07/03/2007, 10:20am, EDT
Tuesday, July 3rd
Apple denies Universal departure reports
Apple is denying reports that the major music label Universal is refusing a long-term iTunes contract, opting for month-to-month deals with the option of outside exclusives. "We are still negotiating with Universal," says Apple representative Tom Neumayr, speaking in an interview with the San Francisco Chronicle. "Their music is still on iTunes and their not re-signing is just not true." Universal representatives have not replied with any statements of their own.
According to Tony Berkman of Majestic Research, if Universal is holding out on an iTunes contract, it may be because of widespread complaints in the industry. "The music industry has been frustrated with Apple for some time because they feel (Apple) has a veritable monopoly on downloading music," says Berkman. "For a while, Apple had all the leverage and could dictate the terms to the publishers." The research firm NPD Group observes that the iTunes Store holds over 70 percent of the online music share, easily defeating competitors such as Napster and eMusic.
This position is not inviolable, warns Allan Klepfisz, the CEO of the future rival service Qtrax. "As much power as they might be perceived to have, Apple needs the record labels and the record labels need Apple. But it's a mistake for anybody to think the record labels need Apple more than Apple needs the record labels."
David Card of JupiterResearch calls Univeral's efforts "hardball negotiations," suggesting they may be insincere. "I'd be surprised to see Universal disappear from the virtual shelves of the iTunes Store."
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That being said, all complaints from the labels in terms of interoperability go away as soon as they are willing to abandon DRM... and this does need to happen. Like most security measures, DRM is virtually useless against anyone who really wants to get past it.
If Apple didn't have to worry about DRM, they might be more open to a more tiered pricing scheme... though I happen to think Steve hit the magic number right on the head with the 99-cent price point, and it should be left alone. $1.29 for non-DRM music at higher quality is reasonable, but still not as appealing as 99 cents.
It'll be interesting to see how long Steve's 99˘ (or $1.29) standards last if labels get enough power to pull out. Of course, with all the high volume of sales, some probably wouldn't want to risk the current lucrative arrangement.
It's a simple matter of greed. At first it was fewer sales and they could still cash in on CD's. Now, CD sales are declining (like we all knew they would) and their higher profit margin per sale is shrinking. Despite an increase in volume of sales, with probable stable profits, they want more. That's not too hard to see.
Apple is selling more and taking less than any other vendor, one again the lables are looking to bite the hand that feeds them.
Once again - here is the music business in a nutshell, since the lables have forgetten. 1. Find talent 2. Sign talent 3. Let talent make music 4. Market music 5. Sell to consumers (DRM free at a reasonable price) 6. Don't kill all music (copy a song for a friend) sharing - because that is the best form of marketing, the social aspect of it.
I think people see Apple's dominance in digital music (which is NOT the same thing as a monopoly) as earned - and see the labels' power as abusive and unearned.
I think people see the labels as the bad guys and Apple as the good guys, more than the other way around. And that's all the leverage Apple needs.
And then charge me $0.50 for a beastie Boys cut 'cause they are yesterday's news_
And I downloaded all of this from an online music vendor_
But then I goto the store and buy a CD for $15 with 10 tracks on it_
Except for the cheaop track by the artist that's not popular - they are making a killing on the prices_
I buy the online track on the internet - I get a song and maybe some album art for the picture window in my player_
They are saving on packaging materials (the product casing and the material used to seal the case sticker doen the break and shrink-wrap) they are saving on not having to produce media - they are saving on the shipping cost to the retail store - they are cuttiong out the cost of the retail store to pay an employee to open the shipping containter - label - porice and stocking the product_ Which ALL goes into their pocket as revenue_
So even at $0.99 per track - buying it online - the record labels are making money_ Don't kid yourself_
So I'm glad Steve/Apple is sticking hard to this $0.99/track arrangement_
And I'm sorry but the difference between the $0.99 track and the $1.29 track - to the general consumer - they will not notice much difference - except maybe more peace of mind and the allusion [not illusion] of "higher quality"_
"In 2000, U.S. consumers bought 785.1 million albums; last year, they bought 588.2 million (a figure that includes both CDs and downloaded albums), according to Nielsen SoundScan. In 2000, the ten top-selling albums in the U.S. sold a combined 60 million copies; in 2006, the top ten sold just 25 million. Digital sales are growing -- fans bought 582 million digital singles last year, up sixty-five percent from 2005, and purchased $600 million worth of ringtones -- but the new revenue sources aren't making up for the shortfall."
-- Rolling Stone
http://www.rollingstone.com/news/story/15137581/the_record_industrys_decline/1
i am not a record company fanboy. they have been gouging consumers and screwing over artists for 2 decades. this is their just rewards. however, it shold be noted that they are declining and so too their ability to strongarm.
2. The labels continue to put out shit.
3. Music is really not about money, it's about playing music! And listening to people who like to play. And thats no shit.
But, that was a physical product that cost as much to package, distribute, and sell as an album. With all of those costs gone, 99 cents sounds reasonable.
I don't have a problem with record companies wanting to charge different prices for their products, but I do have a problem believing it will lower the cost of less popular singles, rather than simply increasing the cost of popular singles. I also have a problem with the labels deducting manufacturing, distribution, and retail fees from the artists' cut of the sale. I can see a huge class-action lawsuit coming out of this.