorable deal for the U2 release. The Cupertino company reportedly is paying Universal Music Group a lump sum, below wholesale prices, for the right to distribute the album as an iTunes exclusive for the next five weeks.
As part of the agreement, Apple also will use a track from the album as part of a $100 million television advertising program for its new iPhone 6 and Watch devices. U2 debuted this favored single, "The Miracle (of Joey Ramone)," as the closing act for Apple's announcement event. While Apple promotes the "Songs of Innocence" release through iTunes and TV, Universal will capitalize on this free advertising to promote U2's earlier albums, which are facing declining sales.
In the end, iTunes users get a free album, U2 gets some free advertising and Apple gets to boast about the Biggest Album Release Ever in History.
