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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.)"
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...
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
Unless of course, they're looking to PROVE that the other record labels are full of sh*t, by building a new buisness model that will be successful. This way they get a boat load of artists and music that they can use to prove their point.
The Record industry is dying not because people don't want music, but because the old means of production and consumption are dying. If Apple can figure out a new means that the average person likes and uses, then they'll make a BOATLOAD of cash. The record industry made a lot of money in the past, because it worked. It doesn't any more. That doesn't mean it's broken and can never come back. Heck, if anyone can come up with a good solution, Apple is it.
- Sighuh?
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.
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
I think it fits well into the Digital Hub. Apple would be ensuring that they aren't excluded from a future digital world dominated by MS formats.
You may think me a tired, old, cynic. I'd have to disagree about the tired bit.
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.
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
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.