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Universal Refuses To Renew On iTunes
UnknowingFool writes "It appears for the moment that Universal will not renew its long term contract with Apple for content on the iTunes store. While the details are not known about the exact nature of the dispute, many speculate that it has to do with Apple's stance on fixed pricing and Apple's refusal to license their DRM. The worse case scenario may include Universal pulling its entire catalog from iTunes. Both sides stand to lose out with 1/3 of of new releases coming from Universal and an estimated 15% of Universal's sales coming from digital downloads. Apple's market share is about 75% of digital downloads, and digital downloads are growing while CD sales are shrinking."
DRM free?
HAH. don't hold your breath... and it _will_ be more expensive than iTunes, and it _will_ be more DRM-crippling than iTunes.
Yeah, competition's great.
It's the Stay-Puft Marshmallow Man.
Aren't they also the only company exclusively backing the doomed HD-DVD format? Stupid businesses make stupid decisions.
empty posturing. What does Universal lose by signing a short-term contract instead of a long-term one? Probably nothing. What do they gain? Marginally more credibility in the back-and-forth threats between Apple and the record companies. Wake me up when they explicitly threaten to cancel their contract and remove their media from iTunes if an express list of demands is not met. Until then, it means nothing. And even then, they'll likely return to the bargaining table before pulling the plug. Both sides know where their interests lie, and neither wants to pull the plug.
My long-term prediction? More of the status quo. Both sides are winning, and there is no external stimulus that seems like it might upset the equilibrium that has developed. Apple doesn't want to lose a third of its collection, and Universal doesn't want to be tied to the misfits and rejects that compose the rest of the playing field.
The most likely answer is that Universal, whose bean counters are not dumb enough to drop fully 15% of their sales to spite Apple, is simply making noises to negotiate a better deal.
The other possibility is that Bill Gates, in utter desperation because the Zune is such a piece of crap, has offered to pay Universal for exclusive content for the Zune. I would seriously not put it past Bill G and Steve B to do something like this. It would be a really bad day for Apple if this did happen, because it would make the Zune more popular and the iPod less popular.
Of course, it could backfire heavily against both Microsoft and Universal if Zune sales don't grow significantly.
Unsigned Band with break-out potential: "So, we sign with you...and our record won't be up for sale on iTunes?"
Universal A/R dude/dudette: "Yep, that's right."
Unsigned Band with break-out potential: "So any unit sales revenue we see from you will be from Wal-Mart and Best Buy sales, nothing else?"
Universal A/R dude/dudette: "Uh huh."
Unsigned Band with break-out potential: "Losers. Next!"
Universal already has the option of going DRM-free with iTunes, and they haven't taken the bait. Anyway, they don't have an exclusive contract with iTunes. Your whole post makes no sense.
Username taken, please choose another one.
Let's see: Universal is unhappy with Jobs' position on pricing and want to have their OWN Digital-Consumer-Disablement crippled service with higher prices than Apple and, since Apple won't license the DCD, it will have to be incompatible with the iPod, which is as close to a player monopoly as you can get without the Feds landing on you with an army of antitrust lawyers.
They think this is good for them HOW?
Uhh... Universal has deals with others. This doesn't change that. This makes LESS options, not more. It certainly isn't a positive for DRM-free music, where iTunes leads the charge, as far as major labels go, since signing the EMI deal. Universal definitely wants DRM.
Universal wants to be able to up prices where it thinks it can get more money. Apple isn't letting them do that. How do you see it as a positive that they're going to go to someone who does?
-Daniel
Yes. If they go and sleep with somebody else, they are going to suck. "It will suck." "It will not work".
I see this as definitely a good thing.
BTW, Magnatune with Amarok is far better deal then iTunes. Just in case somebody is interested.
But do not let me spoil the party - let Apple whoring begin.
Hold on, Hold on. The iPod is NOT a prosecutable monopoly. It's a natural Monopoly. Which is to say, it arises because that just what consumers are buying. There is not illegal about that at all. It is 100% legit. It is only illegal to use a monopoly in one area to force a monopoly in another. Like Microsoft using their Monopoly in Operating Systems to shut Corel out of the market for Office Suites. Like Microsoft using their Monopolies in Operating Systems and Office Suites to secure a Monopoly in the Browser Market. That's illegal. iPod/iTunes is not, despite complaints by overzealous European prosecutors. There are LOTS of (legal even) ways to get music onto an iPod. Buying CDs for one. Plenty of Musicians are distributing music themselves in MP3 or FLAC (which can't be played on an iPod Shame on you Apple! But FLAC can be converted to other formats that can be played on an iPod). iTunes Music Store "Lock-in" in pretty poor to be honest. The vast majority of iPod users are not filling up their iPods on ITMS purchases.
And yet you sell all your CD's at $16.99 regardless of that fact now, don't you?
At the same time, Mr. Jobs has refused the industry's calls for Apple to license its proprietary copy restriction software to other manufacturers. Music executives want the software to be shared so that services other than iTunes can sell music that can be played on the iPod, and so that other devices can play songs bought from iTunes.
Another load of crap. iPods can play music from any other DRM-free music seller. This joker wants you to believe iPods only play iTMS music, which is a lie. And iPod owners would likely buy music from other sources if: 1) It didn't have yet another, incompatible, version of DRM; 2) It was priced right; 3) It was the music they wanted to hear; 4) It had a nice interface to easily purchase and load said music onto their iPod. The record companies themselves are the ones to blame here.
You know, It's the DRM, stupid!
"It's the height of ridiculousness to say for those 9 lines you get hundreds of millions."
Guess who wins? EMI.
If Universal thinks that people will buy from another online source than iTunes, let them try. That's competition. EMI felt differently, and will win and grab a larger market share. Honestly I've never paid any attention to which labels musicians signed with before. But now it'll becoming blindingly obvious who's in what camp.
Losing 15% of your income is a lot of money when you are that big. That's about the point that shareholders want to hear about cost-cutting measures to regain what they have lost--namely downsizing and such. For Apple, it would be a blow, but it would also not be nearly as bad because they still have so many content providers to work with.
If Apple and Universal cannot come to an agreement, Apple should bide its time, wait for them to weaken and strike. Buy out their catalog for a cool few billion dollars in cash and license it exclusively through the ITMS.
Cutting off one's nose to spite one's face is so appropriate. Both parties here are just trying to get more money out of the other.
Truly hilarious.
"BTW, Magnatune with Amarok is far better deal then iTunes. Just in case somebody is interested. "
There IS the issue of just how large their respective inventories are: I believe iTunes wins there.
Hey, there are many sources of cheap, independent music. I use them. I like them. But to say that 500 albums at 5 bucks each represents "a far better deal" requires some suspension of reality.
Unsigned Band with break-out potential: "So any unit sales revenue we see from you will be from Wal-Mart and Best Buy sales, nothing else?"
Universal A/R dude/dudette: "No, of course not. You will never see sales revenue because we will cook the books so that you never see a penny. But you are othewise correct - the unit sales revenue you will never see will only come from Wal-Mart and Best Buy."
Unsigned Band with break-out potential: "Where do we sign?"
Is it just my observation, or are there way too many stupid people in the world?
Not to mention, Universal wants money from each iPod sold, just like they get from the Zune, (and they've been asking for that since before the Zune deal was announced). For some reason, they think that they deserve that, even though they didn't design the electronics, or the UI, and iPods are not sold with any Universal Music on them, and don't in any way require Universal Music to function correctly.
It was never a sane business model. The value of most CDs is their novelty and hype potential, not the music inside, which is mostly pointless goop for easily-distracted people. They're not going to make a killing any longer, since the means of distribution have now surpassed the means of production. Universal and Apple fighting over a miniscule advantage in a collapsing industry is a sure sign that the entertainment industry has no clue where to go now that its product is no longer scarce by the nature of its distribution.
technical writing / development
Great, two big companies fighting over their middleman territory. The artist who creates the product and the user who purchases it are just collateral damage.
Dude, until recently anyone with a non-Apple mp3 player couldn't use iTunes without jumping through ridiculous hoops. Given how cheap commodity flash mp3 players have become, why would any company opt to cut themselves out of that market.
iTunes have established a download market. They've served their purpose and are now surplus to Universal's requirements.
Athletic Scholarships to universities make as much sense as academic scholarships to sports teams.
MS need to give money to people just to jump on their bandwagon, because the service wasn't popular, and they needed to give the labels a reason to join their service. iTunes on the other hand is extremely popular, and doesn't need to make stupid deals like giving away a percentage of iPod profits to music companies. Universal is already getting a percentage of the music sales they get from iTunes, and that is all they should get.
Anthropic principle: We see the universe the way it is because if it were different we would not be here to see it.
No. Look where people go for their downloads. Especially, look at which store people buy DRM'ed tracks from.
If they want to keep the DRM, good look trying to sell it on anything other than iTunes with Fairplay. They'd be excluding themselves from the biggest market.
If they're prepared to sell DRM-free, and want more than Apple's $1.29, they're screwed too, cause customers don't like being fucked by price hikes.
The fact is that by breaking their relations with the biggest distributor of downloadable music, they're only screwing themselves.
If anything, music companies benefit revenue-wise from digital sales. Unlike physical medium like CDs, the distribution and manufacturing costs are minimal. And any infrastructure costs are borne by these player vendors not by the music company. The only costs that music distributor has are costs that they always have had like marketing and promotion. For iTunes $0.70 of every $0.99 goes to the music company. The other $0.29 goes to Apple which has to pay for the distribution system. So the music companies have made like $1.4 billion on iTunes alone, and all they had to do was provide Apple with the digital masters. I do not think is reasonable for Universal to want more.
Well, there's spam egg sausage and spam, that's not got much spam in it.
Pssh. First off, who wants HD Porn? Some thing's are not meant to be seen in high def. 'Nuff said.
Secondly, who the hell buys porn on hard media anymore? Far far far more people download porn than get it any other way. The internet is, indeed, for porn.
The whole "Porn decides all format wars" line would be a lot more useful and relevant if we had a pool of results that was larger than, you know, one. Just because adoption followed porn once, doesn't mean it will ever do so again.
ad logicam Claiming a proposition is false because it was presented as the conclusion of a fallacious argument.
Well, remember back when CD's came out...there really was no way to rip them...hell, not many people had a harddrive big enough to hold all a CD's data. At that time, a CD was a safe, one use medium...you could record off it to cassette, but, that was lossy and they didn't care that much about it.
Then...came larger harddrives, cd burners and cd drives on computers...and compression techs (mp3, etc). Well, what was once 'secure' to do consumer's hardware limitations, wasn't any more.
The music companies hate that...and with digital music and DRM, are trying to close that hole. They'd fix the CD's to be read only if there were only some way they could...trust me. They're gonna be happy to get rid of CD's if ONLY they can lock the users down in a way they screwed up on and didn't do with CD's.
They do not want to repeat the non-DRM mistakes they made with CD's.
Light travels faster than sound. This is why some people appear bright until you hear them speak.........
Not offering the music in the format I want is exactly a reason to obtain it through other means.
I don't need to justify my actions or the way I choose to support the musicians I listen to. I believe the current system of intellectual property law regarding music and cinema are faulty to immoral, and I choose to ignore them, accepting the risk. I want to hasten the collapse of the entire system to the extent that one person can do so.
In case you are interested, for the most part I purchase music directly from the musicians that create it, and believe me, by far most of the music in my collection today is purchased legally, direct from the artist. But I also want to do my part to bring down the labels and publishing companies and the legal serfs who serve them, so I make liberal use of the trackers.
You are welcome on my lawn.
I don't see an upside to Universal doing this. If they pull out, they will likely experience more P2P music stealing. I doubt that a significant amount of iTunes users will switch to a different music store because of it. I would purchase the physical CD before juggling multiple music stores, but I didn't want the whole album than I would either resort to finding it on P2P networks or not get it at all.
For the record, I purchase all of my music. That hasn't always been the case prior to iTunes. I like the iTunes business model.
I am TheRaven on Soylent News
Porn has decided more than once, it's just that the main round that you remember is the VHS vs Beta arguement.
Porn was the bulk of what drove the penny arcades, which in turn promoted the old silent movies (themselves started mostly as a vehicle for porn). Most of the visual entertainment media used throughout history either started out, or was heavily fininanced at the start by porn.
And they've decided today as well. You youself made the point without realizing it.
BOTH formats have lost, it's not about hard media anymore. People are drifting more and more to downloading what they want, and only using hard media as a saftey blanket/backup option.
DVD's will always be around in some form or another, but eventually (sooner in other countries where their telco industry hasn't shamelessly refused to upgrade their infrastructure to handle it) what you want, what you see, and how you get it will be online.
In all seriousness I have stopped supporting the Music industry all together. I don't buy music, I don't download music, and I barely listen to the radio. When they fix their business model maybe I'll think about actually doing it again. As it is, I love classical, sympony orchestra and live blues/jazz so I can get my fix with live shows and for everything else it's public domain.
"Some books contain the machinery required to create and sustain universes."-Tycho
Not really. Apple sells you the iPod. Apple offers you a service on iTunes. If you have an iPod, you can load music onto it any way you like it. My wife has an iPod and she has no idea that there's the iTunes store, for she just rips her CDs and puts them onto the iPod as to any other MP3 player. There are numerous other MP3 players out there and people buy them but more of them buy the iPod than any other kind because they like it better. Indeed, the iTunes service is only for iPods (I think, don't know but I assume so) but you can use any other service (and there are many) to get MP3-s which will happily play on any player, including
the iPod.
Now Windows is a different thing. MS used its market share to force OEMs to include Windows on every piece of HW they sold. MS writes applications that use features of the OS that only MS is aware and MS does everything in its power to keep the format of every file or packet closed and obscured so that no other player on the market could come up with an application that could access MS application related data.
The iPod was not the first MP3 player and became a market leader because people like it better than the others. If you can come up with a player which is actually more user friendly than the iPod, Apple can't stop you to gain market share. As long as people can convert their iTunes downloads to a vanilla MP3 (as far as I know, you can), you can also use the iTunes service for any player you can come up with. It seems that as of now, people like the iPod more than any of the other ~50-100 models on the market. So iPod is a natural monopoly.
Now if you come up with a new OS + office package + browser + whatnot you can not make it read MS documents for the document formats are MS secrets, you can't just plug it onto an MS network for some packet formats are MS secrets and if you reverse engineer everything and you can do it all, then MS will blow the crap out of you with IP lawsuits and threaten the OEMs to not getting the MS licence any more if they sell your stuff. That is where the monopoly becomes unnatural and where the DoJ finds the defendent guilty of illegal business paractices, coersion etc. and when some higher powers kick the backside of the DoJ for harassing such a fine American businesses...
Microsoft has been taking active (and often illegal) steps to enforce its dominant position, Apple simply made a product that people like.
As ATi learned, he has absolutely no problem with damaging his company in the short term if he thinks it will strengthen its position in the long term.
Though I don't have an opinion on whether Steve Jobs is doing this, I do prefer a company executive that looks, years down the road, to the future instead of to this or the next quarter. That's a shortsightedness it seems too many corporations have now.
FalconShould there be a Law?