updated 03:35 pm EST, Mon February 2, 2009
Jobs tense with labels
Although the recent changes to iTunes pricing policies and DRM protection would suggest that Apple and the record label giants have reconciled their differences, interactions still remain tense between the two entities, according to a New York Times report. Sony CEO Rolf Schmidt allegedly posed the final resistance to Apple's terms, disagreeing about the timing of pricing changes, although he finally folded after a heated phone call with Steve Jobs on Christmas Eve.
Jobs' pugnacious tone has been supported by the dominant position held by iTunes. One music executive, speaking on condition of anonymity to avoid displeasing Apple, claimed that the labels lack leverage when negotiating with Apple. The companies are reluctant to resist any terms, fearing the removal of their content from iTunes.
“I think Steve has been smart, and he knows he has the upper hand,” said Dave Goldberg, former manager of Yahoo Music. “They can’t afford to pull their music.”
Although Apple previously opposed flexible pricing, the company maintained an interest in making tracks available on the iPhone. The record companies conceded to the wireless distribution, while achieving the ability to split prices into three categories that would provide higher profits for hit singles.
“They’re still the biggest game in town, it’s really Apple and everyone else," said David Card, an analyst at Forrester Research. "I think the industry would rather have multiple outlets.”