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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."
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!"
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
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."
Wow, time warp. I haven't seen a Mac 8600 or a 486/66 in about a decade. Where are you, in a barn next to a Model T and a steam tractor?
-jcr
The only title of honor that a tyrant can grant is "Enemy of the State."
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.
Like I needed one more reason to download all my music via bittorrent from my favorite trackers.
You are welcome on my lawn.
But some music executives have been chafing at the flat rate
Well, Universal, here's *my* new flat rate for any of your artists.
$0.00
I call it the Interwebs Discount.
Happy now?
And there isn't a damn thing you can do about it.
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.
The problem with music DRM, from the music distributor perspective, is that it's too closely tied to player vendors. There's the iPod and the Zume, and in both cases the player manufacturer takes a cut of the revenue. UMG, reasonably enough, wants to cut the player manufacturer out of the revenue stream.
Microsoft has orphaned "PlaysForSure", which, for a while, looked like an option. Or at least Microsoft tried. WalMart went with PlaysForSure, and they might insist that Microsoft keep supporting it.
What really matters is what WalMart does. If the music industry doesn't come up with a good solution, Bentonville may dictate one. Their site currently says The Apple iPod and Microsoft Zune digital media players do not currently support protected WMA-format files, and will not play Wal-Mart Music Downloads. Walmart.com has a large selection of WMA-/DRM-compatible digital music players available at great prices.
WalMart, remember, sells online music at $0.88/song, below Apple and Microsoft. And they're not going to raise their prices.
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.
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.
I think Apple should demand money from Universal for each CD purchased. After all, chances are that it's going to end up on an iPod anyway.
Oh, if only Apple would license their cross-platform DRM! I know this will be modded as off-topic BUT I wish Apple would license its DRM to the BBC! That way, the BEEB would have an easy way of distributing their content in a non-Windows environment and still satisfy their perceived DRM need. It still would not make a native Linux method of playing BBC content, but it is pretty easy to get iTunes (for example) to run under wine. So, though it is not a perfect solution, at least it would be better than what the BEEB is doing now
So, go ahead, mod me off-topic, but I am hoping to at least also get to be modded as interesting as well.
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.
What a shitty deal -- "We get money from every Zune sold!"
That's like what -- a buck fifty total now?
So now no more iTunes sales for:
* Baby Boy Da Prince
* Bee Gees
* Drake Bell
* Black Child
* Brandon
* Big Tuck
* Big Tymers
* Blak Jak
* Bloodhound Gang
* Mutya Buena
* Vanessa Carlton
* Jamie Cullum
* Domination
* Down AKA Kilo
* Dispatch
* Drake Bell
* Godsmack
* Gotan Project
* Chris Gotti
* Pat Green
* Harry O.
* Heavy D.
* Infinite Mass
* Ja Rule
* Elton John
* Jack Johnson
* JoJo
* Juvenile
* Jordan Flynn
* Kaiser Chiefs
* Brie Larson
* Murphy Lee
* Lindsay Lohan
* Lloyd
* Damian Marley
* Stephen Marley
* Mika
* Mushroomhead
* Mystic
* Natalie
* Pharoahe Monch
* Prince
* Rakim
* Rammstein
* Scissor Sisters
* Strive Roots
* Sunland
The rest are here.
I'm not a fan of iTunes and have never bought anything off them, but Universals reasons for ditching them can only be nefarious. Okay so Prince isn't going to care, and Elton probably won't either. But if anyone knows the other artists it might pay to tell them what their label has done and that now might be a good time to think about their future with Universal.
"Nine times out of ten, starting a fire is not the best way to solve the problem." - my wife
I am TheRaven on Soylent News
> 90% of CD content blows I'm guessing that a typical CD store contains something like 20,000 CDs. (That's a very rough guess.) That means you think 90% of those CDs blow. That means you think 2,000 CDs in a typical music store don't blow. Which is kinda interesting. If you put me in a typical music store I could imagine finding, say, 50 CDs I like. Like many other people, I can spend an hour in a CD store and not find any CDs I'd like to listen to, even when I'm in a mood to spend, spend, spend. If you think 10% of music doesn't blow then you're very lucky - you're easily pleased. And yet you say "90% of most CD content blows" as if that was a bad thing. Weird.
Doesn't it make you feel good to know that our freedoms are protected by politicans, lawyers and journalists.
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.
maximise profits?
No. Companies, whether corporations, proprietorships, or partnerships, have the responsibility to do what the owners want as long as it doesn't break the law. In the case of partnerships and proprietorships it's usually the owner(s) who run the business. Corporations on the other hand have the responsibility to fulfill the requirements of the charter the corporation has been given as well. And since the first corporate charters were granted, to amoung others the Dutch East India Company and the British East India companies one of thise requirements for that the corporation had to serve the common or public good.
FalconShould there be a Law?
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?
All the winners of best recordings of the year in BBC Music Magazine were readily available in emusic as non DRMed files.
IANAL but write like a drunk one.