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Music Industry Threatens to Pull Plug on Apple
bacterial_pus writes "First the music industry wanted
more money, by changing Apple's 99 cents per song policy. Now one exec is
threatening to pull the plug on Apple if Steve Jobs doesn't change the iTunes Music Store pricing." From the article: "Nash's comments echoes those made last week by Warner CEO Edgar Bronfman, who called for Apple to adopt variable pricing and share out revenues from iPod sales. The record companies' position is based on the dubious argument that digital downloads sell iPods. In fact all the evidence points to the opposite: that iPod sales have driven demand for downloads. The vast majority of digital music sales are made by iPod owners. Cut off Apple and the labels digital sales will slump." More recently Jobs resisted their pressure, and the execs snarked back. Looks like they're getting more serious.
Upfront disclaimer: I'm a total idiot, and I have no idea how businesses work, nor do I have any legal background.
So, I wonder if this is a confrontation Apple may welcome, and maybe even brought semi-intentionally. My hunch is the thesis: iPods generate sales, rather than download sales generate iPod sales is the more correct dynamic at work in this market.
There certainly are plenty of alternative sources of music, music that could temporarily replace the current source for iTunes, should the music industry call Apple's bluff. But I think the music industry stands to lose way more than Apple. The music industry could:
- lose revenue
- lose confidence of the consumers
- lose artists
- lose relevance
Apple, on the other hand still offers a sweet product (even a sweet suite of products) and there are myriad ways to get music onto their devices. Sure, a speedbump in iTunes could require a detour, but I think Apple faces little risk. Apple could be the huge winner here. In my opinion, Apple already is at least the winner, they've dared not to blink and the music industry is starting to look silly.Me, I refuse to play one way or the other with any of DRM markets, but I give Apple grudging credit for offering a palatible product and willingness to take on the hand that feeds.
of giant businesses who seem to have no idea just how good they've got it.
this is 2005.
the fact that people are still paying for downloads at all (including me, I have well over 200 iTunes songs) in 2005, YEARS after Napster started the easy-as-pie method of music aquisition... do the music companies really want to go ahead with this? do they want to return to the days of talking about free tunes on Napster instead of paying for iTunes?
MORTAR COMBAT!
I'd love to see Jobs tell the RIAA members to go screw themselves and open up iTunes as a 'label' for independent artists most of whom would probably be happy to take a much smaller cut then the leaches at the labels do. Talented muscians don't need multi-million dollar marketing campaigns to be successful, they just need an audience. And iTunes could deliver that audience much more efficiently than Warner or Sony/Columbia ever could.
That is wht the Tech big wigs need to do. Google should buy one, yahoo, MS and Apple.
I watched a business show about this and tehy said that each of those companies market caps are large enough to buy one company each. then all you need to do is make the tech companies share the catalouges amoungst each other.
Tech companies that are trying to sell their technology will have a friendler stance about copyright and the consumer than the record companies would.
I am the Alpha and the Omega-3
wasn't it in japan a few months ago where sony artists were tired of the bickering between sony and apple in regards to itunes that they just said kcuf it and started releasing their songs on itunes in spite of their contracts?
maybe the same thing can happen here with artists backlashing against the riaa (who are supposed to represent the artists themselves but seems more likely they are representing the executives). but i guess that would depend on the character of the band.
"Tread softly because you tread on my dreams"
iTMS is destroying the RIAA's right to speech:
1. The RIAA can't pat iTMS DJs and Producers to force users to download the hot song of the week.
2. The RIAA can't pay iTMS to list the proper version of the Top 40 Charts.
3. The RIAA can't control which markets get their music, heaven forbid a black consumer getting a listen to Kenny G by accident.
[/kidding]
The music industry needs to see what would happen if they kill this cash cow by trying to milk it too hard. One day would probably not be sufficient, so let's have a week, or maybe just 5 days, where you can't buy anything from the iTunes store. Make it be the last week or 5 days days in a reporting period, because a lot of the pent-up demand will recover the next week, probably.
Better yet, let's see Steve Jobs say, okay, you want variable pricing, we'll hook up with Magnatunes and CDBaby and sell their tracks for 50-75 cents, or something. Those indy labels could really use the visibility, and the artists might see more revenue even at that lower rate than the ones beholden to RIAA and the big corporations. Some of them might even ask Apple to distribute their tracks as m4as, not m4ps, and would probably volunteer a lot more free tracks of the week.
Also, I can't believe they want some of the revenue stream from iPod sales. They had nothing to do with their creation, sales, marketing, etc. They're just becoming more obviously money-hungry than ever before.
Not only would this be a good time for Apple to implement this as a sign that they won't back down, it would finally free me of checking RIAA Radar everytime I go to the iMS to download a song!
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
1. Apple needs to make a deal with Apple Records to free themselves from any restrictions.
2. Apple starts a "record" company.
3. Apple doesn't screw artists and big names flock to them.
4. Apple uses "pod casts" to replace radio air play to promote new artists.
5. Apple cuts out the middle man so artists and Apple now split the profit so each side makes more money.
It is the end of the world as Warner and Sony knows it... And we all feel fine.
This would be such a dream come true for many people and for so many reasons. Imagine an independent (non-RIAA) label with the distrubution clout and exposure of one the majors. It would revolutionize the "biz".
I came to the datacenter drunk with a fake ID, don't you want to be just like me?
How exactly is the relationship between Apple and the large record companies defined? Surly there is some kind of contract in which Apple pays X% of of an iTunes sale to the song's owning record label. If they record labels back out, won't it result in some sort of contractual breach? (Anyone who knows more, please reply)
I think the record companies (unsurprisingly) underestimated the the kind of sales that the iTMS would do. Now perhaps they're finally waking up to the reality of the situtation, that this is how people WANT to purchase and enjoy their music. I mean, how long ago was the old Napster? More than 5 years. FIVE YEARS. After all the bitching and moaning, the labels STILL don't have their own digitial distribution mechanisms. It just shows that the labels were and are still sooooo dimwitted and clueless. And now, "oh wait look, Apple is making money on this online store that we should have made ourselves 5 years ago to react to market demand. Apple should give us more money. Wahhhhh!" Well I say FUCK YOU record labels. You did this to yourself. You underestimated the market, your customers, the technology, and EVERY OTHER ASPECT of running your businesses. You signed deals with Apple letting them sell your music for 99 cents a track. It must have been a good deal then, right? Why else would you have signed to such a deal? If you're unhappy with the terms now, thats your own fault.
"To lead the people, you must walk behind them"
They should do what some slashdotter wrote a while ago.
When you select songs, the song price should be written and additionally the break-up of where the money goes. When they see 9c to apple, 90c to the record company and 1c to the artist, they'll understand something is wrong.
Then they'll see indie labels, 10c to apple, 40c to record comapny, 50c to artist.
And then indie artists, 10c to apple, 90c to artist.
^_^
Musicians with big label contracts have puppet strings firmly attached. Sure, they might like to make more money via direct sales through Apple but the sales side of the music biz is 98% promotion, not fan devotion.
I agree with your statement, but consider this:
If the RIAA takes its ball and goes home, Apple will be able to only promote artists who aren't currently under RIAA control. Crap coming from the teen-idol production machine and manufactured "counter-culture" crap that the RIAA promotes (think "St. Anger" *PUKE*) wouldn't be on iTunes. The artist would then have a sizeable captive audience without the RIAA controlling who's popular and who's not. IOW, Apple just might have the needed intertia to compete with the RIAA itself, and give the artists more control over thier destiny.
I say that's a good thing.
Soko
"Depression is merely anger without enthusiasm." - Anonymous
If Warner and the rest of the labels want to look a gift horse in the mouth, don't give it to them. Saying you don't want to sell downloads at iTunes would be like saying you don't want to sell CDs at Wal-Mart: marketplace suicide.
How ya like dat?
Were I Jobs or Apple, I'd pull a preemptive strike. Announce "Since Warner Records doesn't feel the agreement with iTMS is fair, we've decided to resolve the problem. All Warner titles have been removed from iTMS and Warner Records has been released from the agreement. They're now free to market their music through a service whose pricing is more in line with their desired price points.". Then sit back and watch Warner scream as their sales plummet.
I think the name for this kind of request is "Protection Money." The record companies are used to being the biggest kid on the block, they are used to winning unbalanced cases with hoards of lawyers, if the gloves really come off in this fight Apple will be more than they can handle. Steve has already publicly called them greedy - but what if built into the iTunes music store when you went to buy music was a brief explanation of why people can't buy their music, and a signup page for a CD sales boycott? How about a link to lime-wire? What if through iTunes, I can start a musician account with Apple, upload my music to them and make 15 cents a download? The record companies need to realize just how much backlash there could be.
Correct me if I'm wrong, but I seem to remember reading that the music industry actually makes more money on each 99 cent download than it does through physical cd sales, simply because there is virtually no overhead involved (for record companies) in online music distribution.
My dream scenario for this starts with the RIAA following through and yanking the rights to all of their music from Apple.
Should this happen, Apple will have to find something to do with iTMS - I think shutting it down would be their very last resort. Much more likely, Apple cashes in on what little "counterculture" street cred they might still have, and starts courting independent bands and labels.
Freed of the insatiable greed of the RIAA, they and the indie lables start turning the store into a much better service. The samples will get longer, and you will even be able to download full songs from many bands looking to market their new albums. The iTMS becomes a worthwhile service, and rapidly gains popularity. Pundits declare it the center of the independent music Universe, and hail Apple as the Greatest Company on Earth.
On top of that, Apple starts really capitalizing on the podcast thing. They start arranging agreements with various news and sports radio networks whereby people can subscribe to shows for a price. Apple breaks out of the young technophile music-head market and starts getting the attention of NPR addicts. (However, they will draw ridicule when their ad campaign featuring sillhouettes of people wearing headphones sitting at desks or driving home in traffic and being less bored than normal is launched.)
Through it all, Apple fares fairly well, and may even lose some of the "evil corporation" reputation it's been earning lately, although its profits may take a slight hit as the iTMS becomes more expensive to run. iPod sales will stay where they are, because iPod sales drive iTMS sales, not the other way around. Customers aren't hurt because there are plenty of other places to download MP3s on the internet.
The RIAA, though, ends up with egg on their face as their play at forcing Apple into a position where they can be accused of (and sued for) actively supporting piracy with iTunes and the iPod fails miserably. They also hurt their sales as they close down a small but noticeable source of revenue and it is promptly replaced by the biggest advertisement and point of sale that their competitors have ever had. Their reputation suffers further as a few more people are added to the ranks of those who think the RIAA is a pack of fucking morons with a greed problem.
Oh, they have a reason. Yeah, it's a cash cow now. But imagine ten or twenty years from now. An Apple that has 50% of the music market is an Apple that holds the labels by the balls. More importantly, it is an Apple that no longer needs the labels.
If Apple gets a big enough market, it can start selling artists directly. That is what the labels are really worried about. All the rest is just rhetoric.
The cake is a pie
The music industry better step it up! If they want to stay afloat, they should allow the 99 for all policy to stay! What is better, getting a little under a dollar per song ($10 for an album), or having everyone just pirate and take it all for free? Actually, if they played their cards right, it would be more profitable to lower the price. I would buy a lot more music if it were less than a dollar. In fact, anything 75 or lower, if I heard it, and didn't think it was terrible, I'd buy it. It's time they started realizing that they work for us. We pay them for entertainment. Well, you know what? Screw them. I can live without legal music. I can live with what I've got, or just acquire music from others. By the way, I do not in any way condone or approve of stealing music. Remember that every time you download a song, God (or Buddha, or whatever) kills a kitten!
---Without electricity, we'd all be surfing the net by candlelight.
Damn skippy.
I pay on average $3-$8 for used CDs in "like new" condition, via Amazon.com.
No low-quality downloads, no DRM, no overpriced songs I can't play where I want, on whatever device I want. No bullshit.
Why in the world would I ever even consider paying a dollar per TRACK of the same music, only to have harsh restrictions placed on me as to where I can play it, and how many times I can copy it to other devices?
Screw that. As long as I can still buy CDs used, that's the route I'll take. If iTunes Music Store goes the way of the dodo, I guess it won't bother me.
Between you, me, and the dodo, though, the RIAA's dumber than a sack of hammers to let a potential cash cow like this die.
Free money. For a product they already have. Being sold by someone giving them a cut. For something they otherwise wouldn't be selling at all.
What collossally stupid people must they be, those in charge of the major labels. These are potentially the best years to get in on the ground floor of the internet music revolution, and here they are, trying to stamp it out and drive themselves out of business.
Heh.
And I thought music execs liked money. I guess they don't.
And the circle of life continues to spin, occasionally wobbling on its axis thanks to the weighty presence of dumb.