iHeartMedia CEO Bob Pitman: “Taylor Swift is One of the Smartest People I’ve Ever Met” [Interview]
iHeartMedia Chairman & CEO Bob Pittman spoke with Bloomberg's Stephanie Ruhle and Erik Schatzker at Bloomberg's The Year Ahead summit in Washington, DC: "Taylor Swift is probably one of the smartest people I've ever met, putting age not a factor."
On the debate in the music industry right now and whether people are being trained to think music is free, Pittman said, "…there are arguments on both sides, but I think the numbers that Taylor has talked about are true. I think her record company said she only got $500,000 for all the stuff on Spotify with all here, every song she ever had…So I think this a big issue that the industry is wrestling with. Everybody wants to do the right thing. And motives for everyone are really, really good. There are conflicting views about what the future is and how models shake out. And I think often things change because one person does one thing."
[Interview Transcript Provided by Bloomberg's The Year Ahead]
STEPHANIE RUHLE, BLOOMBERG: We're with the one and only chairman and CEO of iHeartMedia, Bob Pittman.
Bob, this week on the cover of Businessweek and Time Magazine Taylor Swift saying Taylor Swift is the music industry. And this is the week where she pulled all her gear off Spotify. What do make of this?
BOB PITTMAN, CHAIRMAN AND CEO, IHEARTMEDIA: Well look. Taylor Swift is probably one of the smartest people I've ever met, putting age not a factor. And -
PITTMAN: – I think what she's come to is that, look, there are a couple sides. Do consumers want to rent all the music in the world for – absolutely. Who wouldn't? I think what she's bringing up is the downside of that is of course you've taken the value of a song from $1.29, which they were sort of playing that, to a penny or so. And she's saying that's not worth it for me. And she also thinks those kinds of services where you're sort of renting all the music in the world for one price causes consumers to stop thinking about buying music and listening to music for free. I just have my music.
RUHLE: But isn't that where we've moved over the course of the last eight years? Can one artist completely turn around the music industry?
PITTMAN: Well I think there's all – there's always a moment in time at which someone says, when things start working and the economics don't work with as well as the artists aren't making money, Spotify is not making a profit, and by the way so it's a wonderful to have as a consumer, but at a certain point there has to be economics below it. If you remember in the late '90s there were free ISPs.
We were charging $20 for AOL and people came out I'll just give it to you for free. Guess what? At the end of the day the – the consumers loved it. The economics didn't support it and they changed the business model, they went out of business or did whatever. And I think what Taylor has done has just said, look, I actually want to be paid for being an artist.
ERIK SCHATZKER, BLOOMBERG NEWS: But that's because she can. We know that Taylor Swift speaks for Taylor Swift, but does she speak for everybody else? Spotify for some artists is good, right? They make some money that they might not be making otherwise.
PITTMAN: And you know what? I can't speak to that because I don't see the numbers, but too if you've got $10 -
SCHATZKER: And whether that's Spot – it could be any of those, really could be the economics.
PITTMAN: If you've got ten, well it's not streaming. It's on-demand services, because I want to keep that separate. It is $10 a month. I get – I have to – well that $10 I have to split it among every known artist that you might ever listen to, or $10 a month to buy ten songs. So what it does is the $10 gets spread so thin that it's not a lot of money to anybody. And I think that's the complaint from the artist. Now I think if you ask the Spotify people they'll say give us time and we'll build it so big that there will be so many people.
SCHATZKER: And that's what they are saying.
PITTMAN: And by the way, the price may go to $20 or $30 a month, or something so we pay money. I have no idea where it is.
RUHLE: So in the meantime (inaudible).
PITTMAN: And I think the bigger issue is, and there's a great debate in the industry, both sides of it, is are you training people to think music is free, instead of you have to buy your music and your music collection?
RUHLE: And what's the answer?
PITTMAN: I don't have a dog in that hunt. And I think, look, there are arguments on both sides, but I think the numbers that Taylor has talked about are true. I think her record company said she only got $500,000 for all the stuff on Spotify with all here, every song she ever had. And she's a major artist that you would think would be sort of concentrating (inaudible) over airplane. So I think this a big issue that the industry is wrestling with. Everybody wants to do the right thing. And motives for everyone are really, really good.
There are conflicting views about what the future is and how models shake out. And I think often things change because one person does one thing. And I think the thing you have to watch for, which is probably after Taylor did it and Jason Aldean, huge country artist, did the same thing. And I think everyone is watching it, saying is this the moment? Do economics change? Does the relationship change? Does the service change? One of the arguments is, look, don't give it away for free. Charge a subscription service, which is why we gave you the music. And I think those kinds of debates are going on too.
SCHATZKER: Why not have a more dynamic pricing model whereby say Taylor Swift, or Jason Aldean or whomever could say, like cable negotiates with content producers, right? We're prepared to pay this much for that. The content producer says take a hike, right, and we're not prepared to give it away for this. Taylor Swift could say the same thing to Spotify, –
SCHATZKER: – or to (inaudible), or to (inaudible) or whomever
RUHLE: Well maybe this is the beginning of that, Erik.
PITTMAN: It may be that. And, look, you sort of had that with iTunes. And of course what's happened with Spotify is it completely cannibalized downloads. So instead of it being incremental revenue it turned out to be instead of the other revenue.
SCHATZKER: Zero (inaudible) in other words, right?
PITTMAN: And I think that's where people were saying, whoa, wait a minute. That wasn't what I hoped for. And so I think people are working on it. And I think they're having some really interesting debates about it. And we have a lot of consumer data that we're looking at and we share with people because obviously we're – we get a lot of radio station play. And on the radio stations are – there's some services that retail the music, and there are other services that promote the music. And we're on the promote side. We don't offer music on the bands.
You can't build a collection around our products, but we do tell you about – and we did Taylor Swift on top of the rooftop in New York City and had the Empire State Building dancing to all of her music with the Empire State Building folks as great partners there. So when you have stuff like that we understand how you promote. We live with these artists' careers because we're their major promotional device. And when they get down to sell it we want them to make money, and we want them to have successful careers because they're going to be around a long time and make great music. And that's good for us all.
RUHLE: All right, Bob. Thank you so much, Bob Pittman.