Apple new power broker

While Apple growing influence in the music industry has worried execs, a new report claims that the company has become an unexpected power broker as the popularity of its iTunes software increases. With the growing value of the digital real-estate available on iTunes, the company has chosen not sell that prime promotional space, but instead use it to barter for exclusive track offerings, discount pricing, and additional exclusive content. The Wall Street Journal reports that the one million daily visitors to the iTunes Store home page are presented with several dozen albums, TV shows and movie downloads and that of the Cupertino-based company's catalog of more than four million, only a a few dozen are adorned on home page.

"Apple has jettisoned some of the conventions of traditional music retailing -- notably, the practice of selling prime promotional spots to recording companies willing to pay for better visibility for their acts," the report claims. "But behind the scenes there's plenty of horse-trading going on that influences which songs are seen and purchased by iTunes customers."

As one of the largest sellers of music in the U.S., the company offers home-page placement in exchange for non-monetary compensation, such as exclusive access to new songs, special discount pricing or additional material such as interviews with stars. The report says that although other big retailers, digital and physical also seek exclusive offerings, Apple is "especially aggressive and has outsize clout when it comes to the slightly out-of-mainstream music it often emphasizes."

The report says that "decisions by the small group of Silicon Valley and music-industry veterans running iTunes can help put an unknown band on the map, adding millions of dollars in sales, while relegating others to the obscurity of the site's virtual back bins."

The unexpected power shift--from traditional music outlets such as MTV--and bargaining power has draw criticism from some artists and music compnaies, who say that they are "forced" into negotiating with one of the fastest growing music retailers in the world. Apple's ability to generate sells, keeps them at the table.

"Apple's muscle-flexing has begun to rub some artists and music companies the wrong way," WSJ writes. "During a recent radio interview, outspoken British pop singer Lily Allen accused iTunes of "bullying" artists into supplying exclusive content. There's a further worry among music executives that the few spots available to promote artists on iTunes are dwindling as Apple remakes the store into a broader entertainment destination for TV shows, movies and games."

by MacNN Staff