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.)"

Comments

What's your plan, big guy?

[salamander_sjv]

I've got a home server plugged into the stereo, with all my music available via iTunes. I use a Powerbook G4 as my main machine, and I'd like to get a 30GB iPod to plug into my car stereo. This type of setup seems to be becoming increasingly common.

I buy my music on CD, although I only grab them off the shelf when I want to check out the cover art and lyrics. I suppose I might start buying electronically, but unless the price drops to reflect the savings on manufacturing and distribution, I don't really see the point. I still like having a tangible object to associate with the artist's work. (so much so that whenever there's a sale on I end up buying albums I like that I ripped from friends)

Steve must be pretty sure that he's got a killer reason if he's planning such a huge move. I suppose that killer reason could be big savings to the consumer, but somehow I doubt it. What else is he going to offer?

Re:What's your plan, big guy?

[James_Duncan8181]

It offers Apple a guarentee of relevancy?

It would mean that any DRM system that is worked out for music will have to consider the interests of Apple/Universal. This effectively avoids a MS lockout on music, which would obviously be very harmful to sales as the Mac is very media orientated.

Otherwise you are right, there seems not that much of a natural fit between these companies.

Re:What's your plan, big guy?

[TheRaven64]

In the last year, I have bought a single CD. Okay, a 2CD set, but the principle's the same. Most of the time I listen to WCPE Internet radio. They provide a very good service (including an Ogg Vorbis stream), and play good music, with very few interruptions. Radio, as a way of distributing music, has been around for a very long time, and the music industry doesn't seem to have a problem with it. I consider WCPE to provide a good service, and happily contribute to their costs (they're listener supported).

The kind of service I would like, and which I would happily pay $10/month or so for goes one step furthur. I would like direct access to their catalogue, so I could stream or download any tracks I wanted when I wanted them. They could then log which tracks I download, and pay the artists concerned proportionally. I would be perfectly happy for the music to expire if I stopped paying for it. I would not be happy with some kind of analogue watermark that affects the quality of the sound.

I would also rather that they used Ogg, instead of AAC (Apple's apparent choice) since then all the money would go to distribution and the artists, not to patent royalties.

Re:What's your plan, big guy?

[MikeMo]

I'm in the CD replication business. It's really hard to get a CD done for less than 19 cents in any quantity. There are people out there doing it for less, but they're losing money on that kind of work (makes sense, sometimes), and they're probably not paying the appropriate royalties. There's a fixed minimum determined by the cost of the materials, let alone paying for the machinery and the folks to run the things.

Re:What's your plan, big guy?

[common middle name]

You've got it all wrong. I own a record store in Washington DC called DCCD. I wish we could make fifty percent profit on cds. We're lucky to make thirty percent and thats on indie label stuff. The hottest new releases like 50 cent, Eminem, White Stripes, ect. cost us $11.85-$12.59 depending on the release. I've got good relationships with my distributors and get pretty good prices. Target, Best Buy, Circuit City and the like sell media (CDs, tapes, etc.) at a loss to bring you in the front door. CDs are sold as loss leaders. They make up the money selling you TVs, Hard Drives, DVD players and so on. Why do you think you can get hardware on line so much cheaper than at Best Buy? They sell hardware at "list price" which is a total rip off.

Slogan Change...

[MarvinMouse]

If the Universal execs gain the upper hand in the merger/takeover:

Rip... Mix... Burn... Sue...

If Apple execs gain the upper hand in the merger/takeover:

Buy... Rip... Mix... Burn...

And as we know...

[Bonker]

Despite Apple's rampant efforts to protect their own IP, they've been remarkably free, say compared to Microsoft, in distributing technology that allows more liberal uses of information.

This could be very good or very bad.

Free giveaways out of Universal's catalouge could be an incredible boost to sale of music-related hardware like the iPod or software like iMovie. We all need soundtracks, right?

On the other hand, apple could be planning on using their new acquisition in order to further lock apple users into a single platform with costly upgrades. The idea that comes to mind is that they will start making 'Apple Only' music releases that can only be played on Jobs-approved hardware.

Personally, I hope that Apple will use this aquisition to free up music and maybe some more of their own IP and use it to further hardware sales.

Apple Records?

[Reeses]

What about that injunction from Apple Records (the old Beatles record company) preventing Apple Computer from getting into the music business? Anyone know if this would apply?

Re:Apple Records?

[thatguywhoiam]

The settlement does not prevent them entering the music industry as such, it merely prevents them from entering it under the Apple name.

Not quite.

Apple settled with Apple Records a loooong time ago. When they (Apple Computer) paid off Apple (Records), they bought the rights to do whatever the hell they pleased with the Apple name. Apple Records existed at the time solely to collect old Beatles royalties and I'm not even sure if it still exists. It's not an active recording company at any rate.

While I'm at it, Apple licensed the GUI from Xerox, too. ;)

sharing

[pcp_ip]

rip mix burn.

Jobs is the only one that "gets" it. With Univeral being one of the largest record companies- this could change the face of music inthe digital age.

My fear is that it's such a big addition to apple- will they loss focus. Look at the problems sony electronics have trying to be cutting edge but catering to Sony music's fears of piracy.

And what about that pesky lawsuit with Apple Records. Apple was never to go into the music business.

Focus? Culture?

[sjbe]

Ok, this makes a certain odd amount of sense as far as why apple might want it. Gives them some freedom to push digital media in whatever direction suits them. (good, bad, or indifferent) It also diversifies the business a bit which given Apple's niche strategy cannot be entirely a bad idea. If they can't beat Dell/Microsoft head on, it might be best to try something else.

A big concern from a business standpoint to me would be focus. Apple has done pretty damn well by focusing on producing really great machines (and software) that appeal to a couple specific segments of the market. Their expertise really is in the "art" of computer design, both hardware and software and experience. This doesn't necessarily translate to running a music label which is a completely different business with completely different requirements.

Granted Jobs has some exposure to this world (via Pixar) but that doesn't make it a good fit for Apple. I expect the culture clash will be huge. Apple is a pretty unique company. I don't see an obvious fit here.

What I'd like to beable to do..

[Idimmu Xul]

is buy a CD online for a much reduced price (where is the golden rule that says music produces/artist have to be millionaires? I mean, noone else is..) but then rather than have to wait 2/3 days before it's delivered so I can listen to it, be given the oppotunity to download high bitrate ogg's of the album. That way I get the music on demand, and get the tangable album in a few days time too.

The dot com bubble burst, and techies took their pay cut.. I think it's about time the media bubble burst and the 'stars' take their pay cut too!

Lock-in?

[ashpool7]

Unlikeley.

Evidence:
The iPod is available for Windows.
MP3s play on any computer.
OS X promotes open standards.
OS intentionally provides Windows and Linux interoperability.


Apple seems to has no interest in things that *lock* a user in. Sure, they have things that entice users to stay, like iTunes, but there's no lock-in there. I see the mentality being "well, you _could_ use something else, but why? Our stuff is SWEET!"

;-)

Re:One working label?

[bsharitt]

At least we won't have to worry about copy protected cds that kill iMacs. Also, I though Apple could never be arecord company.

Re:Dear god, bring back Sculley and the Newton

[thatguywhoiam]

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.

I think you are exactly right.

I can just hear Jobs now, calling the record execs 'a bunch of bozos who don't get it'.

Jobs is famous for this. He thinks he's got it figured out. And you know what? I say, give him a shot. Anything's better than the ridiculous Town Elders From Footloose who are running the show now.

Apple pissing on Gateway for ripoffs?

[Mikey-San]

First, there was the Profile4, the thing they tried to say was better than the iMac. Then, there was/is "RipMixRespect", strangely similar to Apple's "Rip. Mix. Burn."

http://newsobserver.com/24hour/technology/story/ 84 4767p-5933052c.html

So did Apple just take a big, steaming dump all over Gateway?

It seems that Gateway includes music downloads with EMusic as a part of their promotions to get people to buy their boxes ... And EMagic, well, that's part of UMG.

That's kinda funny, when you think about it. I wonder what the Gateway higher-ups are thinking right now.

And really, what, if anything, does this mean for Gateway? Are they now advertising for Apple? ;-)

-/-
Mikey-San

Apple knows the key

[SuperKendall]

Apple realizes what no-one in the record industry does - that if you open wide the full possibilities for selling music, the take will be enormous.

If Apple buys Universal, then they can continue to sell normal CD's - but also sell everything online. Even older unpublished stuff, which is currently languishing. Then you have not just CD buyers, but nostalgia buyers and people who just want one hit song and not a whole CD. That provides many more channels for revenue, unlike normal music companies which oddly seems to desire that only limited revenue channels be allowed to exist.

Furthermore, by staying away from copy protection they save money over the stupid record companies spending all sorts of cash trying to prevent the CD buyer from accessing their own music! While other companies are building up bad will with stupid formats for online music and CD's that don't play in all CD players, Universal could sweep the industry.

At the very least, the entry of a non-music company into the music business has got to have some interesting ramifications somewhere. Especially when you have a computer company that understands consumers better than most at the helm...

Don't forget Pixar!

[shotfeel]

Everyone seems to forget that Jobs is also the CEO of Pixar (makers of Monsters, Inc,, Toy Story, A Bug's Life...).

I still remember about a year ago the NYT had a big Tech vs. the Entertainment Industry with a picture of Eisner (Disney CEO) representing the Entertainment industry, Jobs representing the tech industry (hiliting Apple's Rip, Mix, Burn campaign) and a screen shot of Monster's Inc. representing "pirated" works. Although the article stated Monster's Inc. was created by Pixar (distributed by Disney), the reporter seemed completely unaware of Job's other job. It would have added a whole new twist to the significance of the "facts".

This could be very big news

[Anonymous Coward]

I've been working in the music business for about 10 years now... I've run my own label, worked for other independents, spent some time with Sony Music (in their distribution arm) and now work with all of the majors via a marketing consulting company. If Apple is thinking along the right lines this could be very good news for consumers. Why?

1. Universal Music Group is the largest major label in the industry.

2. UMG already owns an incredible MP3 download service called emusic.com. Yes, there are ZERO DRM controls. Just great music from thousands of artists (mainly independent at this point, but still an important step).

3. Apple would want to leverage their hardware/software assets vs. the content UMG controls. This would clearly mean cross selling between the iPod [one of Apple's most success products in years], the Mac platform, Quicktime, and all of UMG music/video assets. ... from an insider's perspective, everyone in the business already understands that digital distribution is the future. The key arguement is HOW and under what TERMS. This could be a very interesting step in the right direction. Certainly exciting.

strategic decision...

[The Lynxpro]

There are many different ways to view Apple's interest in Universal Music. 1. By owning the world's largest music company, Apple would have huge leverage in getting Best Buy AND Circuit City to sell Macs in their stores again. 2. Buck the trend of these encrypted music CDs not working in Mac CD/DVD drives. 3. Strengthen the Mac platform in music production and post production from the record company level on down... 4. Boosting iPod sales. Imagine if Apple's subscription system allowed you to download copies of the songs for your Mac (or PC) and allow you to transfer/copy and use them to your iPod; whereas transferring files to other MP3 portables cost extra. 5. Leverage in settling future standards issues like the current SACD vs. DVD-A (DVD Audio not the Trey Parker/Matt Stone definition of *DVDA*)... or Dolby Digital vs. DTS. 6. Enough clout to get the other multimedia companies to actually support the Mac on their DVD-Rom features on their movie releases... (longshot)... 7. Ringtone revenue. We've all been expecting an iPhone for a long time... 8. Haven't we been expecting Microsoft to purchase a media company for a long time now? Apple beats them AGAIN....