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Vivendi Calls iTunes Contract Terms "Indecent"
Bemopolis writes "Brace yourselves for a shocking revelation: The CEO of Vivendi, parent company of UMG, is not happy with the current deal with the iTunes Store. 'The split between Apple and (music) producers is indecent [...] Our contracts give too good a share to Apple.' The usual argument about older music priced at the same rate as new music is trotted out. No doubt UMG would prefer to make the former cheaper, while maintaining the current pricing for the latter. At least he had the decency not to claim that they were trying to defend their artists against predatory iTunes pricing. Or maybe he just misplaced the index card with that boilerplate on it."
(Where former = older music, latter = new music)
No doubt UMG would prefer to keep the current price for the former, while increasing the price for the latter.
There, fixed that sentence for you.
If Vivendi doesn't like the terms of the contract, no one is forcing them to renew. I don't see what this guy thinks he will accomplish by whining to the press.
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This looks like a case where a company is calling foul on a distributor. In a way, I guess Itunes is like walmart. If you want your music to sell online, you do it thru itunes. If not, you find your own way. Perhaps by not killing online radio.
import system.cool.Sig;
Silly question, but if the contract terms are unfair to UMG, then why the hell did they agree to them ?
...how can a company (UMG) that gets money for nothing be in such dire straits?
Half Word - Will Double, Wire Palindrome, San Francisco
They probably prediced the store to do about 10% of the sales they're actually doing, and thought Apple's profits seemed fair at that level. But the bigger pie only made them want a relatively larger piece.
So they get 70 Euro cents for every song for zero marginal cost. They get over 70% of the sale price, leaving the remaining <30% to cover costs plus a profit for Apple.
At least on a physical CD, they had the excuse of printing, transit, etc, etc to cover, but with this they just get a cheque every month for sitting on their backsides and doing sod all.
'The split between Apple and (music) producers is indecent [...] Our contracts give too good a share to Apple.'
Substitute "producers" for Apple and "artists" (musicians) for "producers".
I'm split on this one:
(1) If you think of it in terms of traditional retail, Apple is applying a 41% (.29 retail/.70 wholesale) markup. That sounds like a hefty markup at first, until you figure in Apple's cost of storage and delivery. While there is no "storage" and "delivery" in the traditional brick and mortar store sense, there is still server storage and bandwidth costs. I wonder what Apple's true costs (costs to music producers and IT costs to run iTMS) are on a per-track basis. Know that, and you can get a better grasp on the actual profit margin.
(2) If the deal is so bad for the producers, why did they go in on the deal in the first place?
The second point is more rhetorical, but the first one I think bears further study before deciding if the markup is excessive. Of course, getting Apple's per-track expenses will be damn near impossible so we'll have to settle for speculation and conjecture.
Government's idea of a balanced budget: take money from the right pocket to balance...oh who am I kidding?
I'm not quite sure what the story is here though. The CEO of a company wants his company to make more money? What a shocker.
Then they are free to pay for the hosting, bandwidth and UI design themselves and not have to outsource it to anyone else in the future. I'm sure that they will quickly realize that the initial investment and then continued operating costs would be more than they are paying to Apple.
This is the most entertaining news I've read all day! Thank you, submitter.
I have mod points but unfortunately "troll" doesn't quite fit, "offtopic" is too light, and there's no mod option for "horribly unfunny" or "epic fail", so I opted instead to comment.
iTunes is pretty decent. Yea people can complain about the media not working on the iPod, but I have an iPod (whether or not you think its the best or worst). But when it comes down to pricing, $.99 for a song isn't half bad. Some people may argue for lower prices, but when it comes down to it, its cheaper than some candy bars and honestly, I get more enjoyment from a song than a candy bar. Sometimes they price new albums somewhat high, especially if they don't have a lot of tracks. It's always nice to see like a 16 track album going for $9.99 (price of 10 & 1/11 songs). (Now, if only eBook stores would do similar pricing, that'd be awesome.) Digital media SHOULD be a HELL of a lot more inexpensive than the physical media. iTunes does the distribution, storage, and virtually everything else involved with selling those songs. The record labels AREN'T DOING ANYTHING anymore. They don't have a right to the lion's share of the profit. Beyond that, they sell the music licenses to Apple, so Apple should be able to charge whatever they want. If Apple wants to charge more, its their right (though it'd be a bad move) and it's also their right to keep the rest of the profit. Now, chances are, the profits are probably in percentages and not flat dollar values and that's probably what is pissing the record labels off... Apple is selling them cheaply, so they're not making as much money. Apple isn't really making that much money off of iTunes either, so the labels shouldn't complain.
I'd love to see how much of that 70% makes its way to the artists. Perhaps Vivendi misunderstood where the "indecent" portion of the financial split exists...
I think the complaint is that they're basically loan sharks with lots of connections. You can't tour without a label because affiliated companies of the labels (Clearchannel) own a large percentage of the venues in the country. Granted you can always barhop and go to smaller venues, but that pretty much precludes doing it as a day job or getting that "superstar" status.
The idea that people couldn't produce their own records or with the help of a company that doesn't rip them off is getting more absurd by the day. What they really can't do is get those CDs into the hands of major distributors (owned by the record companies again) or get radio airplay (owned by the record companies) on anything outside of AM or college radio. For all of this what is the primary service of the record labels? To front some money to the band (not a salary, a loan) for the rights to everything they make and to get first cut on any money coming to the band. It sounds like you'd have to be crazy to take an offer like that, but really your choice is to wallow in obscurity for eternity or bend over and spread your cheeks for the big record company.
This is also why record companies find the internet to be so scary. Piracy is an issue, but the loss of control is a much more fundamental one. Even if it doesn't catch on directly, it gives bands more leverage at the bargaining table and that is the last thing the record companies want.
I read the internet for the articles.
You're looking at it the wrong way : the labels are like venture capital for musicians. They have to cover their up-front artist payment, marketing, music production (e.g. producers like the Neptunes who bill at 100K per finished minute of music), music video production, fulfillment systems, etc., in addition to the distribution cost. The cost to send the file is not what they're trying to recoup.
The credit card companies get 7 cents out of every song sold-it comes out of Apple's 'cut'.
Apple gets 15 cents out of every song sold and out of that they have to pay for bandwidth, web design and 1001 other things. Apple gets the smallest 'cut' of all. They claim they only break even on iTunes; that it exists to benefit the iPod-which is their big cash cow. Of course the record companies are ALSO botching abiut that-they want a 'cut' on every iPod sold!Greedy bastards!
So why not release the music in iTunes Plus? More money per song, and the customer gets a better product.
:)
OH WAIT! NO! That would make too much SENSE! Nevermind. I'll shut up now.
Similar to the upcoming US election results
What do we look like? Those monacle wearing, mongoid worshipping, tabloid devouring failed colonialists with bad teeth, the limeys?
We'd ask again, and be proud for doing it.
(And mods without irony sensors can byte me)
It's been a long time.
"I guess the moral of the story is, don't paint your airship with rocket fuel." -- Addison Bain