How Apple Music Is Redefining Streaming w/ Oliver Schusser

21:06Obviously, you guys are selling great headphones. How often do the conversations about your hardware products come into play with your Apple Music products? Apple is a functional organization, so there's a lot of teams in the company that sort of sit side by side. But to the consumer, the magic really happens when the hardware, the software, and services talk to each other and build great experiences. And I actually think that spatial audio and the work we did with Dolby Atmos is almost one of the best examples for it that I can remember in my time at Apple. Because if you look at audio, audio standards are hard.

21:42And if you look back over like, I don't know, 60 years, there's only really been mono for, I don't know, parents or grandparents. And then that went to stereo and that was a thing. And, you know, the music came from two sides. In fact, it's just from one side. That was great. But then there was really nothing. Some people, especially sort of in Asia and Japan, have tried to establish another format. But we wanted to really, and this was a long time ago. We launched it in 2022, but we started years before that. We wanted to create a new standard that had really two distinctive sort of criteria.

22:16One is we thought it was important that people, general people, fans, can notice a difference. And number two, we wanted it to work on as many, if not all, devices as possible, if not all devices. Not just Apple devices, but just in general. And so here's here. So lots of people said lossless is the answer. And I heard this from record labels. Like, you've got to do lossless.

22:38Oliver Schusser:What they didn't notice is that lossless actually doesn't work over Bluetooth. So when you have an unwired connection, lossless doesn't actually work. And so there were lots of people. And you know, in the days of AirPods and wireless headphones, the vast majority of people didn't have wires. And so there were lots of people using lossless services or listening to lossless music out there, not even noticing that they weren't actually listening to lossless. Yeah, I was going to say that I feel like the thing about hi-fi that I find to be a little bit tricky is that your average person really isn't that attuned.

23:11Correct. Well, and that's my second point. My second point is if I did, honestly, if we did an anonymous lossless test here on just an iPhone with headphones, I'm not sure you and I, and you and I work in the industry, and I assume you like sound as much as I do. But I can tell you most fans wouldn't immediately notice a difference. Yeah, I don't think so. But that's what we did with spatial audio, and this required really collaboration. By the way, not just with an Apple, but with lots of people. We worked with Dolby on creating a sound where it's not just from two sides, but it really comes from everywhere.

23:40And it actually worked on pretty much all devices, all headphones, all of our stuff, but on iPhone, on Mac, but also on pretty much any other device. It only had one downside. There were only like roughly 5 ,000 songs in the world that had already been mixed and mastered in sort of spatial audio. And so we needed to go and upgrade all the studios in the world and also educate the sound engineers of what this new canvas would look like. But the good thing is for the sound engineers, this is way better than what they had before. Before they had a restriction. It was like, does it come from this or does it come from there?

24:13Now they have the music can come from here, from there. And I remember my meetings at Abbey Road with the team there. And they were like so excited about having this opportunity. Well, it's like more jobs for them, too. That's right. Yeah. Well, but I don't look at it that way. I look at it more like more creative freedom. Okay. And the great thing is with spatial audio is you immediately, everyone notices the difference.

24:35Oliver Schusser:Yeah. Because the music just doesn't come from two sides. It comes from all over. And the vast majority of people, I'm not saying 100 % of the people, but I mean, we've had very, very few sort of negative comments. The vast majority of people think it's better. Just like when we went from monitor stereo, the vast majority of people thought that was better. And so we had to do the work to get the catalog updated. But we're now getting, I think it's in the 90s or so of our top songs, top albums that are delivered in spatial audio. Customers are loving it. We still get emails and comments about it.

25:07The customer satisfaction is super high. And we also gave it to everyone. We didn't force people to test it and sign up to a higher tier. So we made it super simple. And we're very proud of that. That does create a lot of new jobs for engineers, but that also does kind of create more work for the labels. I imagine that's maybe why they liked the idea of lossless. Isn't that like probably an easier step for them to take than moving all the way to spatial? Yeah, but easier isn't always the right answer. Sure, we had everything in lossless probably from day one.

25:40I give a huge thank you and applause to the labels for supporting us on this journey.

25:46Oliver Schusser:but remember they're also I mean they're also creatives and they like the idea of giving the artists better tools for the music just to sound better and I don't know we have a we have a spatial audio listening room here which you probably have seen before and you sit in there and you hear some of the great work in there it just is mind-blowing and it sounds absolutely incredible and there's no way any of our customers or we would ever want to go back and the labels feel the same about that too yeah yeah I do feel like that is one of those instances where it has built upon all of the pillars that apple is succeeding in i mean i use my airpods every day being able to use yeah great product yeah i have well the only thing about the product that is not great is that i keep losing them and then i have to buy new ones so but that's more of a personal issue but yeah that makes you find mine yeah also a great product i know also a great product i you know what my my problem is is that i will leave them on airplanes That's a big thing.

26:43In the back pocket, you don't see it. That's a problem.

26:47Oliver Schusser:Well, I mean, not to advertise here, but one of the businesses I run is Beats, and we make beautiful colors. Okay, so why keep Beats when you also have the AirPods? Because they're very similar, like what you're showing right here. Yeah, so Beats has been around for about 20 years. It's been a part of Apple for 10 years. And we bought Beats, actually sort of 11 years. We bought Beats at the time iTunes was incredibly successful. but it was a transactional business. And we knew that streaming was going to be very different. They had just sort of announced and launched Beats Music. We loved the team.

27:22Oliver Schusser:We had a great relationship with Dre and with Jimmy and everyone there. And we thought it was a good idea to bring Beats Music in to help us build Apple Music. But also we were excited about the opportunity to build Beats headphones into the Apple system and make them more successful. especially at the time they were very much a US or an Anglo sort of American business. And it's been wonderful. I've been working with the Beats team for the last six, seven years. It's a great business. It's doing incredibly well, growing. We have a totally complementary product to AirPods. We have over-ear, in-ear products.

28:03We have them in multiple colors. We're actually, interesting enough, you don't know this, we're optimized for both operating

28:11Oliver Schusser:systems so we work on iOS but all the features just as great as we work on Android you know Beats has always been on that fitness and music and sports lane so I think to me it's the brand that has found the intersection between sort of sports and music and has always been and has always pushed the envelope, supported the underdog, great marketing and I'm super proud of the work that the team does And it's another sort of company in our music portfolio that most people probably don't actually ever really think about. They sort of forget that Beats is part of Apple and they sit in the Apple Music building as well.

28:54Yeah. So, I mean, yeah, you see them as very branded in different ways towards different consumers. 100%. Yeah, yeah, yeah. That makes sense.

29:01Oliver Schusser:Okay. So did you catch this recent interview that Jimmy Iovine did with David Senra? I caught some of it, I think. Okay. So I wanted to get your take. Definitely caught some headlines, I think. Yeah, it got some headlines. It was also like two hours long. So there was a lot to sift through in there. There were a lot of things you could pick out. But he had like some really hot takes on streaming. And I just wanted to get your take on it. I have it written down here because I didn't want to have it wrong. But he said streaming services are minutes away from being obsolete. It's one dimensional.

29:32It's an ATM machine. You put your money in and you get your music. They don't do anything for the artist. The artist wants to communicate with their fans, period. That's what they want. They want to communicate. They want to market themselves. And streaming services are saying, we'll put you on our list if you're nice to us or if you like us. That's bullshit. What do you think? Well, first of all, Jimmy is the greatest.

29:52Oliver Schusser:We have a great relationship. I see him as often as I can. I'm co-located between the Bay Area and here. And, you know, we worked with him very closely for all those years before he retired on Apple Music. And I think he sort of summed up in Jimmy's words what kind of what I said before is like artists want more from streaming than just, you know, a jukebox in the sky. That's anonymous where you press the button. Oh, I knew this album. And so that is the reason why we built our studios. That's the reason why we think artist relations and working with artists on more than just the music is so incredibly important.

30:33And, you know, Jimmy likes to be provocative. I think that's great. He wants to push the envelope. And that's awesome. Obviously, we've got some challenges. And he was referring to AI for those people who didn't hear the full interview. That's very Jimmy. But I think he's an incredible supporter of the creatives, of artists. And this is when we partnered with him on building Apple Music, the number one thing that I personally and we all learned from him. Now, at McDonald's, wake up to a$4 breakfast meal deal. Wake up to a sausage McMuffin or a sausage biscuit, to hash browns, and wake up to a hot coffee.

31:08Get your$4 breakfast meal deal. Limited time only. Prices and participation may vary. Prices may be higher for delivery. Experience a membership that backs your business journey with American Express Business Platinum. When you pay with membership rewards points for all or part of an eligible flight booked with a qualifying airline through Amex Travel, you can get 35 % of those points back, up to 1 million points back per calendar year. American Express Business Platinum. There's nothing like it. Terms apply. Learn more at americanexpress.com slash business dash platinum. Yeah, and I mean, you've been in the music tech world for a long time.

31:46You've been at Apple for a long time working on music and music products. I mean, back in the day, the idea even when iTunes was out is people could conceive of streaming. They could imagine that it's possible in the future. There were a lot of logistical challenges. This is such a huge paradigm shift in the music industry. I think maybe fans underestimate just how big of a challenge it was for the record labels and the publishers and everyone to get aligned on how streaming could work and how that business model could work. Even back in the day, in like the early 2000s, you could conceive of streaming being the next wave.

32:18I kind of can't conceive of what is after streaming. Can you conceive of anything? Is there anything that you see behind the sky? By the way, let me add to that.

32:27Oliver Schusser:You might not know this, but before I joined Apple, I was actually at Napster. I did know that. I was here in San Francisco. It had just been sort of the service had just been shut down, and we were working on a subscription service. I don't remember what price points we had in mind. It was probably a little lower. But the idea was to charge one price, and you have access to all the music ever recorded in a service. Why do you think that didn't work out? Oh, we probably would have to add another hour to this. Probably a little distrust from labels. I think for three reasons. Number one, what really started the Ditcher music revolution, in my view, was the iPod.

33:06It was the idea that you can take your music with you, like in the old days of Walkman or so. And sure, there were other MP3 players out there, but they were all terrible. And the iPod was amazing. And this idea of putting a thousand songs in your pocket really started the whole thing. and when Napster was out there was really no hardware I mean no hardware that was working really well and imagine today if all your music was on a computer at home in one of the rooms it wouldn't be the same I think that's the first thing the second thing is I truly believe the industry wasn't ready there was no licensing model there was no catalog there was no we started iTunes I was in London in 2004 when we launched in the UK Germany and France we started with 400 ,000 songs and you know now everyone has like hundreds of millions.

33:56A hundred million plus, yeah. And so it took the industry actually quite a moment to even get to the 400 ,000 songs. All cleared, all licensed and you know. And so that wasn't available in the Napsis. And thirdly, the company had so many legal issues. Yeah. Whether they were right or wrong, I don't want to comment, it doesn't matter. But forget about that. The idea of creating a service where you'd have access to all the music in the world, I agree with you,

34:20Oliver Schusser:was not actually a new idea. Yeah. To your question, one of the things I'm really proud of is how we have developed the product, especially over the last sort of 18 months, two years. We're laser focused, as I told you, we're laser focused on just the music experience and Apple Music. And you can go on Reddit and they're all like, wow, you guys have shipped more features in the last six months than, I don't know, in the time, whatever time before. And it includes great AI features like automix or playlist playground or doubling down on listening experience or lyrics or improvements to library, like library pins and so on.

34:54So we're concerts, all these things. We need to continue to make our product better and better. There's new technologies and we need to obviously play with them. There's immersive experiences. We looked at NFTs originally. Now there's AI. There's always something. And I think I go back to having access to every song ever recorded on your fingertips, on your iPhone, anywhere in the world. There's no blackout windows. It works. You can rent a car. It's not even your own car. You plug it in, you go Bluetooth and it works. It's an amazing product. I think our responsibility is to continue to double down.

35:36And, you know, we're a product company. We're all about innovating. We've got an incredible roadmap ahead

35:42Oliver Schusser:for the sort of next few years and we're super excited about the future. Yeah, I mean, I just kind of don't see how it gets better for the consumer than streaming. And I do think in music, the consumer kind of always wins, like whatever they want. I mean, that's kind of how people started adopting Napster back when it was just file sharing because they were like, okay, free music? Hell yeah, let's do it. I mean, CDs were$20. I actually disagree with you on that. Sure, I don't think people use Napster because it was free. Sure, that was an incredible job. But wait a minute. It was also having the access to the music at the time was impossible.

36:16You had to go to like Times Square during opening hours and they only had like 20 ,000 records in the store. And I think at the time it was the largest record store in the world. I used to work in that building on top of that at BMG. And so, but if you weren't close to a record store like this, you wouldn't even have access to it. And so it was the access. Sure, it helped a ton that was free. It started as a student movement. So I get all of that. But it became mass marked very quickly because you could go to a show and the next day you could, you would have access to, maybe I was at a Bruce Springsteen show last night and I don't know, you have all of a sudden you have access to these recordings, which is kind of what maybe you get on YouTube today.

36:54Yeah. But I think it was access as much as it was free and the access we've solved, which is great. Totally. I mean, now everyone has access to all this great content. Yeah, yeah. Well, okay. So way back in the day when Steve Jobs was announcing iTunes, he did talk about how he didn't believe in streaming as the idea. He didn't think that people wanted to like rent music was basically the quote at the time. I'm wondering when do you feel like at Apple there was a shift when people started to get more interested in streaming as the next frontier for music? I don't know the answer to that. So I was, my journey at Apple was I moved for Apple to London in 2024 and was part of like a three-man startup team.

37:35And our goal was to launch iTunes, the music store and that's what I thought we were doing all along uh and as many countries as possible and believe it or not when I started um uh when I started at Apple at that time Apple didn't even have an office in central London I mean it's kind of wild it was before we had rolled out the retail stores Apple Europe was run out of Paris and the sales office for Apple England was like far

37:59Oliver Schusser:outside of central London and so the first thing we had to do is find office space and then I spent 14 years traveling around the world to expand iTunes into as many countries as possible. We're now in 175 countries with our services, with most of them, including China and Australia, Japan. And I remember all these launches. And as you remember, we didn't start with music. A year later, it was podcast, then it was TV and movies and books. And we launched the App Store and news and so on. So I think that was at a time when I was running around in the world trying to, I don't know, launch new countries or so.

38:35Did you ever meet Steve?

38:36Oliver Schusser:I did, yeah. Has he ever said any sage words of wisdom that have stepped in you? No, there's obviously many books written about him and the people that I work with have worked with him. And I think you look at Apple today and you see his handwriting and he'd be very proud because his focus was always on products, innovation, and excellence. He always taught everyone to focus on a few things and do them really, really well. And I think that's what we're doing on Apple Music. We try to focus on a number of features and execute at the highest level and, I don't know, have the best product in the market and treat everyone with respect.

39:17Yeah. Well, you mentioned earlier Automix, which is one of your new features. It is AI-powered. So not generative AI, but it's AI-powered. And it seems like all of the streaming services are trying to find at least small ways to integrate AI into the platform to make things more customizable. That seems to be a really big movement. I've heard the quote before, you know, the first part of streaming is getting your music to play. And then the second part is getting to play with your music. I am curious, though, what your roadmap is for using AI for customization of songs on the platform. I know Spotify is trying to work with the music industry to create some sort of remixing tool.

39:59I don't know what you guys have in mind. What's the roadmap for AI at Apple Music?

40:04Oliver Schusser:Unfortunately, I can't tell you that because that would give away some secrets. You know, AI isn't exactly brand new. There's AI, machine learning. It's really a technology development that allows you to do things or allows you to do things faster or cheaper that weren't possible before. Automix is actually a great example. We shipped it last fall. It mixes songs together in a playlist like a DJ. That's not new. DJs do that, but it's just not scalable. Now we can give it to all of our subscribers around the world. And the feedback is actually, we've been overwhelmed. The feedback has been fantastic.

40:41And again, we set some guardrails. We decided not to do it for albums because we look at that as a body of work. And we didn't want to, we thought artists have been very thoughtful about how the songs go in and out and how they start. But we decided for playlists and everywhere else. And I think our customers are loving it. Making a playlist is incredibly important in any streaming services, and it's hugely popular on Apple Music. We just launched a feature called Playlist Playground, which makes it super simple to make a playlist. You just put in a prompt. You can say, I don't know, make me a playlist for, I don't know, Sunday morning or a club night, or I'm going to Coachella.

41:20Make me a Coachella playlist and so on. Those things were possible before, but this is now way easier, way faster. hyper-personalized, to use your words. We don't call it that way. But if we personalize for you, you can even edit it. It's like, you know what? I don't like this artist, but add this artist. And so we'll continue to use AI as a technology to improve Apple Music and the Apple Music listening experience. And sure, the idea of providing customers more lean-forward tools is a wonderful idea. Remember, most customers are pretty lean-back, though.

41:56Oliver Schusser:Yeah. I wouldn't say they're lazy because that that sounds negative, but they're they like their music to be leaned back. That is that gives them the joy. You press a button, it plays music. It's personalized. It's your thing. Good. Yeah. I mean, that's like the whole benefit of a great editorial playlist. If I find a dinner party playlist or something or a workout playlist, then I don't have to think about it that hard. Yeah. I mean, that's actually like one interesting development over the course of streaming as it's become the dominant platform of music consumption is that, you know, People really loved playlists.

42:27People were discovering stuff on streaming services. And then as TikTok took hold, there was a lot of discovery that started shifting over to social media and to TikTok specifically. And I'm wondering how you guys think about that. I mean, obviously, streaming services are still just as important, but they're more so the final destination for listening rather than the discovery point. How are you guys thinking about that? And do you feel like that is an issue to lose discovery more towards social media?

42:55Oliver Schusser:I personally think, I mean, social media is awesome. And I think the opportunity to discover music there is wonderful and that's great. And especially because it's very much focused to a younger audience. Given how huge social media is, though, I actually think that they could do even better at really discovering and pushing music forwards. It's not like you look at our top 100 and be like, oh, I mean, sure, there's always some TikTok songs in there and so on. Yeah, it's not always the stuff that goes viral online that actually ends up getting straight. So I think, again, we're all about the creatives.

43:31And so if other people are pushing trends and music, and what I love today is that, I mean, for kids, there's no difference between an old and a new song, whether it's a Fleetwood Max song or a brand new, I don't know, Harry Styles song. It's just music for them. So I love that. And if social media can help surface that, that's wonderful. And, you know, we work with TikTok. We've announced a partnership with them. and we have a lot of other ideas what we could do with them. And so we love that. I do think they could probably do more for Discovery than they're already doing. Yeah, well, I mean, what would you have in mind?

44:03Oliver Schusser:I don't know. Now you're speculating. We're not talking about the future. We're here to talk about today. Apple Music also has recently become the title sponsor. Not recently. Last couple of years. Four years ago. I think I know where you're going. Oh, my gosh. You're talking about the Super Bowl? Yeah, yeah, yeah. Wait, wow. Okay, that's been four years now. It's been four years. We started with Rihanna. Then we had Usher, Kendrick, and Bad Bunny this year. I mean, that's a huge decision to make. This is obviously like the biggest advertising stage possible. So it's like a huge, wonderful look, but it is an expensive look.

44:34So how did you guys decide that this was the right opportunity and that Apple Music did want to be that title sponsor? Well, we've been doing live events for a very long time. Most people don't really know that.

44:49Oliver Schusser:but we used to run actually a festival in the iTunes days called the iTunes Festival in London at a venue called The Rounders for 10 years. It ran for a month every year. So we had more than 660 artists on stage between opener and headliners, all recorded, all made available worldwide, all streamed worldwide. And we put the festival on pause because we wanted to just do other things. And so we have a monthly concert series that's called Apple Music Live, which are exclusive. Sorry, it's not quite monthly. It's sort of, I would say, maybe eight a year or so. Where we have live events that either we organize ourselves or we go to an existing live event that we shoot for our customers.

45:31And it's our own team producing these events. And this is a muscle of working with artists and producing live events that we've developed literally over two decades. and we can talk a little bit about Apple's 50th anniversary in a second

45:46Oliver Schusser:because a lot of it was music. And so we were looking around and was like, okay, what are the biggest live music events in the world? And there really is only one. The Super Bowl has like 200 million plus viewers. Look at the Grammys and the ratings. It's somewhere below 20 million. I don't want to quote, but it's like a tenth of that. And that would be the second biggest music moment in the year, leaving the festivals aside, which I think is a difference. And so we like operating at the highest level and working with the best of the best. And we think the NFL are an incredible organization and Roc Nation and Jay-Z's team are incredible.

46:21And so when we saw that opportunity, we thought we could come in and help to make the Super Bowl bigger, make it better, and make it more global. Those were our three goals. You know, we've broken the record ever since and every year. And it's been phenomenal to work with them. And I'm looking forward to next year. Yeah. Okay. So one of our episodes of the show, we did kind of try to get into Super Bowl halftime show, how that comes together. I heard that one. Oh, yeah. Well, there you go. There you go. We'll have to have someone from Apple Music on next time to talk about it. I definitely want to make that an annual thing because it's so much fun to talk about that event.

46:58I am wondering. I don't quite understand this. What is the division of roles between Rock Nation and Apple Music in booking the act and putting it on? Well, first of all, we have a very long relationship and partnership with them, with Jay, with Desiree. They're fantastic people. I think they're the best of the best. We love working with them. And so we have an ongoing dialogue that actually includes myself most of the time to talk about what would be a great shortlist. Ironically, and I would encourage you to that, that would be a great dinner conversation. to just see, hey, who would you all book?

47:33The list is actually not very long. It's actually super short. This is the greatest, biggest stage on the planet. It is too big for some artists. And some artists have already performed. Some of the artists have already performed twice. Yeah, I know, like Bruno Mars is one of them. Beyonce. Beyonce. Coldplay. It's a fun dinner conversation. But we work with them in collaboration. Ultimately, they produce the show. Our team is fully involved in everything. So ultimately, I would say they have the last call to say, this is the artist. But we are in full alignment with them. And it's a great partnership.

48:12And I love the work that the team is doing. We had more than 4 billion total views for Bad Bunny this year. It was a total smash worldwide. It broke every record there is. And it was a beautiful show. And the views were fantastic. fantastic. And it's not just that. We really work very closely with the artists. We do, for example, the press conference. And this year's press conference, the press conference is always on Thursday morning at 10 a.m. It's with the headliner, but also some of the support artists. We had 75 million viewers of the press conference this year. And this is sort of a production that we do.

48:48And Zane and Ibro were sort of the interviewers. We love the work. We look at it as a partnership. And we do it because we like operating on that level with the best of the best people. Yeah. I mean, I feel like it is undoubtedly the biggest stage in music. The only thing, though, is that the Super Bowl is such like an American thing. As a non-American, you probably get that. It's like football is so America. Well, you say that, but I go back to... Sorry, I didn't mean to interrupt you. No, you go. No, you look at what the NFL does. I'm from Germany. And so they play games now in Germany and Ireland and the UK and Spain and Brazil, Mexico, Australia.

49:29Yeah, they're trying. And one of the things that Roger Goodell, he's the commissioner of the NFL, has done is really push the international roadmap. And you know that in most years, certainly in the years we've been involved, the halftime show gets more viewers than the actual game. Totally. And by the way, internationally, most people just watch the halftime show. Yep. And Bad Bunny. And remember, Bad Bunny was an interesting choice. As much as he's the biggest streaming artist and has been for the last few years, he's actually not toured most parts of the world. He's never really had a proper European tour, for example.

49:59He's in Europe this year, right now. And so for him, this was a huge moment. And for international, it was a huge moment. And the viewership numbers, if you look at it, I mean, the viewership numbers in international were like crushing anything we've ever seen. It's amazing. One question that I have, it pertains to y 'all's new policies around AI. Yeah. So you guys have recently announced a new policy. Do you mind explaining it? Because I feel like most people probably still don't know about what. Yeah, no, I can talk a little bit about AI and then I can talk about the policy. Again, AI is a technology that our responsibility as Apple is to use it to make our products better, faster, whatever it is.

50:40And secondly, also allow people to use it in a responsible way. And, you know, technology has for the music industry, I know Michael Nash has said this recently, has always actually been good for the music business in all the various waves over the last 50, 60 years. And I really do believe AI has a ton of opportunities as well. The reality is today, what it does is allows anyone to make music because it's super simple and super fast. And there's nothing wrong with that. And what happens is people take the music and deliver it to streaming services. So when you look at our sort of monthly sort of intake, more than a third of what we get today is actually what we would say is music that's 100 % AI.

51:26We have developed, we've never talked about this, we've developed technology in-house that would allow us to exactly see what music people are delivering us, what AI it is and this and that. And that's obviously important to know so you can analyze when something's come in. now the reality is the usage of the AI music on Apple music is really tiny I'm gonna say really tiny it's like and by the way I'm rounding like to the lowest thing is like below like 0.5 percent of usage and by the way that it's it's much lower than that wow so usage is low but by the way we're just at the beginning you could see a world where that grows you never know where it gets really tricky is is when fraud comes to play totally and remember I talked to you about for us the quality of the experience, we're obsessed about the quality of Apple Music.

52:13We have very high customer satisfaction. We've got the lowest churn in the industry. People love, people that subscribe to love the product and we want to get rid of fraud. And by the way, this has been a 20-year journey because there was fraud obviously in iTunes already. Totally. And so we have, we're investing way more than anyone else in reducing and eliminating fraud. And our fraud in Apple Music is like tiny, literally tiny. And so we have implemented a fraud penalty four years ago where if we catch someone, then we actually take the money and put it back in the pool. So it goes from fraudulent artists or labels to honest artists and labels.

52:49And so what's important is we need to monitor. There's a correlation between AI and fraud that needs to be monitored. That's one of the reasons why we just doubled the fraud penalty. First of all - Oh, so you doubled it. We've doubled it February 1 this year. Okay, wow. First of all, we don't like fraud full stop. Forget about AI for a second. But secondly, we were worried that maybe there could be more fraud with AI. And again, it doesn't have to be. We're assuming that. We've seen some - There is a correlation. There is some correlation, yeah. But the good news is our fraud program and the fraud penalty works incredibly well.

53:25We've seen a 60 % reduction sort of over time in fraud just because of the penalty. So we feel like that's totally under control. And now, which brings me to the last point is, okay, what is actually AI? And I've said repeatedly to all the CEOs and presidents of the labels, there needs to be an industry consortium where they come together and discuss what is AI. And by the way, that can't just be corporates. You need to have artists and songwriters in the room as well because there's nothing wrong with artists and songwriters using AI, even 100%. But someone needs to then decide, well, what is AI, what's not AI?

54:04What we have done is, and this is really just an early step, we have put it on the content providers, labels, and distributors to say, hey, we want you to tell us when you're using AI. And we've created sort of basically AI flags. And we've said it's for the music, it's for the art, it's for the songwriting, and it's for the video. So there are four flags when you deliver content. And labels have started to actually use the flags. Have they really? They have, yes. I feel like that's the one thing that I was concerned about when I saw that is just, does that incentivize people to lie? Well, first of all, you should know every label in the world is delivering AI.

54:40They might not know about it. Yeah. So because they themselves also need to develop tools to understand what's AI or not. Yeah. I know that they have these. Some of these labels deliver us a ton of content that's coming from all over the world. Luckily, we have, and we pushed on this really early. We have, our technology is really solid. We see exactly what's coming in. And so we have these flags. Right now it's an honor model. There's no penalty or anything yet, but at least it gives us a foundation to say, then we know, and then we can figure out what do we want to do with it. But I really need that answer.

55:12I don't think we should make that answer. I don't think one of the major labels should give that answer. I think it needs to be a broader conversation that includes the creatives. And that, I mean, artists and songwriters to define what is a reasonable and fair way to treat AI. Because overall, there's nothing wrong with AI. You and I could make a song here right now. That's great. It'd be a really fun moment for us to make a song in AI. Anyway, so it's a journey. Yeah, that's very interesting. I didn't really realize that you guys had a detector kind of in-house that y 'all were looking at. Well, so why not just use that to make the flags?

55:49Why ask people to disclose? Well, what are we flagging then? Well, I mean, also... And by the way, who's to say that we're not going to do that at some point? But I think we're at the beginning of something that the industry needs to figure out. And I strongly urge everyone that we need to come together because this is not a particular label issue. This is sort of an industry issue. No, totally. And it's a responsibility for the music business. I don't even need to have a seat at the table. We'd like to have a seat at the table. But I think it's more important that the creators have a seat at the table to me.

56:22Yeah, well, I hear what you're saying because, I mean, you know, it starts with the artists making things. however they make it, wherever they make it, then it goes to the label or distributor, then it goes to you guys. So y 'all are kind of like three steps removed from the creation of the music. So asking the streaming services to come up with that plan alone would be, I mean, kind of missing a lot of other parties in that conversation. But yeah, it's going to be interesting to see what happens because I think AI-assisted music will be much bigger than fully AI-generated music. That's right, correct.

56:54By the way, people have used technology for decades. GarageBand. And GarageBand. William is a great friend. He's very technology forward. And there's nothing wrong with that. But who am I to say, oh, this is right, this is wrong. That's not how it works. And maybe, by the way, maybe everything is okay. I don't really know. We'll need to see. For us, as I said, the number of songs delivered in AI is growing. And it's already a third of what's delivered. for us it's really the usage is very small it's really important that it doesn't correlate with fraud and and i think we got that covered on our end thanks to the great work that our engineers and and our business teams are doing and then yeah on on on ai we start with the flags we have a bunch of other things that we're going to do over the course of uh uh the near future and uh but i really need the content providers and the labs to take responsibility here well thank you so much for letting me ask you a million questions.

57:55Okay, to end things off here, I always play a game with our guests. I heard on the podcast. Yes, yes. Thank you for listening, by the way. That's very nice. I'm glad you checked out the Super Bowl episode, the Michael Nash episode. Okay, so it's called What Would You Queue? Yeah. You know the drill, but so you need to pick one song per prompt. Okay. So the first prompt is, what would you queue to take you back to your childhood? I tell you a story that's actually very recent. Okay. I grew up in Munich, wonderful city. I'm very proud. I go back a number of times. And, you know, in Germany, you get to learn English in school relatively early.

58:34And everyone's really small and young and has no sense of learning a language. One of the early things I remember, like literally in the first month or so, what teachers do is they teach you a song, an English song, and they want to teach you a little culture. So the song that my teacher taught us as a class to actually write, then learn by heart, and then sing was helped by the Beatles. Oh, wow. And I actually totally forgot about that. We did, as part of Apple's 50th anniversary, we had Apple turn 50 April 1 just a couple of weeks ago. We did, I don't know, events all around the world. Many of them were music events because we love music.

59:13The final event we did was a show with Paul McCartney at Apple Park. And it was 15 ,000 people. It was beautiful, great weather, great lights, amazing stage. He played for two and a half hours. And the first song he played was Help. And for whatever reason, I remembered it at the time that I was sitting there, like, writing down Help, the lyrics, and didn't understand a word. I mean, we didn't. This was, like, literally in the first month of me learning English. So most of the words, obviously help was easy to translate. But it was fun, and that brought back some good childhood memories. I love that.

59:42Oh, man, to actually see Paul McCartney himself perform it. That's a fun thing.

59:47Oliver Schusser:Yeah, it was a huge honor. We had done things with Paul before, and you remember Steve was a huge fan of the Beatles. And in 2010, I worked on, because it was run out of London mostly, I worked on the campaign when the Beatles did an exclusive release on iTunes. I don't know whether you remember that. Wait, what was the exclusive release? Well, the Beatles were a holdout in digital for the longest time. They were, with the very few exceptions that still exist today, they were sort of the last to come to iTunes. And we did a huge campaign all around the world with a beautiful ad campaign. You should look it up.

1:00:18I was really proud of the work. And we launched the entire catalog on iTunes. And we've been working with them ever since.

1:00:26Oliver Schusser:And to have Paul McCartney celebrate with Tim Cook and our executives team and 15 ,000 people at Apple Park. What was Apple's 50th birthday was amazing. And he kept on playing and playing, playing. But he did open with help. I love it. Which is amazing. I love it. Okay. What would you cue to remember your favorite era of music? I don't really have a favorite era. Let me tell you why. Okay. I lived in Germany for about 20 plus years of my life. I was in England for 15, in the US for, I don't know, 10, 12 or so. And it's interesting. when I look at someone's 80s and 90s playlist here, I was like, that's not my 80s and 90s.

1:01:08My music was way more like European and different. So I actually, it's sort of all a bit of a blend. I would probably say the 80s and the 90s if I had to sort of say, and probably it's late 80s, early 90s, probably 85 to 95. So is there like a German 80s or 90s song that you're...

1:01:28Oliver Schusser:Well, not really, but I'm a huge dance and EDM fan. So I go to like Ibiza and Tomorrowland and places like that. So, and that's probably my European sort of DNA and roots. I love it. I love it. Okay. So what would you cue to remember the best concert you've ever been to? That would be Michael Jackson. Oh, wow. Yes. And I'll tell you why. I saw two big Michael Jackson shows in the 90s, 92 and 97. he was close friend his tour promoter was a guy called marcel abram i think that was his name and he's a german guy it was sort of mostly based in munich and so he used to open his tours in munich and he spent a lot of time in munich there's actually a statue and a shrine for michael jack in the center of munich which makes no sense because yes but anyway but he did i went to the dangerous tour and the history tour and it was something i'd never actually i was really young It's something I had never experienced and seen before.

1:02:23It was the most incredible thing. You probably didn't even know what you were exactly seeing. No. It's only in hindsight. It's like one of them, the history show from Munich is actually on the internet. I've seen, I've been lucky. I mean, Zane Lowe and I went to see Bruce Springsteen last night. It was one of the five, ten, pick any number, best music moments we've ever had. I mean, there's 18 people on stage and everyone's a wizard and a magician. It's incredible.

1:02:51Oliver Schusser:Yeah. So I've been lucky. I go to a ton of shows. We see a lot of great live music. But I think the world hadn't seen anything like Michael Jackson in the 90s. True. And there's been so many. I've seen Prince. I've seen so many other great shows. I typically hate to call something out, but I would say those were my two biggest, best concert moments of my life. I think that's fair. It's kind of hard to be Michael Jackson. That's right. Okay. Final one. What would you cue to recall a core memory at Apple Music? So maybe a big campaign you did around a certain song. anything that kind of stands out to you?

1:03:23There's so many. I'm sort of flip-flopping between two. I think the work we've done with CoPlayer on Viva La Vida for the silhouette campaign, as we call it. You remember sort of dancing. That was fun. But no, I would say going back to what it means to me personally and also my path here is the first ever show I did in my life and we did actually worldwide for iTunes was a show with the stereophonics at the Apple Store on Regent Street in London. And it was a toll experiment. We're like, well, what if when the store closes in the evening, what if we did a show afterwards for a couple of hundred people in between, like all the, there was no iPhone at the time.

1:04:07It was like 2005, literally. And it was such an incredible moment that we actually decided to immediately do this monthly. So we created a series called iTunes Live from London. It was every month. and then we liked it so much that within a year we had iTunes Live from New York and from Paris and wherever we had Apple stores and it led us to do the festival and let us do all the live events. I actually think it's sort of the origin of the DNA that led us to do the Super Bowl as well. It's sort of us being in the business of like producing events and working with artists directly and you know, I love the Stereophonics.

1:04:40It was a fun band so I would say it was that. That's a good shout. Okay, well Oliver, thank you so much for coming on the record. Thank you very much. All right, Thank you so much to Oliver for joining me to talk about all things Apple Music. And thank you for listening to this week's episode of On the Record. If you liked today's show, give us a follow on Instagram and on our brand new TikTok page, at Billboard on the Record, where you can see new clips of this show every single week. We'd also appreciate it if you rated us on your favorite podcast platform, because all of these things help On the Record grow bigger and better than ever.

1:05:10Again, I'm your host, Kristen Robinson, and tune in next week for another peek behind the curtain of the music business. I'll see you then.

1:05:46We'll be right back. to spend more time outside and less time slathering on aloe lotion. You're welcome. Columbia. Engineered for whatever.