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Music Labels Charge Too Much For Microsoft

Posted by Zonk on from the i-share-microsoft's-opinion dept.

Bret540 writes "Yahoo is reporting that Microsoft has ended license talks with four major music labels. From the article: 'The paper [the Wall Street Journal] reported negotiations broke down Friday over what Microsoft considered high royalty rates.' How much more can the music labels demand when even Microsoft won't go to market? With other recent developments, one must wonder how long the music industry can keep pushing."

29 of 366 comments (clear)

  1. Yahoo! by duerra · · Score: 4, Interesting

    They say that the current subscription services are being charged in the %6-8/month range, which is what was being offered to Microsoft. If this is true, how is it that Yahoo! can afford such a low subscription rate?

    --
    A community-oriented lyrics site
  2. High royalty rates? by Fulcrum+of+Evil · · Score: 2, Interesting

    'The paper [the Wall Street Journal] reported negotiations broke down Friday over what Microsoft considered high royalty rates.'

    Is anybody really surprised? Well, maybe a little - MS has shown its willingness to lose billions to get into a market.

    --
    "We returned the General to El Salvador, or maybe Guatemala, it's difficult to tell from 10,000 feet"
  3. Wrong question by Mr.+Underbridge · · Score: 4, Interesting
    " How much more can the music labels demand when even Microsoft won't go to market?"

    That's not it. More like, "how much more of the cut is MS demanding (compared to others in the market) that the RIAA won't do it?"

    And,

    "How long is MS willing to let Apple own music before they realize that the music itself is a loss-leader?"

    1. Re:Wrong question by Mr.+Underbridge · · Score: 2, Interesting
      Howz music the loss leader - you say they're making big bucks on the iPods?

      For Apple, yes and yes. They make tons of cash from the iPod, and only recently did the iTMS become even moderately lucrative. They intended it to hopefully break even.

      That's kind of a dumb model - you want it the other way around. You want the thing they buy once to be a loss leader, but the thing they keep paying for to make you money...

      That's the usual way, but here not so much. The main reason (I think) is that iPods aren't a one-time purchase, actually. They keep getting bigger and better, and are upgraded fairly often by their owners. I think they run iTunes so people definitely have access to legal music to put on said iPod, and so they have complete control over what goes on the iPod.

      But ultimately, yes, the money is made on the iPods.

  4. Wow, MS does the right thing? by glomph · · Score: 3, Interesting

    Hard to believe, but they have agreed with His Steveness, and told the cartel to stuff it. Takes one monopolist to know another, or an oligopoly, at least.

  5. It'll Never Happen by fragmentate · · Score: 5, Interesting

    ...one must wonder how long the music industry can keep pushing.

    Indefinitely?

    The majority of people are ignorant to these demands. The only informed people are the ones that follow the blogs, and news sites (like /.); last I knew, I don't think /. had readership on the scale necessary to effect change.

    The answer is a simple one to state, but a difficult one to implement. While media is completely different from every product in that it is possible to reproduce (copy) it, I also believe it's longevity implies copies should be permitted. Let's look at CD's, even if you take care of them they wear out. You didn't buy the CD for the plastic disk, you bought it for the music on the plastic disk. Compare that to say, a TV, when it dies, it dies, you have to buy a new one, period. You can't copy it. On the other hand, you didn't purchase what you're going to watch on the TV. And you can't blame the TV's or their manufacturers for crappy TV stations. The TV manufacturers have to make the TV last longer or the reputation is at stake. They can store music on a low quality media, and get away with making you buy it repeatedly... so the media and the music can both suck, and you're screwed.

    The point is everything the music industry is involved in revolves around greed, plain and simple. You don't believe there was some greedy bastard at each of the record labels wringing his hands in glee when he realized the recurring income from worn out CD's?

    Stop buying it. Or stop bitching about it.

    That's what we have to do, present company included...

    --
    My ZooLoo
  6. I root for the little guy by LunaticTippy · · Score: 5, Interesting
    It's strange to see microsoft in a relatively powerless position.

    I'm not sure how to feel about this situation.

    --
    Man, you really need that seminar!
  7. When.. by aero2600-5 · · Score: 3, Interesting

    This is just my two cents, but I belive the music industry executives to be complete and total morons. When will they realize that people will not continue to buy your product when you're overcharging? This is basic economics. If a dairy wanted to charge $20 for a gallon of milk, do you think anyone would buy it? No. There are better ways to support the artist than buying their music. Steal the music, go to their concerts, but their t-shirts.

    And here's a hint to the music industry: Collective Licensing. You will continue to be forced to lower your royalties until you reach this.
    Voluntary Collective Licensing

    Your time as the bully is over.

    Aero

    --
    Please stop hurting America -- Jon Stewart
    1. Re:When.. by Karma_fucker_sucker · · Score: 4, Interesting
      Steal the music,...

      Oh, please no. That'll just give them (RIAA, record companies) ammo for the legislatures that there needs to be more DRM, they need more laws to allow them invade our machines, more laws allowing for all of those stupid lawsuits that they're filing, it gives an excuse as to why their sales are declining - regardless if it's true or not, and more that is not coming to me, now.

      Lastly, it's just wrong. I wouldn't like it if you did that to me regardless of how noble your intentions are.

      --
      Evil people don't think they're evil. - George Lucas, Making of Ep III
    2. Re:When.. by dwandy · · Score: 3, Interesting

      Sadly they're not total morons ... perhaps idiot savants.
      Music (art in general) is a human thing that exists without the riaa, without a compensation model, and has existed for all of the history of mankind, and will exist to the end of the human race.
      There is no other monopoly ('cept maybe food...maybe!) other than music that is guaranteed by humanity.
      The telephone company (the original modern monopoly?) is not even guaranteed an income - but those that can monetize music are guaranteed an income. If you haven't read Eben Moglen's thoughts on all this look him up... For me he answered the big compensation question.
      Sadly it's not the riaa that's stupid - it's us for buying their particular music.
      I agree with many others on /. - the answer is to STOP SUPPORTING THE RIAA and purchase/support independent artists.
      It won't happen over nite, but when they no longer control the market, the big artists will no longer be signed with them...

      --
      If you think imaginary property and real property are the same, when does your house become public domain?
    3. Re:When.. by kraut · · Score: 2, Interesting

      ?This is just my two cents, but I belive the music industry executives to be complete and total morons.
      Quite possibly they are, on the other hand I've not actually heard of any major record label going bankrupt, so maybe they're not that stupid after all.

      > When will they realize that people will not continue to buy your product when you're overcharging?
      Perhaps when enough people stop buying CDs because they find them too expensive. It hasn't happened yet.

      > This is basic economics. If a dairy wanted to charge $20 for a gallon of milk, do you think anyone would buy it? No.
      Yes, actually. People pay considerably more per gallon for other drinks. But milk would possibly be considered a luxury rather than a staple. Of course, there is competition in the milk market, which there isn't in the same way in the music industry. If you want to buy the new FooBar CD, and one label is offering it for $20, there's no competitor offering it for $15 instead, is there?

      > There are better ways to support the artist than buying their music. Steal the music, go to their concerts, but their t-shirts.
      Yeah.... right. Three easy steps. Such a shame most people stop after step 1.

      --
      no taxation without representation!
    4. Re:When.. by the+arbiter · · Score: 2, Interesting

      You could not be more wrong, and I've got twenty years in the music industry to prove it. Bands frequently NEVER see any return from royalties whatsoever...they're paying off their "debt" to the record company just like any good sharecropper must. Unless you own your own distribution, the only money that will ever cross your palm is from merchandising.

      --
      Boycott everything - they're all trying to fuck you one way or another
  8. It's already affecting Itunes by bl968 · · Score: 4, Interesting

    While not the biggest fan of on-line music I have occasionally bought albums via iTunes. However 9.99 is the max I am willing to pay for any downloadable album. So I have skipped four albums in the last two weeks due to their pricing being higher ranging from 13.99 to 19.99 for the downloadable album. That works out to $39.96 in lost sales if you work it out using my max price. Why do they think we are fool enough to pay as much for a downloaded album as we would for a complete packaged CD. I also notified Apple of my decision and why so they could use it as ammunition in their fight against the labels. I am waiting for the price fixing lawsuit and the abuse of copyright claims against the recording labels. Maybe one day. I know I am a dreamer.

    --
    "GET / HTTP/1.0" 200 51230 "-" "Mozilla/4.0 (compatible; Setec Astronomy)"
    1. Re:It's already affecting Itunes by Tsiangkun · · Score: 4, Interesting

      Exactly.

      I can go to $USED_CD_STORE and buy $ALBUM used for $3.99-$9.99. I walk outside, sit on the curb and rip it to my powerbook in a higher bit rate than the downloadable version. Three minutes later, I walk back into the store and sell the disc back for $2.50.

      I'm not going to pay $14, $15, .. $25 for a digital album.

  9. This is how long they'll push by Red+Flayer · · Score: 5, Interesting

    The recording companies will push as long and as hard as they can -- they'll pause when someone pushes back.

    Only by continually testing the line will they be able to determine how much the market will bear, which is how they determine their prices. MS breaking off negotiations is a negotiating tactic in itself -- MS has communicated to the recording companies that they are demanding too much.

    Wait a month or two, the recording industry will come down in price, and both sides will have a deal they are content with.

    --
    "Trolls they were, but filled with the evil will of their master: a fell race..." -- J.R.R. Tolkien on Olog-hai
    1. Re:This is how long they'll push by Overly+Critical+Guy · · Score: 5, Interesting

      The recording companies will push as long and as hard as they can -- they'll pause when someone pushes back.

      That just might be Apple. With CD sales down again this year and Apple owning 82% of the online market along with a Christmas-slaying iPod nano and rumors of a slimmer fifth-generation hard-drive iPod coming later this month, Steve Jobs really has little to be afraid of from these guys. If they pull out of the iTunes Music Store, people will still be gobbling up iPods, and they'll just be filling them with pirated music instead. Jobs knows this, and so do the labels...they're just making a public fuss after realizing they're losing decades of control they once had over music distribution, all because they waited and waited and waited, and so Apple just strolled along and legitimized it without them.

      --
      "Sufferin' succotash."
  10. Re:Microsoft's next step by Anonymous Coward · · Score: 1, Interesting

    Don't laugh. If I wasn't NDA'd, I could tell you some stories.

  11. Re:Where'd that price come from? by Anonymous Coward · · Score: 2, Interesting

    Now if you want something to blow your mind (well okay, not that suprising really). I was reading the iaudio forum and all the people there were the exact opposite. We love DRM, what's wrong with you?! We love DRM! My take is they don't see the potential/real risks. So at least from this view, it seems like the industry has designed the trap with enough space that average people are willing to ensnare themselves.

    http://www.iaudiophile.net/forums/showthread.php?t =4254

    And this thread is about WMP DRM support coming in a new firmware upgrade for these players so that they can work on the subscription sites like Rhapsody and Napster. Now I suppose more features and having the ability to partake if one so choses is okay. But I still can't shake the "wtf is wrong with these ppl?!" feeling... then again, mainstream music... oh well. I'm really not going to worry about this too much. I feel like I just got here on planet earth. I'm just here to observe and take notes. What strange and curious creatures these indiginous so-called human beings are...

  12. Dvorak correct? by BKuhl · · Score: 4, Interesting

    With developments like these I am begining to think that Dvorak may be on to something in his latest PCMag.com article.

    http://pcmag.com/article2/0,1895,1862166,00.asp

    It certainly seems that the record companies are deliberately trying to sink online music sales...

  13. Quite understandable by Thijs+van+As · · Score: 2, Interesting

    The amounts the labels are asking is quite understandable I think.
    Selling music online is very 'hot' these days. Lots of self-respecting online mega-corporations are setting up online stores.
    Labels notice this (duh) and adapt their price to the market. They know Apple's a big rival of Microsoft, and that MS wants to have the market share Apple has in this piece of the market. And, not the least important, Microsoft has ability to pay the labels such amounts. If only to push Apple out of the market.
    Fortunately they (MS) didn't...

  14. Re:Music Industry? by cosinezero · · Score: 5, Interesting

    No, I'm sorry... I'm a dj, a musician, and date a girl who worked for years at world-famous nightclub. The music industry as a whole is inherently evil. Those people break violate contracts in a week than microsoft does in a year...

  15. The real question by Queer+Boy · · Score: 4, Interesting

    The real question is when Apple or Microsoft will start/buy their own music label. Sounds easier to me than trying to negotiate with any cartel...

    --
    Not since Marie-Antoinette played milkmaid has looking simple and honest been so fake and complicated.
    1. Re:The real question by Chris+Oz · · Score: 2, Interesting

      It is unlikely to happen that way. Imagine what the other labels would do if Apple gets into bed with a Label. The labels are not dumb. If this happend they would simple pull all their music from the Apple's store as soon as their contracts allowed it.

      Personally what I suspect all Apple is going to do is make it very easy for bands to setup their own labels, particularly if they want to deal with ITMS. Hence Apple can say we are just a store, it the bands breaking away and it is nothing to do with us.

      Personally I see this as more of a problem for the labels than if Apple was to become a label. Who does the label fight, the bands? If Apple goes away they still have all these bands that have wised up and realise that they can do it themselves. The labels could try and force all of the online music sites to not deal with smaller labels. However once this got out that would be the end of the labels for sure. Just imagine the law suits, the PR and the political attention.

      Just my 2 cents. We will have to wait and see how it all pans out.

  16. Re:Never thought I'd ever say this, but... by nine-times · · Score: 5, Interesting
    How about the equally unlikely, "three cheers for the RIAA!" for keeping Microsoft out of the music business? With all the knack Microsoft has for leveraging their monopolies, I don't want anyone in control of the content delivery, the content format, AND the device the content plays on, all by making deals with a monopoly that controls the content production.

    It's a bit disconcerting when it's Apple. It'd be downright frightening if it's Microsoft.

  17. Apple the Record Company by DavidBartlett · · Score: 2, Interesting

    If the record companies abandon apple, then apple will be left with a pre-existing user base of music fans, and all the infrastructure it needs to become a major record company itself. It will sign on new bands by promising them 50% of all revenue, and be able to lower the song price to $.50. Apple will make $.20 more per download, as will the artists. The lower cost of distribution and advertizing will enable them to sign more diverse, local bands then would be profitable the way the record companies do business. The fans would get a better selection, for half the price. Incentives could be given to big name bands to switch to apple, and suddenly you have a music industry without greedy, anacronistic record companies.

    --

    -DB-
    E-mail is like a prison: a prison with no walls... and no toilet. -Strong Bad
  18. Re:Never thought I'd ever say this, but... by spxero · · Score: 1, Interesting

    Yes, let's cheer for Apple, because they give us DRM'd AAC music for iPod's only...

    What makes Apple any better than MS? They do the same practices, arguably worse than Microsoft would do. Granted they have success with the iPod, but if it were not for the scroll wheel (or if the scroll wheel wasn't just an iPod thing) then it wouldn't be any better than most of the other players on the market.

    Microsoft getting into the buisiness will open up more stores for more players, possibly giving more options. I agree that WMA sucks, but if MS floods the marketplace there could be more competition for my $.99

  19. Re:The Means of Distribution by Anonymous Coward · · Score: 1, Interesting

    Dude, *micro*economics is about price theory, with the price and demand curves, elasticity, substitutability, and the like. More generally, it's concerned with single factors and single decisions.

    *Macro*economics is about international balances of trade, interest rate policies, currency exchange rates, national productivity, and the like. Large scale, many factors, multiple decisions.

    Your comment is much more about microeconomics in that you are weighing "the crux of the issue" (one factor), with the hypothesis being that collectively dominating traditional retail distribution of music gives the labels individually a degree of pricing power. This implies either collusion, or demand that is highly artist-specific (artists being more or less randomly spread among the main labels) or insensitive to price, or both.

  20. Winners and loosers by DragonHawk · · Score: 2, Interesting

    "It's strange to see microsoft in a relatively powerless position. I'm not sure how to feel about this situation."

    There's an old saying: When elephants fight, it is the grass that gets trampled.

    I can assure you that regardless of whether MSFT wins or RIAA wins, consumers will loose.

    --

    dragonhawk@iname.microsoft.com
    I do not like Microsoft. Remove them from my email address.
  21. meanwhile, in the brick-and-morter world... by r00t · · Score: 2, Interesting

    Walmart is making noises about taking on the music industry. Walmart is... well...

    Walmart often tells suppliers exactly how to run their business. Walmart demands to see the finances. Walmart demands that an advertising budget be slashed so that the price can be slashed, and Walmart doesn't get "no" for an answer. Walmart drives most suppliers to the edge of bankruptcy, and a good number of suppliers go over the edge. Walmart tells a supplier how much will be produced and when it will show up. Walmart dictates information systems decisions for suppliers.

    If there's anything to make RIAA terrified, it's got to be Walmart.

    Picture it: "Dear RIAA, all CDs will be selling for $1.37, starting next week."

    RIAA can't refuse. Walmart sells about 1/5 of the retail goods in the USA.