View this article at: http://dev.macnn.com/articles/06/01/23/record.label.concerns
Monday, Jan 23, 2006 3:10pm

Reluctant record labels voi...

Followers of the digital music industry are voicing concerns that the growth of legitimate downloads-- such as those offered by Apple's iTunes Music Store- have incurred lasting damage to record labels' profitability. "Music has become a disposable item," said Nicholas Firth, chairman and CEO of BMG Music Publishing. "For many people it's a traffic builder," Firth said. The $1.1 billion earned last year in digital music sales is mostly comprised of online iTunes sales, and some believe that Apple's dominating website is part of the problem, according to a report from the Associated Press. "I'm hearing that the artists aren't happy, the publishers aren't happy. Someone other than Apple needs to be happy for this industry to grow," said Amit Shafrir, president of AOL's premium services arm. AOL is set to launch its own music website allowing users to download unlimited tracks on a monthly-basis.

Apple's one-size-fits-all pricing of 99-cent tracks in the US has set the industry benchmark much too low for labels, one of which threatened to deal a "decapitation" blow to Apple if the company did not agree to variable pricing for its online music back in September of 2005. Music industry bigwigs are still pushing for variable pricing on iTunes, primarily to charge more for sought-after new hits than for older tracks. Apple's CEO Steve Jobs has repeatedly rejected the idea, saying that the record companies were "getting a little greedy." Senior music executives now credit Apple with halting the growth of piracy, despite their disbelief during the early stages. "For the time being we all must work with Apple and make the most of iTunes," said Eric Nicoli, chairman of EMI Group PLC. Nicoli added that "single pricing is almost unique to the music industry, if you look at any other consumer category-- including things like iPods- they sell at different prices."