09/24/2007, 1:20pm, EDT
Monday, September 24th
Vivendi chastises Apple for "indecent" terms
Major record label Vivendi today chastised Apple for its "indecent" contract terms between Universal Music Group and the iTunes Store. "The split between Apple and (music) producers is indecent [...] Our contracts give too good a share to Apple," said Vivendi CEO Jean-Bernard Levy. Vivendi says it currently receives €0.70 of the €0.99 charged by Apple in Europe, and is demanding a new pricing model that would make new releases cost more than older works, according to a Reuters report. Levy assured reporters at a gathering in France that the largest record label is speaking with companies other than Apple to "ensure that music is better remunerated." Universal cancelled its long-term iTunes contract in early July, deciding instead to offer its catalog of tracks on a monthly basis and with an "at will" capacity. [corrected: Another panel member, not Warner Music Group, said that music labels could remove their music catalogs from the iTunes Store in one swift "decapitation" move. Warner has clarified that it did not threaten to remove its music catalog from Apple's iTunes Store.]
The label also began experimenting with DRM-free music in August, but omitted Apple's iTunes Store in its list of outlets that would offer the protection-free tracks. The iTunes Store also offers DRM-free music at a slightly higher price than protected tracks.
Warner Music has also waged an ongoing war with Apple over iTunes Store music pricing, and has repeatedly demanded that it be allowed to mark up newer songs at higher prices than older tracks. Apple argues that part of the iTunes Store appeal to customers is its simplicity and consistent pricing of every musical track, which results in no surprises for music customers looking to download a particular song.
NBC Universal late last month announced its decision to pull all of its TV show episodes from the iTunes Store, citing Apple's resistance to altering prices or bundling videos together to increase profit as the primary reason for its decision to back out. The network's videos, which include popular shows like Battlestar Galactica and The Office, will remain available to iTunes customers for several months until the two-year contract between Apple and NBC runs its course in December.
Filed under: industry
Other story tags: digital music/video
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i'm amazed at apple's ability to hold out even this long. it is a testament. but, it seems unrealistic to surmise that it will last indefinately.
perhaps apple could take a hardline, 2-tier, stance. new releases, $1.29 flat (~25% markup). older releases $.99 flat. take it or leave it.
notice also that apple is encouraging companies to go DRM-free in iTunes. the $1.29 price tag is $.30 extra revenue with zero additional expense.
Yep.
"Seems they are not happy unless they are the only ones making money."
Nailed it.
That said, if it's what it takes then let the studios set prices for DRM-FREE content. Either it won't make a difference in sales, or it will. If no one buys at the higher prices, then that's a pretty clear signal that Apple was right and they were wrong.
And I know Apple thinks "simplicity" is important, but I think us poor feeble-minded consumers can figure things out. After all, I seem to manage the variably-priced items in my Amazon shopping cart just fine.
It's the same thinking which is the reason the labels couldn't get their shit together in online sales of their music.
Or maybe it's "sticking your foot in your mouth".
First, they say that Apple takes an indecent share. Then they say that Apple takes less than 30%.
Considering the overhead of bandwidth, it's clear that Apple is barely more than breaking even on digital music sales-- they just use it to sell more iPods.
What is the overhead that the record company is paying? They don't manufacture a CD, or print liner notes. They don't have to ship anything to record stores.
Hell, they often make recording artists pay for production costs, even loaning them the money against royalties, don't they?
I think it's clear to everyone what is indecent here. I can't imagine why Vivendi would want to draw attention to it.
if you look at it right now, apple's markup is in the one-off sales, as most full albums are actually lesser than 99 cents per track when bought all at once. so they're already using a two-tier set-up, just more subtle.
have to say that i expected this after the fallout between apple and nbc/universal. if they "take their ball and go home," it's gonna make quite a dent in the available itunes music catalog.
*smack*
Apple has sold how many songs through iTunes now? They hit the one *billion* mark in February of last year. So, that means the labels only got a measly roughly $700 *million* out of their deals with the ITMS.
Those poor, unfortunate bastards. We must all weep for them, then have a late-nite infomercial asking for people to donate funds to "adop a song".
"For less than a dollar a month, you'll be able to sponsor this song, making sure that it keeps generating revune for those that need it. And who needs it more than those mega record labels? After all, they have only made seven hundred million dollars in the past few years on digital downloads alone! Can you really sleep at night knowing that CEOs of these companies are making as little as 20, *maybe* 25 million dollars a year? I know I can't. Please... adopt your song today."