Apple’s $100 Million U2 Blunder

iTunes users are seemingly an ungrateful bunch. After Apple CEO, Tim Cook, announced that the U2’s newest album, and first since 2009, Songs of Innocence would be automatically uploaded to everyone’s iTunes, people quickly took to twitter and other social media outlets to complain about the unwanted album.  Apple, hoping they’d make a splash, revealed the album at the conference at which they revealed their highly anticipated iPhone 6 and apple watch.  Although people seem excited for the release of these new products (especially the watch), the reaction to the U2 gifted album has been unexpectedly negative.

This reaction is even more troubling for Apple when you consider that they paid U2 a reported $100 million plus royalties for the right to release the album in such a fashion. For the most recent fiscal quarter, Apple registered a net profit of almost $8 billion and a revenue of more than$37 billion.  While a $100 million is certainly a large chunk of change, it’s relatively marginal in the eyes of this tech giant.

U2 and Tim Cook celebrate their partnership

U2 and Tim Cook celebrate their partnership

Apple will most likely roll out a marketing campaign pairing the U2 album with featured apple products such as the new iPhone and watch. However, the company may be rethinking this strategy due to the unexpected backlash from the automatic upload of the forty-eight minute album featuring 11 original songs.  In fact, Apple, in a move to appease upset customers, created a website and plugin to help users remove the album from their iTunes.

The unpopularity of this move may be surprising to some, but the zenith of U2’s fame is far behind them.  Some young users reportedly had never even heard of the band. Apple can take a few lessons from this gaffe. First, don’t let the veteran apple executives decide what’s “cool” for their younger customers, and additionally that they probably do not need to spend quite that much money on this type of move even if won’t drastically affect their profit margins. Personally, I, Carl Koenemann, have no problem with U2, and actually enjoy much of their older music. And as a finance professional, I can’t knock a free product.


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