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Music Labels Charge Too Much For Microsoft
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."
one must wonder how long the music industry can keep pushing.
The editors must mean the greedy recording companies - the music industry itself is not inherently evil, it will outlive the current system and be there for as long humans inhabit this planet.
They'll fail to agree on this issue, but decide to organise a joint conference next year entitled : "Price Gouging For Fun And Profit : How to make a de facto monopoly work for you"
Athletic Scholarships to universities make as much sense as academic scholarships to sports teams.
According to several people briefed on the matter, the labels separately were seeking royalty payments of $6 to $8 per user, per month. People close to the labels say that is in line with what existing subscription-music services pay, the Journal reported.
Seems rather high, considering you still have to pay $1 or more for each song you download, and the song is likely to be encumbered with DRM, and the quality is usually less than a rip from a CD. One would get the feeling the music labels don't really want to sell songs via the Internet...
The NSA: The only part of the US government that actually listens.
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
They'll push until Microsoft owns them
'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"
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?"
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.
...one must wonder how long the music industry can keep pushing.
/.); last I knew, I don't think /. had readership on the scale necessary to effect change.
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
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
...three cheers for Microsoft!
This represents a stunning defeat for the music industry, and combined with Apple's iTMS success, could indicate the beginnings not only of a change in how music is priced, but also of a change in how music is produced, promoted, and distributed - i.e., without the RIAA and its members.
I'm not sure how to feel about this situation.
Man, you really need that seminar!
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
it's all about power: the music conglomerates and the riaa exist to control music distribution in a world of LPs, cassettes, and CDs
in a world of cable modems and fiber optics, who controls the music distribution?
the tech companies do
bill gates and steve jobs do
so if their handlers are smart, they will just start signing artists themselves
intellectual property law is philosophically incoherent. it is your moral duty to ignore it or sabotage it
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)"
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
In other news, Microsoft puts out a new security update that enables a global Windows-based peer-to-peer filesharing network.
Steve Ballmer was quoted, "F**K THAT RIAA! I'm GOING TO F**KING KILL YOU TOO!! KILL!!! KILL!! KILLL!!!!!!"
Stock prices of major furniture companies went up as well on the news, on forecasts of the increased need for chairs.
What are the odds that some idiot will name his mutex ether-rot-mutex!
It's pretty bad when a company that lost $8 billion breaking into the gaming industry says you're charging too much.
FanFictionRecs.net
The problem here is that MS needs to make a significant profit on the venture, as opposed to Apple, who has a music store to sell music players. Apple is content to give away the bulk of the proceeds from its store for market share so they can drive iTunes sales. What does MS stand to gain by giving away the bulk of its profits? More WMA licenses? Those can hardly bring in more than a few dollars per player.
Of course, I wouldn't be surprised to see MS do everything at a total loss just for the sake of controlling the market.
Basically, the industry needs to deal with Apple, not Microsoft. Microsoft is not a player in the game anymore. Microsoft is a a Johnny Come Lately.
It's either on the beat or off the beat, it's that easy.
I moderate therefore I rule!
--
This has to be the most ironic position either side could possibly be in.
Microsoft - convicted monopolist, one of the richest companys in the world, complaining about being ripped of by
The music industry - convicted price fixers, convicted conspirators, defacto ologopoly.
What's the difference between a record company and Microsoft? I'll tell you: One is a monopolistic leviathan, saddled with an outdated business model and unfairly, perhaps illegally, leveraging a chokehold on one market to try and take over another, desperately afraid of emerging free alternatives and assailed by customers for ridiculously high prices and shoddy quality. The other ... hmmmm, let's try this again.
What's the difference between a record company and Microsoft?
I'll tell you: One will be entirely bankrupt in 10 years, while the other will at least limp along selling a Flight Simulator.
Payback's a beeyotch, INNNIT??!!
They're starting to catch on. I suspect that they demanded a share of MSWindows revenue (same as iPod with Apple). Which, IMHO, was the only thing they could do.
Remember, the RIAA is basically just a bunch of distributors. Apple and now Microsoft are taking that role away; with them holding the DRM key to the store the RIAA has little choice but to do business with (and through) them.
Just like the artists have little choice but to do business with (and through) the RIAA. Indentured servitude. "Work for hire." In other words, the Man owns you, suckah, and unless you give good head you're not singing anywhere for the rest of your life.
Karma is such a bitch -- especially on the "comes around" part.
Lacking <sarcasm> tags,
somewhere steve jobs is smiling. You would think that due to recent developments that the music industry would love to emanate a "play by our rules or we'll go somewhere else" image.
Well, that is unless microsoft took advantage of that situation and dictated terrible terms, with the message that like it or not, a new distributor is in town.
That's the problem with admitting you are currently in a bad deal while negotiating for another. They come across, on some levels as appearing desperate.
What would it do to iPod sales if microsoft became the leader in music distribution software? Considering the iPod is a cash cow for apple, and microsoft would have to support the iPod to enter the market, would the two of them have to play nice? (I recall reading a theory that apple was hoping to break even on the iTunes music store, if so, then what would the fallout for an MS/music industry from apple's perspective?)
Am I open minded towards open source, or closed minded towards closed source?
WTF are you talking about? That's not what this is about at all.
The basic questions have all been answered, now they're just arguing over price.
Lacking <sarcasm> tags,
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...
There are three good reasons why the music industry wants third party online services to fail.
First, imagine if a service such as iTunes became very successful. For example, 50% or more of all music sold was sold via iTunes. Now imagine you're a successful musician and it's time to resign to a label. Do you sign or do you get a marketer and simply sell your tunes on iTunes and keep the vast majority of the profits for yourself? If any third party online service succeeded, the current music industry would be toast.
Second, the music industry has historically cooked the books, i.e., over reported sales of some artists to hype them or under-reported sales of successful artists to screw them out of royalties. With a third party keeping precise track of every song being sold the music industry loses control. Suddenly they can't "fix" the charts and artists are demanding their fair share. They don't want that.
The third reason is that they want ALL profits for themselves. Why should Apple or Microsoft get some of the profits when the music industry can get it all? Let's face it, they are a monopoly. E.g., you can only legally buy a System of a Down CD from Sony, and no one else.
This refusal to negotiation fair rates with third parties certainly shows that the music industry is doing pretty well. If they were as bad off as they claim they would more willing to open new markets and new models.
If someone says he and his monkey have nothing to hide, they almost certainly do.
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...
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.
If M$ operated it as a loss leader they would probably still pass on the royalties of $6-8 a month or $72-96 per year for what would certainly would be a service overencumbered with DRM. And probably like Yahoos service you can't listen to the songs if you subscription expires.
Compare that with iTMS where it would be the equivalent of buying 72-96 songs per year, with a indefinite period of use, and the right to burn it to CD.
As far as proprietary systems (iTunes or WMA) is concerned it is a tie. No advantage unless you're an iPod fan. iPod market share tells that story.
Makes me wonder if M$ is going to reconsider embedding DRM technology in Vista or Windows Mobile.
Must... not... make... joke...
Warning: Apple/Nintendo fangirl. Likes her electronics cute & cuddly. May be rabid.
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
It's not quite that simple, but I do expect it will happen eventually and the results will be interesting. The thing is that the music industry as it exists now is to some extent predicated on having a number of extremely high-profile artists; these artists get the benefit of the massive promotional push that the labels put behind them. The other artists toil beneath the spotlight until their time comes or the labels drop them. (Obviously indie artists are part of a different industry)
What's interesting is to imagine the online stores leading artists to leave the labels. If that happens, the results will be catastrophic for:
- Music magazines: no more sky-high ad prices paid by major labels
- MTV: no more $100k videos gracing their airwaves
- Record stores: no more high-priced endcap displays and, eventually, no more stores (some indies will likely survive, but Tower and Virgin?)
Because artists who are self-distributing and self-promoting obviously won't be paying for those things.In reality, I expect the labels will adapt and perhaps fall back to the strategy of yesteryear, promoting singles and not albums. It's the distribution chain that will collapse, obviously -- Warner Music Group, for example, not only distributes their major product themselves, but also operates the ironically-named Alternative Distribution Alliance (ADA), which distributes pseudo-indie labels like 4AD, Matador, and Epitaph. They make plenty of money from that, I'm sure, and would like to keep doing so...
AP reports online digital music sales have tripled in the last year, accounting for over 6% of sales. But there's more than meets the eye here. Profit margins on on-line digital sales are rumored to be much higher so that is much more than 6% of profits. Not only did this more than offset the decline in physical unit sales but, more importantly physical unit sales have also declined in price as well as volume, further increasing the advantages of on-line digital sales (6% gross price decline, 3% volume decline). Note that a 6% gross price decilne means an even larger profit margin decline assuming manufacturing, distribution and marketing costs are not decliniing.
The article further points out that there are 500 million iTunes songs sold and 22 million ipods sold. Averaging this gives one only 23 itunes sold per iPod: thus one can hardly say that iTunes sales are the motivating factor for iPod sales but one could neccessarily say the reverse. People are clearly filling those Ipods with their purchased CDs, borrowed and pirated music. The record industry rants about selling music too cheap and iPods leveraging their IP for sales would seem dubious.
Some drink at the fountain of knowledge. Others just gargle.
The music companies want on-line services to work because CD sales are declining and they need a replacement.
No. they want CD sales to stop declining.
Artists will sign with whoever gives them the most money. Go to Apple and see how much of an upfront payment you'll get.
Perhaps Apple will spot aniche in the market and cut out the middle man if online music sales become the most popular means of buying music.
Download sales are already taking off and unless you've been asleep you can't miss the fact that more deals are being done every week. If they didn't want these services to survive why are they doing the deals?
Because they feel trapped. They realise their customers want downloaded music. If they don't sell it to them, their potential customers will simply download it anyway. They choose the best deal for themselves.
If they want all the profit themselves, why aren't they selling direct?
Are you suggesting they don't want all the profit for themselves? The problem is, they simply don't have the brand strength to do this. iTunes succeeds because it offers music from everyone. iTunes has market recongnition. Most people don't know who the publisher of their CDs are. Nor do they care. They're certainly not going to go to several different music download sites. And they've never sold direct. The industry isn't set up to do this. They've always sold through record stores.
Interesting comments, but you make the common mistake of confusing a single source with a monopoly.
A product is not a market.
A monopoly requires a market.
Sony does not have a monopoly on "System of a Down" CDs.
Apple does not have a monopoly on the Macintosh.
Microsoft does not have a monopoly on Windows.
BMW does not have a monopoly on BMWs.
Microsoft did establish a monopoly in PC operating systems, since they eliminated competing products within a market (the desktop PC industry), and prevented the introduction of new competition. Microsoft does not have a monopoly in video game consoles.
If Apple were to gain full control of online music sales, they'd have a monopoly; today there are still several competing products led by powerful interests.
There's also a difference between having a temporary monopoly position (which is common in emerging markets) and acting as a monopolist to destroy competition and create a long term dominating position in a market. Apple is not exercising monopoly control to prevent competitors from doing business.
If Apple began signing exclusive contracts with labels, or if they licensed iPod software to all hardware music player makers exclusive of other designs (excluding competition from WMP or Linux or Sony software, say), then yes, Apple would be a monopolist like Microsoft.
If Microsoft made their own PC, and it was so much better than other PC makers that it cleaned up the market, they would no longer have a monopoly, since they would be selling a product (the WinPC) , not selling within a market (the PC industry). They would, like Apple's iPod, have a very successful product, not a monopoly of a market, since there would not be a PC market.
There is simply no sense in declaring a "monopoly" when a company is the single source of a product. Monopoly means single control, so the word only makes sense in a context where there should be multiple parties sharing control, in a free market. There is no expectation of competition in the manufacture of Xbox, BMWs, iPods, or Rubic's Cubes.
Being successful or having a popular product does not make you a monopolist. Rubic didn't establish a monopoly on the Rubic's Cube, or in hand held puzzle games, despite the fact that it was a hot seller and there wasn't really any effective competing thing with similar sales.
Similarly, Google and Apple both offer popular services/products that don't have much effective competition. But competitors exist, and more effective marketers with better products could compete.
A Monopoly is usually a bad thing in a market, because it distorts the market pressures to innovate and prevents effective competition. Monopolies are useful when competition would hurt consumers. For example in healthcare, transportation or cable TV utilities, competition might end up in service disruption, or providers only choosing to do business in areas that made them money. Governments allow monopolies (or sell the right to be granted a monopoly) in some markets to ensure someone will provide the service.
The labels are not really being greedy. They are fighting for their survival. They have been in control of who hears what for the last 50 years. In order to remain, they have to be the ONLY place that they can go to, or even through. The internet is a disaster to them. Not so much because ppl are downloading music for free, but because it allows artists to do their own marketing, their own music, etc.. In addition, while the MS world charges top dollars for lousy recording programs, the OSS world is picking up a number of recording type programs from the MOvie industry. It is only a matter of time before making an album is also a no cost. At that point, Concerts are all that a label controls. And they may be losing that as well.
IOW, labels are not being greedy. They are just trying to survive in a market where they are about to become worthless. Can you say BYE BYE sony music?
I prefer the "u" in honour as it seems to be missing these days.
"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.
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.