The Kitchen Debate: (From left) Interscope-Geffen-A&M Chairman Jimmy Iovine, U2′s Bono, Apple founder and CEO the-late Steve Jobs and U2 guitarist The Edge holdeing the black-and-red U2-branded iPod, the plan for which was first negotiated in the kitchen of Jobs’ Palo Alto, Calif. home. (Photo: Getty Images)
In the past few years, arguably no one has been a more prominent, more outspoken advocate on behalf of artists, record labels, publishers and other rights-holders in the digital age than U2 manager Paul McGuinness. McGuinness shepherded four young men (and himself) from the streets of Dublin to the top of the world, including a deal done in Steve Jobs’ Palo Alto, Calif., kitchen in 2004: McGuinness, Bono, Interscope’s Jimmy Iovine and Jobs ate lunch and agreed to a deal to use U2′s “Vertigo” in an iPod TV ad, and for Apple to create a black-and-red U2-branded iPod.
U2 hadn’t previously used its music in advertisements, and-heaven forbid-Apple had never released an iPod that wasn’t white. McGuinness recalled this moment during a keynote speech at the MIDEM Music conference in Cannes in January 2008, while also beseeching Jobs to “bring his remarkable set of skills to bear on the problems of recorded music.” McGuinness grouped Apple in with a number of other telcos and search companies that had “built multibillion-dollar industries on the backs of our content without paying for it” and urged them to take greater responsibility.
McGuinness caught up with us from his Dublin office, warmly remembering Steve Jobs the man, the music fan and, yes, the tough negotiator.
Billboard: You really had a unique relationship with Steve.
Pual McGuinness: I suppose I wish there were more like him.
What do you mean by that? The sense he cared so much?
He was a music lover. That was very clear. He had an extensive knowledge of music.
How did that come to be known to you?
He played music in his house. It was a musical environment; he knew a lot about artists and record labels…He was very generous, grew up listening to music; a very colorful guy. It was in his DNA. He knew extraordinary amounts of information about the way music could get distributed and paid for, particularly. He was kind of unique. Everyone else in the tech world sort of grew out of the Internet. He seemed quite honest to the music industry and artists. Others took a little less interest in getting the artists paid than Steve.
He didn’t solve the problems. The problems are still there. Most music that is consumed over the Internet is not paid for. That hasn’t gone away. There are a lot of geniuses in that world. I always think that if the geniuses of Google, Verizon, AT&T..If they had all been as creative as Steve, I think the problem would have been solved by now. The willingness and generosity of spirit that seems strangely absent to me was there, yet he was a tough business guy.
What was he like to deal with in that regard? There was this moment in his kitchen, for example, when the details of the U2 iPod were ironed out. You were there for that, yes?
Yeah. For the first time, we were allowing U2 music to be used in advertising. It was kind of generic for Apple, iPod, iTunes. It was like all their advertising-very elegant, beautiful. Effectively, he was putting a music video onto the TV screen and paying for it on a worldwide basis. There was no payment for that. But we got this massive worldwide exposure for our song. And that was the first . . . alongside that we could have the U2-branded iPod.
How did that idea come to be?
I can’t remember. I think it might have been Bono’s idea. There were a lot of ideas floating around at the time.
For example, there was the idea we might sell a preloaded iPod, with U2′s catalog on it. In fact, what we sold with the black-and-red, U2-branded iPod was unique. It was the first time they did something that wasn’t white. Until then Apple had a design policy, which was white only. The U2 iPod was a success. With it you got a digital coupon that allowed you to download the entire U2 catalog at a discount.
In your role with U2 I’m sure you deal with many different styles of negotiators. How would you characterize Jobs in your business relationship?
He was interested in doing what was right for his company. He had the strongest sense of what everything associated with Apple should look like, whether it was advertising, the store, of the product itself. He and Jonny [Ive, Apple senior VP of industrial design], who we’ve got to know quite well, they had an extraordinary aesthetic that ran through everything they did. Put them in a class of their own compared to all the other consumer electronics manufacturers. There is really no comparison between what they represent aesthetically and what the rest of that industry has come up with.
What details linger with you from Jobs, the person?
[His home] was a very relaxed environment. We were having lunch in his kitchen. His wife and kids were around. It was a family home. I think he still lived there until recently. This is not like a giant Palo Alto mansion; it was a pretty normal home. There was nothing overbearing about it. We did what turned out to be a pretty effective piece of business for all concerned: the label, the artists and for Apple.
I was there for your 2008 address at the annual MIDEM conference in Cannes and you seemed to lump in Apple with other tech companies and Internet service providers (ISPs) as being among those that built these billion-dollar industries on the back of content, if you will. What do you think of his legacy? Was it purely positive?
When Apple proceeded to become the most powerful retailer in the music industry, that power is certainly something that they leveraged. They had no real competitor in the download business [laughs]. Never underestimate the ability of a monopoly to defend itself. What disappoints me about the tech world, the distributors, the Googles and phone companies, I wish they had made it part of their code to protect the sources of content better. They say it has nothing to do with us. They wash their hands of responsibility. But in the years to come I think they will be blamed for not applying their resources and power to those sorts of things.
There have been studies saying that, for example, for every 40-gig iPod, a person spent money on only 16 or 17 tracks. But you get the sense that they weren’t walking around with a 40-gig iPod with only 16 or 17 songs on it.
[Laughs] The stats are pretty clear. If you look into the future, not everyone is happy with this, but the iTunes payment system is basically the way in which the content industries will collect their income in the future, perhaps literally. It doesn’t have a strong competitor at the moment. If it does move into the cloud, perhaps Spotify has a good lead on the space Apple might be moving into. I would expect that in the years to come, the model will change so that the very concept of owning a piece of content will become irrelevant.
People will have ubiquitous access to content: movies, music, newspapers, magazines, and those payments will be made through iTunes or another equivalent. We will eventually reach a point where the gatekeepers, the pipe owners, the phone companies, the ISPs will collect that money and distribute it fairly.
What about the role Apple has played there?
Apple has absolutely played a role in helping to socialize that notion. Going back a few years, once the mobile phone became a status symbol, very quickly there became one in the hand of every adult and child in the country. Nowadays when someone gets their phone bill, and it says you’ve made a call to Australia, for example, no one seriously thinks there’s any corruption in that process. They believe what it says on their account statement. It is obviously possible to develop the algorithms that identify those calls, which traffic and charge appropriately for it. I wish the same level of ingenuity were applied to collecting music and other content.
I think your concern is very commendable. It would be very easy for you and U2 to not be as preoccupied with this. I’m sure it’s money out of your pocket, but your pockets have a lot of money, and other artists don’t have what you have. I think your advocacy will continue to benefit them.
I think everyone’s entitled to get paid for what they do. The history of the music industry is littered with stories of victims who were songwriters or recording artists. Musicians have never been very powerful in that respect. I think in the digital age, it is absolutely clear that it is possible to track every micro transaction, every song, every pair of ears that listens to a song, every eyeball that watches a movie, if you really want to. And then you can collect the money and give it to the rightful recipients.