Bob Lefsetz gets the goods on this news. To Wit:

Famous for being in the right place at the right time, as of June 1st,
Jimmy Iovine will no longer be employed by Universal Music. He is
ankling the firm to return to New York City to run LimeWire, the P2P
service based on the Gnutella protocol.

Two factors seem to have triggered Jimmy's departure, the radical drop
in CD sales and his kids' reaction to the RIAA lawsuits. Always in
touch with the younger generation, the true Dick Clark, Jimmy thought
it was time to get out while the getting was good. His move reminds
one of nothing so much as that old Graham Parker chestnut, crawling
from the wreckage into a brand new car.

So how did Jimmy get out of his Universal deal?

Turns out his contract has got a bonus structure based on sales
volume. And, if a certain volume is not reached, either party can
terminate the deal. There was some debate as to whether digital sales
counted in the formula, but unfortunately for Universal, even when
they were added in, the sales target was not reached. Doug Morris was
flabbergasted that Jimmy would want to move on, then again, unlike Mr.
Iovine, Mr. Morris is notorious for still living in the twentieth
century, still believing in the formula of getting records on
terrestrial radio and seeing if they react at sales outlets. Hanging
out with Steve Jobs, Jimmy has now seen that podcasts are a better way
to reach the public, that new media is the way to go, so he got up and
left.

But why not start his own label?

Because distribution is king. Universal might own all this fabulous
content, but if they can't get paid for it, what difference does it
make? It's best to be where the rubber meets the road, where people
acquire and pay.

Yes, but who's paying for LimeWire now?

That's just the point. Mr. Iovine believes Ted Cohen's editorial in
"Billboard" this week represents the tipping point. It's time to
license P2P and see how it all turns out. Negotiating a fifty percent
interest in the company, for his imprimatur, Jimmy is now the
licensing point person. And smart money has him closing deals.

The new pay LimeWire will at first feature unique content that
eclipses anything ever offered at the iTunes Store. To save the
business, now that he's got the ball rolling saving Africa, Bono will
cut a solo track, only available via LimeWire. Turns out that there's
no solo deal in U2's contract, and that Bono is free. Everyone felt
U2 was like Metallica, and no solo discs would be allowed, but Bono
doesn't need to leave the band like Jason Newsted to make his own
music, his effort is condoned by Edge and the other two.

But that's just a start. There's a whole Stevie Nicks/Tom Petty duets
album in the can. Each cut as good or better than "Stop Draggin' My
Heart Around".

And Jon Landau inserted a key man clause in Bruce Springsteen's
contract with Sony. Turns out if Andy Lack isn't in charge of a
combined SonyBMG, if he's not top dog, Bruce can walk. Being a man of
the people, Bruce is leaving the big bucks behind, to do something for
the good of the business, for his fans. Then again, will he end up
making more money when everybody owns his albums, when they can be
purchased for such a low price? As to Jimmy producing said record,
nothing has been confirmed. However there are still some unreleased
tracks from the "Darkness At The Edge Of Town" sessions, and Max
Weinberg has said they're every bit as good as "Candy's Room".
However, believing in the new paradigm, Bruce is not going to appear
on Conan. You see to be exclusive to LimeWire, you can't do
television. Word of mouth will drive sales/trading. Jimmy feels this
is the only way for acts to maintain their cred, and their longevity.

Of course there have been negotiations with Irving Azoff for the
Eagles. Jimmy thought he had the inside line, since he produced Don
Henley's duet with the aforementioned Stevie Nicks on her debut solo
album. But Irving wanted fifty percent of Jimmy's action, twenty five
percent of the company, to close the deal. And still believing in the
major label mantra, that the executive is bigger than the act, Jimmy
said no.

Of course the Pussycat Dolls can't come along. But Jimmy believes
it's only a matter of time before the majors cave and make a deal with
him, and he has all the content. And despite the flash and hype of
the new acts, all the money is in the heritage acts anyway, so Jimmy's
starting there. It is believed the acts that get broken on LimeWire
in the future will be more akin to the classic acts anyway. That
they'll be able to sing and play, and will write hummable tunes.
Timbaland is in negotiations with Kazaa, as is Snoop, for that company
is offering elephant bucks to performers to make a big splash upon
relaunch, but Jimmy turned those dollars down, famously saying it
would be like making a deal with Sony Connect. Who wants to be king
of nothing? Dre? Dre's still up in the air, blown away his godfather
walked out without telling him. He's worried his new album on
Universal will stiff without Jimmy there to steer it, so he's sitting
on the sidelines for now. He tried to get Jimmy to stay through its
release, but expediency has always trumped loyalty in Jimmy's book.

So how's it going to work?

At first, before the major labels sign on, LimeWire will cost two
dollars a month. Then, every time a major label group signs on,
another two dollars will be added to your bill. So when all the
majors are on board, it will cost ten dollars a month for all you can
eat, unprotected MP3s. There will be no indie bonus. The indies,
although a growing percentage of overall sales, are getting screwed
again. Yes, you see every time a major signs on $100 million is
transferred to their account, which, of course, goes straight to their
bottom line, staving off Wall Street until LimeWire truly takes hold.
For it's envisioned that once LimeWire takes off, within the next
twelve months or so, there will be so much money distributed, the
majors will be rolling in profits.

The deal is LimeWire skims fifteen percent right off the top. The
rest is distributed to the labels owning the traded tracks, a la ASCAP
or BMI payments. How that money is then distributed is up in the air.
One hopes fifty percent will go to acts, and that publishers will go
to a percentage rate, but expect big battles. The only way to avoid
all this is to make a deal with LimeWire directly. Then Jimmy coughs
of up fifty percent of the revenue. Of course, then he keeps fifty
percent. On top of his fifteen percent distribution fee. It's not
clear if Jimmy wants to expand this sphere of the business or not.
After all, the money's truly in distribution, a fiber cable never
called in the middle of the night looking for dope or crying about its
girlfriend leaving. Advisors are telling Jimmy to just make enough
deals to launch the ultimately truly legal service. But can Jimmy
avoid double-dipping? Only time will tell.

And what's in it for the consumer, you ask? Well, in addition to the
exclusive content, Jimmy has made a deal with Mitch Bainwol and the
RIAA. Anybody owning a LimeWire license will be exempted, immune from
lawsuits. Yes, a credit card bill will with a LimeWire charge will be
an absolute defense against a lawsuit. Jimmy's kids told him that
college students still would not pay, but blanket trading licenses for
universities are being negotiated as I write this.

The future has finally arrived. And contrary to all the spin, it was
not brought to you by Steve Jobs, but someone from the music business,
who understands relationships, who understands musicians, who
understands the audience. Mark April 1st down on your calendar as the
day the music business was saved.

Now I remember why I dislike the month of April so much

Music industry saved by this creep? Must be April's fool...

Where is Limewire getting the $400 million to sign up the majors?

Contrary to all the spin? This reads like a bad joke.

It is April fools!

April fiddle faddle!

Thought so, but you posted on the 2nd.

The part that says "Mark April 1st down on your calendar" should have been enough of a clue.