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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.)"
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?
lots of people. remember when their stock took a hit a year or so ago and people were wondering what the fate of apple would be? then also remember that news came out they had over 12 billion in cash assets. yeah apple is a huge company. they may not have market share yet in the OS world but they are a very very large company. make no mistake.
According to Apple's financial reports, they had 4.4 billion dollars in cash reserves. Vivendi, who currently own Universal, has somewhere between 6 and 7 billion dollars of debt, so I don't think Apple is going to be able to pay part cash, part stock. Vivendi is just looking to get out.
What I'm waiting to see is how this interacts with Apple's new music service which supposedly debuts next month. Nice catalog of music to choose from.
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?
Reeses
Their accountants, I'd assume.
Some anonymous Google translation doesn't do this justice. This is Big. Very big. Changing the way the world does business big.
Adapt or die, as Lessig says.
Wow.
(Not logged in due to copyright infringement, and fear of being called a Karma Whore...)
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Apple Reportedly in Talks to Buy Universal Music
A deal could yield up to $6 billion for parent firm Vivendi and make tech maverick Steve Jobs the most powerful figure in the record business.
By Chuck Philips
Times Staff Writer
April 11, 2003
In a pairing that would alter the architecture of the music business, Apple Computer Inc. is in talks with Vivendi Universal to buy Universal Music Group, the world's largest record company, for as much as $6 billion, sources said.
Such a seemingly unlikely combination would instantly make technology guru Steve Jobs, Apple's co-founder and chief executive, the most powerful player in the record industry.
Universal, which reaps about $6 billion in sales annually from artists such as 50 Cent, Shania Twain, U2 and Luciano Pavarotti, would be controlled by a maverick who revolutionized the computer market and coined the mantra "rip, mix, burn," which many in the music business read as an invitation to electronic piracy.
The discussions, a closely held secret for several months, could founder over unresolved issues. Apple hasn't made a formal bid but may offer $5 billion to $6 billion for the music company before Vivendi's April 29 board meeting, according to the sources.
Jobs and other Apple representatives declined to comment, as did representatives of Universal Music Group and Vivendi Universal.
The Cupertino, Calif.-based computer maker's surprise play for Universal Music could alter the dynamics of the bidding for Vivendi's entertainment assets. The French giant, in a move to reduce debt, seeks to raise $7 billion this year by selling assets that probably would include some or all of its Universal film, television, theme park and music units.
Investor Marvin Davis has offered about $13 billion for 65% of the entertainment assets and has been the only known bidder to express serious interest in the music company. A separate sale of the music operation would appear to work in favor of Liberty Media Corp. and others that are focused on the company's other entertainment properties.
Jobs' pursuit of Universal comes at a time when Apple, with less than 3% of the desktop computing market, has been struggling to find its next wave of growth and the music industry has been buckling beneath the pressure of online piracy and falling sales.
Defying conventional wisdom, Jobs apparently is betting that music is finally on the verge of becoming a profitable presence on the Internet. Apple has been quietly testing a service that some music business insiders believe could pave the way for widespread online distribution of songs.
People who have tried the service, expected to debut by the end of April, say it makes downloading and purchasing music as simple and nontechnical as buying a book from Amazon.com. It allows users to buy and download songs to their computers with a single click and to transfer the music automatically to their portable MP3 players.
The computer maker, known for its iMac desktop computer and other high-profile products, posted an $8-million loss on sales of $1.47 billion for its fiscal first quarter ended Dec. 28 -- marking the company's first back-to-back quarterly losses since Jobs returned to the CEO post in 1997. Apple has annual sales of about $5.74 billion and had about $4.4 billion in cash, cash equivalents, and short-term investments as of Dec. 28.
Jobs, who also is chairman of Pixar Animation Studios, helped found Apple in 1976, then stepped down as its chief nine years later to launch Next Inc. He returned to Apple when it acquired Next.
Universal Music Group, which saw operating profit slide 23% to $510 million last year, dominates the industry in 63 territori
...remember that Apple has been planning its own online music-buying service for a while now, having announced it just last month. Obviously this is a BIG step towards making that successful for themselves.
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?
Maybe Vivendi will throw Blizzard in for free
You are standing in an open field west of a white house, with a boarded front door. There is a small mailbox here.
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
Hence why their cash reserves make up most of their stock price. It's ridiculous. Apple is the bastard child of stocks, with a ridiculously low price-to-earnings/price-to-assets ratio because nobody actually invests in it but fanatics, while some people do pump-and-dump (they let others pump; they only dump) around MacWorlds.
---- My Design, Code, Ruby on Rails blog: http://www.slash7.com/
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!"
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
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...
"There is more worth loving than we have strength to love." - Brian Jay Stanley
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".
dalamcd
moer liek CELtroid prime!!@1!
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?
... 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.
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.
When the Macintosh II came out with greatly expanded sound capabilities built in (not as an add-on MIDI card), Apple performed one of the most famous corporate "jokes" of all time, naming one of the new, high-quality system alert sounds "Sosumi" (Pronounced "So, sue me"). I don't think Apple Records (if they are even still around) ever took them up on it.
I'm a lawyer with excellent karma. Something's gotta be wrong.
So, will Apple support Ogg?
Actually I don't really care, I don't have any Apple products. I'm just trying to recover from a karma dip from my "MS really isn't that bad!" thread a couple of days ago.
These figures you have stated show how undervalued the company is.
If the market cap is $5.1B, and they have $4.4B in liquid bank assets, that means the Tech and patent portfolio, "Apple" brand, outstanding accounts receivable, Plant, Property, and Equipment are only worth $700M.
Go get the stock now... the Mac OS is probably worth $500M in development and marketing alone.
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