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Apple Plans to Purchase Universal Music
mrbiiggy writes "Apparently Apple has been plotting to purchase Universal Music for $6 billion, reports Spiegel Online (read the Google translation). Who knew Apple even had that kind of cash? (The L.A. Times is also reporting this, free reg required.)"
Given the fact that apple is officially against DRM, though not pro piracy, that would be a first merger between computer and media groups, not consumer eletronics (SONY)
Will it be one of the rare cases of a merger beneficial (besides economically) to the end user ?
Apparently they killed off the Newton and other loved technologies (Hypercard) to get back to the basics of being a computer company and making money..... And now rock star Steve is buying a damn record company?! I dont think this fits into the 'Digital Hub' or the 'Year of the Notebook' shtick they have been preaching. Just when I thought the death knells were over steve got a great idea: "Hey lets waste a ton of money while were barely profitable to buy into an industry that everyone _knows_ is dying...
Sounds like a plan right? Thanks again Apple for keeping me on my toes.
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because i can think.
they have what, 3% marketshare? maybe 5% tops? how the hell would they make money selling to 3-5% of the market.
you can't put the evil borg logo on every computer vendor. there are some things that require a huge market share before they'll work, that would be one of them.
It would take a couple days and many pages to write up the details about why this could happen. Expect that they won't take Universal lock, stock and all the debt -- this will be done in a nasty way which screws a lot of creditors. Universal may be split into the more profitable bits and left with the debt-ridden bits, which would then be spun off and left to file Chapter 11 and later dissolved.
Just 'cause they're "cool" and not MS doesn't make Apple stupid in business. They've survived this long...
Considering Apple, as a great a product as they have, only has around 4% of the OS market, I have trouble believing that this could happen if music were distributed on CDs. Yes, they have around 21% of the mp3 player market and would be able to do something like this if this were an mp3-only world, but I think the CD is going to be around for a while so I wouldn't worry about "SteveJobs of Borg" just yet. Bringing people away from a standard (RedBook) is very unapple.
psxndc
The emacs religion: to be saved, control excess.
Could this be a step towards one record lable that won't be total asses about copyright and ripping your songs to mp3 format?
From the *one* company that has a controls an entire consumer hardware platform? Hell, no. If this isn't a hoax somehow, it'd be a play toward building a media playback system that the media companies will go for. And one *hell* of a lucrative positioning, if it works.
"Apple-compatible" audio. They have a portable player and the desktop already in place, and then they just need a home theater system. Apple is the sole company in the world that could build an entire *working* DRM system. MS doesn't have the hardware control.
Damn, in retrospect, Jobs actually had a cohesive plan these last few years. Who woulda thunk?
May we never see th
Who knew Apple even had that kind of cash?
um... anyone who's been paying attention. Apple's been pretty consistently reporting profit for years now, and remarkably little of that has gone out of the company.
Money goes in, but doesn't come out - simple math that one. They're sitting on some huge cash reserves.
Perhaps this is a sign of the shape of things to come from Cupertino? providing the 'spokes' to their own 'digital hub' might be the next phase of the company's revival... anyway it looks like good news for all (Mac-heads and non-Mac-heads) on the DRM front if Apple get their (affirmedly anti-DRM) mitts on a major record label.
Maybe Apple will be happy when their whole catalog is up on Kazaa for download. Maybe.
It's easy to take a liberal approach to the whole MP3 issue when the catalogs in question don't belong to you. It sure would be interesting to see how they behave when the ripping and mixing and burning affects properties they own, and not properties owned by someone else.
But I have to wonder whether Apple really would do this in the first place. They're a computer company, scratching for a small piece of market share. The annals of business literature is replete with stories of companies who expanded into areas outside their core competencies and got squashed. Just look at what happened to Seagram when *they* got involved with Vivendi/Universal.
seems like just the guy to perhaps "think different" and turn around (and hopefully improve) another industry that "everyone _knows_ is dying".
Anyone remember his name? I think it was Steve something-or-other...
"Empathise with stupidity, and you're halfway to thinking like an idiot." - Iain M. Banks
Copy protected CDs from Universal Music will only play on BSD and Mac OS computers...
Seems unfair? That's what most CD companies are forcing us right about now...
May the source be with you!
There is so much conflict of interest inside Sony right now... and its really held back Sony's electronics division, specifically its walkman/mp3 players which are all crippled by copyright protection mechanisms.
The Civil War Inside SonyDoes Apple really want to get itself in the same situation? I feel that Apple's relative unemcubrance is what allow it to dethrown Sony as the maker of the coolest portable music device you can buy.
Shut up about .ogg; shut up shut up shut up.
The creators of the (arrogantly, perversely, stupidly named) Ogg Vorbis format had their chance to innovate and create a format wildly better than .mp3, and they blew it. Rather than adding actual features music fans might find compelling enough to switch all their probably-already-ripped digital music to .ogg, they imitated rather than innovated. It's a fine quality audio compression format, but there's nothing interesting whatsoever about "Ogg" other than legal patent ideology, and that's simply not interesting whatsoever to 99.99% of the music-listening public.
Besides, you yourself admit that in the past year you've bought one single CD. Why should the music industry listen to the advice of an obviously cheap bastard?
~jeff
Brands, in fact, have a very specific value, and are really the only thing in an increasingly digital economy that have a relatively strong chance of retaining a high value.
I think you're probably just trolling here, so I'll keep my reply short. In a marketplace where (just as an example) even you could fire up a GNU/Linux distribution and sell it in competition with RedHat, what does RedHat have other than their brand?
hmmmm?
Since their market cap is under 5 Billion, and their cash reserves are around 4.4 Billion I would say the company's other assets are worth about 600 million. Not much for a company that is about to bite off a 6-7 billion chunk. I am seeing shades of AOL/TW here where the media company comes back to health and takes over the once brilliant tech company.
There are 4 boxes to use in the defense of liberty: soap, ballot, jury, ammo. Use in that order. Starting now.
Maybe Apple is already aware that Universal's entire back catalog, along with every other record co.'s, is out in the world in unencrypted red book format already (and thus on Kazaa). :)
If Jesus wants me it knows where to find me.
We have Internet music distribution that emulates radio and we have Internet music distribution that emulates retail. It would make sense for the record companies to combine them both, based on the way that radio and offline retail have traditionally worked together. In this model, you listen to the radio, hear something you like, go to the store and buy it. The radio is free but you buy the CD to play whenever you want to. So what might work is for record companies to allow anyone to stream their music free, if so long as the streamcasters link each track to the record company's one-click purchasing mechanism. A mutually beneficial arrangement and (possibly) happy listeners.
--- Yx3 = Delilah ---
Let the actual music-store sales of CDs fade into oblivion where it belongs as it is grotesquely undercut by Apple's new music distribution service, which operates with only bandwidth as an expense - no worries about costly shipping, manufacturing and logistics.
The music distribution service has hooks into Apple's already attractive personal solutions (iTunes, iPod, .mac) making these products even more attractive to customers.
Universal benefits because it is first to jump on board and has a premier business relationship with Apple's new killer service, giving it a (slight) advantage over other labels who may have to pay a slightly higher premium to use the first ever legal on-line music distribution system that is effective and "just works".
If Apple/Universal does this properly (by playing the right cards at the right time), they will be laughing all the way to the bank.
Rather than adding actual features music fans might find compelling enough to switch all their probably-already-ripped digital music to .ogg, they imitated rather than innovated. It's a fine quality audio compression format, but there's nothing interesting whatsoever about "Ogg" other than legal patent ideology, and that's simply not interesting whatsoever to 99.99% of the music-listening public.
What's there to innovate? It's an audio codec. It sounds better at lower bitrates than mp3. What more do you need? What features are you talking about? The music-listening public doesn't care about features, they just want their songs, and they want to be able to burn them to CD, play them on their portable digital music players, they want to pay as little as possible for it, etc.
--Drunk as in Beer
Asking all the artists who only sell 500,000 albums in their lifetime to take a pay cut because n'sync will sell 100,000,000 in their lifetime is unfair. Unless of course you want to make sure that there is less diversity in music, in which case it's a genius plan.
Anyone else noticed how Universal's entire catalog is available for free on Kazaa, Soulseek, etc.?
There's been a paradigm shift in the music business lately. Universal is going to be obsolete in a 10 years. If I had 6 billion to spend, I wouldn't buy a record company.
Nope, no technical differences other than a little tighter compression, being able to "slice" the layers in order to play at a lower bitrate instead of reconverting to a lower bitrate, and being free of patent or copyright issues.
Nope... might as well use MP3. (sarcasm)
Everything I have on my system is Ogg... and I run Windows and Linux.
-- This space for lease, low setup fee, inquire within!
"Steve Jobs is a multi-billionaire in his own right. If he wanted to spend $6,000,000,000 on Universal Music then he - Steve Jobs - easily could"
No offense, but that is so much bullshit. Stop the caffeine and go to sleep. If Jobs reads this, he's laughing his ass off.
Forbes.com lists Jobs' net worth as 1.1 billion dollars (#413 on their list). And that's just on paper--who knows if he could actually realize that in the open market. A six billion dollar company is pretty much just as far out of reach for him as it is for me.
"Science is a tribute to what we can know although we are fallible" -Jacob Bronowski
People always say "it is better at lower bitrates" but who wants to listen to audio at lower (read: poorer) bitrates? For digital backup, I can't imagine using anything less than --alt-preset standard/extreme whatever from LAME or MPC. And sure, "lower bitrates" might be suitable for Internet radio, but we are quickly moving to ubiquitous broadband world, making a 24kBps or whatever stream quite feasible, making the sacrifice in quality unjustified.
OK, so lets assume a CD costs $16, and take 20 cents to manufacture.
That means that everything else must cost $15.80, right.
OK, now lets make a cassette tape of the same stuff.
Lets assume the Cassette costs the same 20 cents to make (although I really think that the cost would be higher).
The cassette sells for $10. Doing the math all that other stuff must cost $ 9.80 cents.
Hmmm.
The question for the reader is, are CD prices rigged?
The answer is yes.
The music industry is generally agreed to be in deep trouble. Their real problem isn't piracy - it's video. The music industry used to have their own channel - record stores. They now share their channel with Hollywood, since most stores that sell CDs now also sell DVDs, and even video games. A DVD looks just like an audio CD, and DVD players will play both. Yet the DVD has far more production value, more play time, and often costs less. Not unexpectedly, movie DVD sales are growing, music video sales are up, and audio CD sales are down. Total sales of "entertainment delivered on circular recording media" are way up. But the music industry's share of that market is down. (New figures on this were in yesterday's Wall Street Journal.)
The music industry has been in defensive mode for years now, frantically trying to keep retail prices up in the face of this competition. Few if any new ideas have emerged from the music industry in years. Their cash-cow genres have been mined out - rock, rap, house, classical, and country all peaked a long time ago. Broadcasting companies now have more clout than record companies. Congress is tired of all the RIAA's whining. The industry is sick.
Jobs can shake this up quite a bit. Especially since he can buy Universal at a bargain price, which means he can undercut the competition at retail. He's brighter than the current management in the music business. (That's not hard. The film industry has smart people, but top management in music is generally agreed to be dumb.) He might be able to find a way to pull the industry out of the tank. The Jobs "reality distortion field", an ongoing pain in the computer industry, would be an asset in the music industry.
If you've taken collegiate level economics then you're aware of the elasticity of demand.
When CD's first hit the market and went past the early adopter stage in to critical mass, CD's were priced between $16 and $20 with replication costs just under $2 (and CD players were $300-$400). Within my first year of buying CD's, the pricing seemed to reach equilibrium at roughly $16.
The kicker? As hardware prices have continued to plummet the CD pricing itself has remained relatively constant. All the while the prices of CD replication have continued to fall and are now under $
It's no wonder that my 14 year old daughter refuses to spend her babysitting money on music. She has an iPod and we have been in a constant struggle over piracy as I refuse to allow her to use Kazaa, copy friends CD's or make CD's for others (from the music she *does* buy). She views me as the "tough unreasonable Dad" and she truly doesn't understand why she should throw money away and why, "...the record companies are so lame and don't get it".
In the next breath she says, "...I'd buy all day long if CD's were under $10" and she does buy frequently when on sale or on mark-down at retailers. Also, in two seconds she'd sign up for a music service *if* it had all her favorite bands and she could buy songs one-at-a-time (not yet available though some services getting closer).
Makes me wonder if the record company executives slept through Econ 101 in college?
You see, the problem with that is that a $700 PC with $400 software is not high-end. That hardly even counts as middle of the road. I'd say that's actually closer to upper low-end. Absolutely no one in their right mind would use a rig like that for professional video production. That would probably suffice if you wanted to put a show on public access.
Final Cut Pro actually has become an industry standard. You'd be surprised how much stuff on TV nowadays is put together using some DV cameras and a G4.
The problem is, once you drop the price of CD's to $10, after a year or so, people will become accustomed to that particular price and sales will start to drop off. Then people will look for the $7 mark-downs. Your daughter will then demand that if only all CD's were $7 she would buy them. It is a slippery slope to go down.
<these general thoughts are not about your family by the way - just people in general >
People generally think that the grass is greener in another place, and if only they could be in a diffent place/situation then everything would be great. That thinking is often a way of self-justifying a guilty conscience. It makes the person feel good if they believe that they would buy the CD at $10, and the only reason they do not is because they don't have the extra $6 to spare. It is a shift of blame for theft - all of a sudden the record companies are the guilty ones because they charge too much, and that makes a thief feel a lot better.
The funny thing is that people who think this way actually believe they would and therefore feel like morally they are right and so don't feel guilty about stealing anymore. Can you see how it is a clever self delusion to justify stealing?
</ end general thoughts >
It would be interesting to know how many more CD's your daughter would buy if you gave her the extra $6 for any she wanted to buy. Then they would truly cost her $10.
I am not having a go by the way, I am really impressed by your stance to help your daughter not steal music. Top marks. It is just interesting looking at the human dynamics behind this sort of thing, not just the economical factors.
I've USED PC's and Macs for about 16 years now, and frankly, in my experience, PC's suck (PC=Windows here). Every little thing needs coaxing, praying, cursing and calling in "experts" (people who devote their lives to installing soundblaster cards and stuff) on a PC. If you're like a good friend of mine, who loves to tinker, that's ok, that's great. If you're like me and a lot of other people who occasionally want their stuff to work, you're automatically drawn to the Mac.
IMO (in desktop/home use situations) Linux is best for extreme hobbyists, programmers, geeks in general, inventors, scientists, freaks and lovers of intricate systems. Windows is best for gamers, tinkerers, and hobbyists, Macs are for the rest of us. I like all of the platforms for their "qualities", but wouldn't trust linux or windows to treat my personal and work stuff.