Steve Jobs, the co-founder and chief executive of Apple, is an emerging force in the mobile phone business, thanks to the snaking lines of gadget fans who queued up last week to buy the iPhone. But now he faces a headache in an industry Apple already dominates--digital music.
The Universal Music Group of Vivendi, the world's biggest music corporation, last week notified Apple that it will not renew its annual contract to sell music through iTunes, according to executives briefed on the issue who asked for anonymity because negotiations between the companies are confidential.
Instead, Universal said that it would market music to Apple at will, a move that could allow Universal to remove its songs from the iTunes service on short notice if the two sides do not agree on pricing or other terms in the future, these executives said.
Universal's roster of artists includes stars like U2, Akon and Amy Winehouse.
Representatives for Universal and Apple declined to comment. The move, which comes after a standoff in negotiations, is likely to be regarded in the music industry as a boiling over of the long-simmering tensions between Jobs and the major record labels.
With the shift, Universal appears to be aiming to regain a bit of leverage--although at the risk of provoking a showdown with Jobs.
In the four years since iTunes popularized the sale of music online, many in the music business have become discouraged by what they consider to be the near-monopoly that Jobs has held in the digital sector--the one part of the music business that is showing significant growth. In particular, Jobs' stance on song pricing and the iPod's lack of compatibility with music services other than iTunes have become points of contention.
By refusing to enter a long-term deal, Universal may continue to press for more favorable terms from Apple or even explore deals to sell its catalog exclusively through other channels. If Universal were to pull its catalog from iTunes, Jobs would lose access to record labels that collectively account for one out of every three new releases sold in the United States, according to Nielsen SoundScan data.
But if Apple were to decide not to carry Universal's recordings, the music company would likely sustain a serious blow: sales of digital music through iTunes and other sources accounted for more than 15 percent of Universal's worldwide revenue in the first quarter, or more than $200 million. (Vivendi does not break out revenue from Apple alone).
If push came to shove and Universal decided to remove its catalog from iTunes, it might not necessarily instigate a broader insurrection against Apple. The second-biggest corporation, Sony BMG Music Entertainment, recently decided to sign a new one-year contract making its catalog available to iTunes, according to executives briefed on the deal. A spokeswoman for the company, a joint venture of Sony and Bertelsmann, declined to comment.
Some industry observers have cautioned against taking on Jobs directly. "When your customers are iPod addicts, who are you striking back against?," said Ken Hertz, an entertainment lawyer who represents artists like Beyonc? and the Black Eyed Peas. "The record companies now have to figure out how to stimulate competition without alienating Steve Jobs, and they need to do that while Steve Jobs still has an incentive to keep them at the table."
But other music industry executives say the major labels must take a harder line with Apple at some point if they are to recalibrate the relationship. In particular, they say, it is unfair for Jobs to exert tight control over prices and other terms while profiting from the iPod. Jobs, in February, noted that less than 3 percent of the music on the average iPod was bought from iTunes, leading music executives to speculate that the devices in many instances are used to store pirated songs. (Of course, users can also fill their players with songs copied from their own CD collections.)
Apple has now sold more than 100 million iPods, and the device's ties to iTunes have helped make Apple the leading seller of digital music by a wide margin. The iTunes service accounts for 76 percent of digital music sales, and the contract talks come as it is on the rise--Apple recently surpassed Amazon.com to become the third-biggest seller of music over all, behind Wal-Mart and Best Buy, according to data from the market research firm NPD.
All of that has transformed Apple into a prominent gatekeeper, wielding influence as a tastemaker by highlighting selected artists on iTunes storefront, and as an architect of the underlying business dynamics.
Apple has stuck to a pricing system that charges a flat 99 cents for a song since iTunes started four years ago (except for the recent introduction of songs without copy protection, which carry a higher price). Jobs has long argued that a uniform system and low prices will invite new consumers and reduce piracy.
But some music executives have been chafing at the flat rate that Apple has insisted upon in its contracts with the big record labels, and they have been pressing publicly or privately for the right to charge Apple more for popular songs to capitalize on demand or, in the event of special promotions, to charge less. Edgar Bronfman Jr., the chairman of Warner Music Group, reinforced that idea at a recent investor conference, saying "we believe that not every song, not every artist, not every album, is created equal."
In the backdrop of the pricing dispute is an investigation by European regulators who are studying the roles of the music companies and Apple in setting prices in certain international markets.
At the same time, 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.
so what I gather is.....steve doesn't want the record companies to release their songs to other formats..yet they are all excited about keeping the music exclusively itunes? wow that won't spread piracy at all...nope.
UMG ... RIAA ... pricing control ... With <i><b>all that we know</ b><font color="DD33DD"> I cannot believe you would make such an <b>idiotic statement</b></font></i>. And "NO", I won't be apologizing for that comment!
I don't want to "reply" to the prior post, because this needs to be out in front. Apple DOES NOT HAVE A MONOPOLY ON MUSIC. Looked the flippin' word up, already? There are DOZENS of online stores. People CHOOSE iTunes. IT IS UNIVERSAL'S FAULT THAT THEIR MUSIC IS LOCKED INTO THE iPOD. Universal insists on DRM, not Apple. EMI went DRM free, and EMI's music on iTunes can be played on ANY MP3 player because of it. Universal wants ONE THING, and it appears that they're willing to lie in order to get it. Universal wants to RAISE PRICES, and nothing more. Hey, Universal, the public isn't stupid. You follow through with this, and I'll never buy ANYTHING, in ANY FORMAT from you again. Capishe?
Universal, you spend millions on useless advertising, and pointless promotions.
Universal, you want to restrict your customers' choice like supermarkets clearing shelves of products so they can sell others nobody's buying because they're garbage!
Universal, when are you going to respect your customers and your products more than you say you do?
I didn't CHOOSE iTunes. I was forced into it with the purchase of my iPod. Believe me, if there was a better way to put content on my iPod, I would drop iTunes in a heartbeat.
Think about it this way, if iTunes is so wonderful, then why not let every MP3 player on the market access it? If the iPod is so great and wonderful, where is the harm in letting other music stores access it?
Yes I know I can burn my iTunes AAC+ to CD and then rip to MP3 for unprotected version, but that seems to be retarded and un-necessary... glad EMI had some common sense to remove the DRM and allow free access to the purchased songs.
Now I agree that wanting to charge more for other songs is a REALLY bad move. A flat rate per song has pretty much become the accepted standard. They have to realize that the old way of doing business doesn't work in the music world. They are not selling a physical product, there is no overhead... that's the beauty of digital, upload the master track and it can then be downloaded infinitely without the need to produce anything like CD's, cases, booklets and then package it up, put it on a truck and ship it out to retail stores.
You sound more like an APPLE fan than a MUSIC fan and in a way that's very sad when dealing with a music issue.
I'll bet if I played the Universal Studios trademark theme, you'd recognise it immediately, and agree that it is played at the END of all Universal productions. Can you un-ring that bell? I can't. Can iTunes display, BEFORE purchasing, who the production company is, so you can make an informed decision? I think not. I'm not even sure that it's entered in the DRM metadata of the song itself. More likely it's just going to mention Verisign or another e-certificate company. So, how can any boycott begin?
Am I the only one that finds this just the smallest bit idiotic?
Universal makes music, not iPods, not MP3 players. Universal feels entitled to profits from the iPod, a product they have no involvement in creating, marketing, or owning in any way shape or form.
So, according to Universals' thinking, Disney, TimeWarner, Comcast, Viacom, CBS, NewsCorp should all be entitled to profits for each TV, cable box, CD player, DVD player, Zune, Zen, etc. sold?
Universal just is po'ed that they are stuck in a market where they have a product most customers are poo'poo-ing and have no MP3 player to call their own, simple as that. I hope Steve sticks to his guns, and calls Universals' bluff.
I don't agree or side with no one, but you can compare your way to this one. Apple had nothing to do with creating the AT&T network, yet they will get money from it, a piece of the pie from the subscription fees because Apple froced them to, or bend their arm I guess is a better term to use.
Same boat, human greed knows no bouds, I guess that's called good business, huhhh ?
For that idiotic business practice. I felt they did for this very reason, when that fact came to light <i>(portion of an iZune sales goes to the RIAA)</i>.
i use my iPod to listen to music from my CDs. i still have a $25.00 balance(birthday gift) @ iTS from nearly a year ago because i don't listen to pop music. being a big jazz fan, i just haven't taken the time to investigate Apple's jazz catalog. & the podcasts(free) i've dl'd are in my 'puter--not my iPod. i say go Steve!! keep the buy & burn/own model & the prices as they are. BUZZ OFF labels!!
I have like 20 Gigs of music on my Ipod, and way less than 3% of it was downloaded off of Itunes or any other service. There are several good reasons for this (e.g., my pre-existing CD collection, and DRM!).
It is really annoying to have record executives "speculate" that I and others like me are theives. Makes me sorta wish I had pirated the music instead of line the pockets of people who would so cavalierly accuse their customers.
This idiot Brofman Jr. needs to go back and run his daddy's segrams distillery where he would be much happier with the profit margin from liquor sales. This guys problem is the fact that he is embarrassed by a non music executive clout in the music business, and his ego is bruised that he can't swing for the fence like the big boys and hold sway. Grant you..., jobs has a huge ego as well, however, the difference is that Jobs swings for the fence and connects, while Brofman swings for the fence and whiffs, and he complains that the reason he whiffed was the fact that the ball had scuff marks on it because Jobs had hit it first. (sorry for the baseball analogy) Brofman was so privilege when growing up that he skipped college, because he knew he had daddy's money, and a high paying executive job waiting for him. In the summer before his junior year in high school, Bronfman went to London to work on a feature film, arranged partly through his father's connections at MGM.(wp)
Bottom line...., to brofman it's about prestige and bragging rights. Right now..., he's not getting any love...., poor thing.
I say dump Universal, cement the other relations with the other music groups at Universals expense. Sink or swim!
I'm sure there are plenty of other music stores (Rhapsody , Uhhh..., what are the others name?) that would love to have an exclusive deal with brofman. I hope they just don't bend over to pick up the soap in the shower at brofmans new executive shower. Read more about the privilege life of Brofman here... <a class="jive-link-external" href="http://en.wikipedia.org/wiki/Edgar_Bronfman,_Jr" target="_newWindow">http://en.wikipedia.org/wiki/Edgar_Bronfman,_Jr</a>.
I don't buy music online, and I'm not stuck using iTunes to connect to my iPod (shuffle). Right now I use Banshee to manage my music and if the Google Summer of Code is successful then I'll be able to use Banshee on my Windows machine too! (<a class="jive-link-external" href="http://code.google.com/soc/2007/mono/appinfo.html?csaid=8FEB3D742773D35" target="_newWindow">http://code.google.com/soc/2007/mono/appinfo.html?csaid=8FEB3D742773D35</a>)
... at selling music online beofre iTunes? Answer, not at all. I recall the PDA I bought two years before iTunes. I wanted to buy music legally on line but there was nowhere to do so (that sold anything in the least bit mainstream). Only Apple solved that problem. The record companies screwed it up royally.
That Zune $1 per unit gave Universal too much confidence
I'm pretty sure after Universal struck that deal with Microsoft, they felt they'd be able to exact similar concessions from Apple.
These guys are seriously out of alignment. Amidst rampant digital piracy, the one man that offers them a sustainable way to continuing profiting from the music they own is now the guy they want to beat down?
It's bizarre they want to jeopardize the whole thing by sabotaging iTunes catalog. ITunes/iPod would probably survive, but Universal could find its profits further decimated.
. . . I think you're on to something! Universal is just pissed off because they only made a couple hundred thousand dollars off of that "$1 per Zune" deal ;-)
It is ridiculous for music companies to charge what they do for a music CD.
The Music industry needs to quit cribbing about piracy and realize that their pricing and market segmentation strategies are to blame.
Folks copy music not because it is cool, but because copyrighted music costs an arm and a leg. It is also ridiculous for these companies to talk about expenses in developing and supporting talent. They spend too much on too many people, and their inability to manage costs and finding innovative ways to market their products and services is no reason to charge the customer more.
I am NOT suggesting that piracy is right nor am I saying that it is answer, servicing the top chunk of the market segment, leads to the gray market, since there is no supply to meet the demand (micro economics 101) in these segments.
So if Apple has found a way to meet that demand, quit cribbing and toe the line, unless you have a better way to do it.
Going from past experiences, I haven't seen nor heard anything from the music industry of a strategy to sort this out.
Fighting piracy is not in the billions of $$ poured on laws, lawmakers, DRM and the rest of the muck, its all about pricing and market segmentation.
I wouldn't worry too much about Universal telling Jobs to buzz off for too long seeing as they really need iTunes to keep their heads above water. Online music is the wave of the future, not CDs sold in stores, and right now iTunes is the most popular place to get them...still at an unreasonable rate of .99 each, but MUCH better than Universal's scantily clad method of raising prices called "allowing them to charge more for popular songs and give deals for others." Read: they will jsut charge more for any song you will want and will give away the crap no one wants for a bargain so they can say "songs starting at 49 cents".
I would like to see the record companies continued downward spiral and contribute to it by not buying music from them. Consumers have spoken for years about the outrageous price for music, the companies have chosen to ignore them, and now they are paying the price. Good riddance; which is probably what Jobs will say too.
...the main reason why this is happening in the first place, i.e., that the agreement between MSFT-ZUNE and Universal calling for a per-unit royalty, made Universal realize that their original deal with AAPL was a charity case - not business.
That's called a bad business decision on Brofmans part. If he had any real insight into how the music industry really worked in a consumer world, he would have been ahead of the game now. Now he's in the deep end of the pool, grasping for the life preserver. Too bad he can't call Dad to bail him out of a hole again. Even if he did manage to extract more money from songs sold, do you really think the artist would get their fair share of the profit? Not hardly..., brofman would just go out and get him a new Brofmobile.
Apple sells half as many iPhones (iPods) in two days as Microsoft has sold Zunes since they were released, and that turns Universal's head? If that is true, the Universal is truly clueless.
The music industry needs to lighten up. For one, they wouldn't have the know-how to bring music together to a platform that was somewhat universal.
If anything, Sony has proven that you can't control your music and the devices at the same time (read: ATRAC, MiniDisc, Bean; despite the fact that they were all good products, but that's another argument).
The industry should actually be thankful to Jobs for bringing music to the masses in such a way that is not only cool to own, but the colors aren't that bad, either.
Speaking for myself, I'll never own an iPod for the simply reason that I don't use iTunes - I use Rhapsody and subscribe to my music. But let's not forget who started this lame mini-war to begin with: if the music labels were a bit more tuned in with today instead of keeping things so tight like security at Auschwitz, they'd be a lot happier and I'm pretty sure the consumer would be, too.
Speak with your dollars people! Universal wants to go back to a model where consumers had no choice, and prices were kept articially high. And very little of those music sales went to artists anyway.
The iTunes/iPod model WORKS. I'm 41, and this is the way I've envisioned music sales since I was 20. There are many ways for me to purchase music. I can buy a CD from a variety of retailers, both Brick and Morter as well as online. I can purchase digital downloads from numerous online digital retailers. I can rip my CDs and store them on any number of fine MP3 players from Creative, Sony, etc. I can buy a Zune. I have choice. Plenty of choice...
I choose iPod/iTunes!
The entire transaction is simple from purchase to actual listening. The price, for once in my 41 years, is fair in my opinion. I will never go back to buying CDs. I do not want to manage physical media anymore. It's simply DUMB in this day and age, like using floppy disks.
Instead of Universal ROBBING the consumer, they may have to try a strategy of (get this) EARNING MY MONEY! If Universal wants more profits, they can:
- Charge extra for lyrics with the iTunes download, so it shows on my iPod. - Sell music videos of my favorite songs. - Sell expanded album art. - Sell higher bit-rate songs for the $1.29 price.
Apple, do not cave into Universal. Microsoft was foolish to give in to their $1.00 fee per Zune sold licensing scheme. I mean, what if I never bought a Universal song?! I paid them a dollar FOR NOTHING!
I was once on the Napster network when it was illegal. Most of what I downloaded from Napster were old singles here and there from my youth. Not much really to make a dent in a company's music sales. Most of those old songs aren't even on retailer's shelves anymore, especially in singles format. But when iTunes came along, I erased Napster from my computer, and have never signed up with another illegal music sharing site. I felt that $.99 per song was reasonable, and I was GLAD to pay it.
- Charge extra for lyrics with the iTunes download, so it shows on my iPod.
I don?t know about this one, the karaoke novelty of it all might sell for the simpletons. If I need to know lyrics there are plenty of free websites out there that will give me the lyrics.
- Sell music videos of my favorite songs. Music videos are large files, not to mention YouTube, artists websites, promoters, MySpace, and other music oriented websites give music videos away for free.
- Sell expanded album art. I can appreciate this as a legitimate cost for making a CD, but I personally am not going to buy CD case sized art.
- Sell higher bit-rate songs for the $1.29 price. This is probably the most pragmatic suggestion you made, however I don?t see higher bit-rate songs going that cheap. Bandwidth costs go up with the increased download size.
Apple should throw Universal out of the iTunes store if they don't agree to everything Apple demands. Universal has far more to lose: people buy a track or two on iTunes then buy the CD at Best Buy (#2 music seller, for now), and Wal-Mart (#1). If they can't get this stuff on iTunes they just buy something that they can.
Apple has the leverage and should use it. Universal deserves a spanking.
The consumer will be the one Universal is screwing over, not Apple
Hey, if I want a song and it isn't available from iTunes, I can just as easily pirate it through a P2P network. The record company will be screwing over the consumer and the artist, not the consumer who is pirating their content. Bring it on Universal!
Universal has it backwards. $1 per song is the cost of providing a service and paying a royalty. Since popular songs get downloaded more, they are more profitable for iTunes to keep on its servers, and therefore they should logically cost LESS per download. Unpopular songs, individually, might not even be worth keeping on the server, since the storage costs may be higher than the profit from the few downloads. To compensate, they should logically cost MORE per download.
However, the flat iTunes price structure has the effect that easy profits from popular songs subsidize the existence of a huge library of less-profitable less-popular songs. This benefits everyone, since nobody spends his entire life listening exclusively to the current smash hits. Flat pricing allows songs to have a half-life of more than 3 weeks. This benefits our culture, and the artists, and the recording industry.
Hey, idiots at Universal! Popular songs ARE worth more, because they get DOWNLOADED more. Sell more units; make more money. Why is that too hard for your pigeon brains? Now you want to charge more per download, too? Sheesh, talk about greedy!
I also am in complete agreement with the previous poster. iTunes is the preferred method for tens of millions of consumers to feel comftorable <i>legally</i> getting their content online. <i>The only people UMG would be hurting <b>are</b> the consumers!!</i><p>Their arrogance, and greed is astounding! No inventory, no shipping, no old-school (expensive) marketing. New acts can debut, with low-overhead. All new acts should sign with online stores just like iTunes, not these guys. We also no that app. 75 cents, of the 99 cents purchase price goes to the RIAA. That was the cost breakdown at the inception of iTunes. With <i><b><font color="green">over a billion tracks sold through iTunes at a gross profit of 75 cents each, with little or no overhead</font></b></i> it seems downright stupid for UMG to threaten the people who are purchasing there labeled content!.
Listen, I think the label has the upper hand here. If I'm a fan of U2, and a user of ITunes...and Apple no longer carries U2 music, I'm simply going elsewhere to make my purchase of an MP3. I'm not going to just shrug and say "Oh, well, it's not on ITunes so I just can't have it." (Of course, I'm not an Ipod owner...maybe Ipod owners, in general, dont know you CAN actually go to other sources for music? In that case I retract and laugh.)
On the other side of the coin...Universal can simply hand U2 Content to the highest bidder, and count on the fact that people follow the band- NOT the technology.
U2 could tell Jr. and Universal to go "F**k" themselves and sign with Apple.
In fact, the rise of the digital age make all the record labels and the entire RIAA less and less relavant as time goes on. Why should artists pay these pr*cks the lions share of the money made from their hard work when they aren't even making physical records or CD's any more?
Are you stupid!?!? If Apple softens and gives into the ******** demands of the music industry are you really willing to pay MORE of your hard earned cash for music. As it is 16 bucks for a CD is reasonable...please!!! You should be thanking Apple and iTunes for ALLOWING you to purchase music from other stores and at the 99 cents rate you do today. If it wasnt for Apple, the iPod, and iTunes other companies would have gotten such sweet deals as they did...Name me one time that another music company...a real one, dont give me mp3.com ****...came out with its own pricing deal BEFORE Apple had already secured a contract for iTunes...99 cents, TV shows, Movies, Podcasting (by relation), 1.29 DRM free higher bitrate songs, ... What was that...oh that was the silence of your dumb Zune using ass realizing that Apple has done more good for ALL MP3 player users than any other company yet. Thank you...
To sell more, work out a deal with Apple to have a Universal Music Tab in iTunes so people looking for Universal Artists can find them easier.
Universal can then make the artists they want to push have a more prestigious location in iTunes. They can add more benefits to users who choose the universal tab and view the contents... like extended coverflow or free videos available only if someone downloads the entire album. (More sales of songs people aren't interested in)
All major record labels should have their own tabs and compete on iTunes for consumer attention.
There can be a Tab just for Indie labels and anybody can post content that gets more attention as more people download the songs with royalties going directly to the independent artists. (First Major label to figure out how to take advantage of this to contract the next upcoming star wins)
There are tons of ways the Music industry can use Web 2.0 and iTunes to make a ton of money... no need to be narrow minded.
If Universal stopped working with iTunes, the only loser would be Universal. As an iTunes listener and buyer, I can assure you that there's a lot of great music out there -- more than I can discover in the time I allot -- and if Universal artists aren't exposed on the largest online music outlet there is, I just won't discover those artists, will I? How long will it take for artists to abandon Universal for some other label -- or do with a lot of new artists are doing and abandon the labels entirely and sell direct to their fans.
It seems Universal doesn't realize the ground has shifted under their feet. Dinosaurs.
This is a very interesting negotiation tactic by Universal: It finds Apple at their most vulnerable in years. The Great iPhone just launched and iPods are doing better than ever. They can't afford a major provider to pull their services right now. Of course, UMG can't afford to lose such a lucrative digital market (as iTunes provides), either.
Obviously, Universal songs aren't going away from iTunes anytime soon, but it proves just how fragile the relationship between Apple and the record labels are.
Before this move, I think it always looked as if the labels are in need of iTunes, but this highlights just symbiotic their relationship is: UMG needs the digital sales, but iTunes needs UMG's artists (Eminem, Mariah Carey, Janet Jackson, Gwen Stefani, Bob Marley & the Wailers etc.) just as much to be successful.
Like I said before: Clever negotiating tactic by Universal, whether I agree with it or not.
P.S. www.coolfer.com has a great write-up of this.
Steve Jobs is the perfect example of why monopolies need to be crshed. Apparently he learned his business practices from Microsoft, who once loaned him $100 million to ensure that there was another personal computer ccompany around they could point to whenthe Feds characterized them as a monopoly. Unfortunatelt, rather than compete against Microsoft, Jobs has simply moved Apple into greener pasture to establish a monopoly, with his "company store" called itunes that his loyal and oh so gullible and tractable following continue to enrich. Between Apple and Microsoft, the entire personal computer/entertainment business is a licnse to steal - the iphone's 55% windfall profit wouldn't be tolerated from an oil company. So how does Jobs avoid those anti-trust investigations? I think its high time the Feds started looking into Job's sleazy behavior.
How is Jobs a fool. The man is a billionaire. Have you done better than he has?
Apple is hardly a monopoly. And even if it was, it's not illegal if they don't restrain anyone's trade. Which Apple has not - other than making a player and user experience that is so vastly better than any other product that people would be fools to use anything else.
Unless by fool you mean what you said about Jobs.
BTW, it was $150 million of non-voting stock that Microsoft bought as part of an agreement to make Office for Mac for at least five years. That was in 1987, and they made quite a tidy profit from that investment.
Apple's profits were in the toilet back then, but their income was in the billions. That kind of chump change made no difference as to whether Apple would, or would not, continue to do business.
By the way, when you talk about the "company store" (which is the fastest growing, most profitable per square foot company in the history of the US), I get the impression that maybe you worked at one of those old independent Apple stores.
You know, the ones that had prices jacked way up over MSRP, that didn't carry much in the way of inventory or selection, and had technicians who showered maybe once a week whether they needed it or not.
The kind of stores with dusty shelves in grimy buildings on back streets next to places like Ho Jin's Asian Massage Parlor.
Jobs turned what is essentially a commodity product into a brilliant fashion and status symbol. MS has tried with Zune, pocket PCs etc, etc. You DON'T have to buy ant Aplle products in the way that you're locked into MS Windows or Vista or whatever crap thety come up with. Jobs is a brilliant marketer/promoter in the best tradition of good old American capitalism. If you can't recognize or appreciate that then you're the fool, not him.
Jobs, in February, noted that less than 3 percent of the music on the average iPod was bought from iTunes, leading music executives to speculate that the devices in many instances are used to store **pirated** songs. (Of course, users can also fill their players with songs copied from their own CD collections.)
I don't spend money on iTunes, and I'm not a pirate. My entire MP3 collection is backed up in hard form by genuine CD or Vinyl. Piracy is rife, but don't go assuming that **everyone** is part of the problem.
The music industry used to force customers to buy a whole album just to get one hit song. iTunes has made the market for songs more efficient with a la carte pricing and purchasing, so people aren't buying those album filler songs anymore. So the music industry wants to recoup their losses by charging more for the hit song that was the focus of the original album sale.
I stumbled across this article and cannot understand why a record company label whatever would be concerned about selling their tunes! Think about it. iTunes is one company's tool that provides functionality with the added benefit of purchasing 3rd party media - Apple does not make all the profit- to users. Apple designed the tool and the pod so they deserve to benefit. MIllions of people have made the pod a hit so what? Would the music companies rather you download it all for free??? It is sad that the world has allowed microsoft to completely take over with mediocre product dupe the masses into believing that it is the ONLY OS worth having all the while they hold a lock on the market and actually, rightfully so since the masses allowed it. Yet, in this case, the ipod, THE KING of MP3 players, allows for increased profit channel for these companies. They should be thanking Apple not attacking. The real issue is that they would love to cut Apple out of their piece of the action thru iTunes, create their own online store and get it all But the ipod was designed with 2 parts - pod and tunes and the other junk doesn't matter. Two years ago I bought my first pod. A friend bought a cheaper mp3 player. Now, this may NOT be the case in every situation but when I bought my pod and purchased songs I was able to keep my songs. He, on the other hand, was not. His software part of the experience only allowed for loading into the player. Things may have changed in the past few years but I realized like so many others that iTunes is well thought out and works well. The iPod is the ONLY mp3 player I would even consider and record companies need to enjoy their profit percentage. I am sure that they get the most of the sale anyway.
The company says that manufacturing facilities in Shenzhen and Chengdu, China, will be inspected by a group "dedicated to ending sweatshop conditions in factories worldwide."
The Samsung Galaxy Mini 2 S6500 could make its debut at the Mobile World Congress in Barcelona later this month, according to a leaked promotional image.
The space agency powers down its last System Z machine, years after IBM stopped selling them for the mathematical calculation jobs for which NASA originally bought them.
Mozilla plans to release a beta version this year for Microsoft's upcoming Windows interface. It'll be a lot of work, but Mozilla doesn't really have a choice.
release their songs to other formats..yet they are all excited about
keeping the music exclusively itunes? wow that won't spread
piracy at all...nope.
b><font color="DD33DD"> I cannot believe you would make such
an <b>idiotic statement</b></font></i>. And "NO", I won't be
apologizing for that comment!
out in front.
Apple DOES NOT HAVE A MONOPOLY ON MUSIC.
Looked the flippin' word up, already?
There are DOZENS of online stores. People CHOOSE iTunes.
IT IS UNIVERSAL'S FAULT THAT THEIR MUSIC IS LOCKED INTO
THE iPOD.
Universal insists on DRM, not Apple.
EMI went DRM free, and EMI's music on iTunes can be played on
ANY MP3 player because of it.
Universal wants ONE THING, and it appears that they're willing to
lie in order to get it.
Universal wants to RAISE PRICES, and nothing more.
Hey, Universal, the public isn't stupid. You follow through with
this, and I'll never buy ANYTHING, in ANY FORMAT from you
again.
Capishe?
Universal, you want to restrict your customers' choice like supermarkets clearing shelves of products so they can sell others nobody's buying because they're garbage!
Universal, when are you going to respect your customers and your products more than you say you do?
Think about it this way, if iTunes is so wonderful, then why not let every MP3 player on the market access it? If the iPod is so great and wonderful, where is the harm in letting other music stores access it?
Yes I know I can burn my iTunes AAC+ to CD and then rip to MP3 for unprotected version, but that seems to be retarded and un-necessary... glad EMI had some common sense to remove the DRM and allow free access to the purchased songs.
Now I agree that wanting to charge more for other songs is a REALLY bad move. A flat rate per song has pretty much become the accepted standard. They have to realize that the old way of doing business doesn't work in the music world. They are not selling a physical product, there is no overhead... that's the beauty of digital, upload the master track and it can then be downloaded infinitely without the need to produce anything like CD's, cases, booklets and then package it up, put it on a truck and ship it out to retail stores.
You sound more like an APPLE fan than a MUSIC fan and in a way that's very sad when dealing with a music issue.
<b>Interesting</b>
Universal makes music, not iPods, not MP3 players.
Universal feels entitled to profits from the iPod, a product they have no involvement in creating, marketing, or owning in any way shape or form.
So, according to Universals' thinking, Disney, TimeWarner, Comcast, Viacom, CBS, NewsCorp should all be entitled to profits for each TV, cable box, CD player, DVD player, Zune, Zen, etc. sold?
Universal just is po'ed that they are stuck in a market where they have a product most customers are poo'poo-ing and have no MP3 player to call their own, simple as that. I hope Steve sticks to his guns, and calls Universals' bluff.
this one. Apple had nothing to do with creating the AT&T
network, yet they will get money from it, a piece of the pie from the
subscription fees because Apple froced them to, or bend their arm I
guess is a better term to use.
Same boat, human greed knows no bouds, I guess that's called
good business, huhhh ?
reason, when that fact came to light <i>(portion of an iZune sales
goes to the RIAA)</i>.
balance(birthday gift) @ iTS from nearly a year ago because i don't
listen to pop music. being a big jazz fan, i just haven't taken the
time to investigate Apple's jazz catalog. & the podcasts(free) i've
dl'd are in my 'puter--not my iPod. i say go Steve!! keep the buy &
burn/own model & the prices as they are. BUZZ OFF labels!!
It is really annoying to have record executives "speculate" that I and others like me are theives. Makes me sorta wish I had pirated the music instead of line the pockets of people who would so cavalierly accuse their customers.
segrams distillery where he would be much happier with the
profit margin from liquor sales. This guys problem is the fact
that he is embarrassed by a non music executive clout in the
music business, and his ego is bruised that he can't swing for
the fence like the big boys and hold sway. Grant you..., jobs has
a huge ego as well, however, the difference is that Jobs swings
for the fence and connects, while Brofman swings for the fence
and whiffs, and he complains that the reason he whiffed was the
fact that the ball had scuff marks on it because Jobs had hit it
first. (sorry for the baseball analogy)
Brofman was so privilege when growing up that he skipped
college, because he knew he had daddy's money, and a high
paying executive job waiting for him.
In the summer before his junior year in high school, Bronfman
went to London to work on a feature film, arranged partly
through his father's connections at MGM.(wp)
Bottom line...., to brofman it's about prestige and bragging
rights. Right now..., he's not getting any love...., poor thing.
I say dump Universal, cement the other relations with the other
music groups at Universals expense. Sink or swim!
I'm sure there are plenty of other music stores (Rhapsody ,
Uhhh..., what are the others name?) that would love to have an
exclusive deal with brofman. I hope they just don't bend over to
pick up the soap in the shower at brofmans new executive
shower.
Read more about the privilege life of Brofman here...
<a class="jive-link-external" href="http://en.wikipedia.org/wiki/Edgar_Bronfman,_Jr" target="_newWindow">http://en.wikipedia.org/wiki/Edgar_Bronfman,_Jr</a>.
they felt they'd be able to exact similar concessions from Apple.
These guys are seriously out of alignment. Amidst rampant
digital piracy, the one man that offers them a sustainable way to
continuing profiting from the music they own is now the guy
they want to beat down?
It's bizarre they want to jeopardize the whole thing by
sabotaging iTunes catalog. ITunes/iPod would probably survive,
but Universal could find its profits further decimated.
Universal is just pissed off because they only made a couple
hundred thousand dollars off of that "$1 per Zune" deal ;-)
The Music industry needs to quit cribbing about piracy and realize that their pricing and market segmentation strategies are to blame.
Folks copy music not because it is cool, but because copyrighted music costs an arm and a leg. It is also ridiculous for these companies to talk about expenses in developing and supporting talent. They spend too much on too many people, and their inability to manage costs and finding innovative ways to market their products and services is no reason to charge the customer more.
I am NOT suggesting that piracy is right nor am I saying that it is answer, servicing the top chunk of the market segment, leads to the gray market, since there is no supply to meet the demand (micro economics 101) in these segments.
So if Apple has found a way to meet that demand, quit cribbing and toe the line, unless you have a better way to do it.
Going from past experiences, I haven't seen nor heard anything from the music industry of a strategy to sort this out.
Fighting piracy is not in the billions of $$ poured on laws, lawmakers, DRM and the rest of the muck, its all about pricing and market segmentation.
Regards,
CJ
I would like to see the record companies continued downward spiral and contribute to it by not buying music from them. Consumers have spoken for years about the outrageous price for music, the companies have chosen to ignore them, and now they are paying the price. Good riddance; which is probably what Jobs will say too.
Gene from ZuneChannel.com
If he had any real insight into how the music industry really
worked in a consumer world, he would have been ahead of the
game now.
Now he's in the deep end of the pool, grasping for the life
preserver. Too bad he can't call Dad to bail him out of a hole
again. Even if he did manage to extract more money from songs
sold, do you really think the artist would get their fair share of
the profit? Not hardly..., brofman would just go out and get him
a new Brofmobile.
has sold Zunes since they were released, and that turns Universal's
head? If that is true, the Universal is truly clueless.
If anything, Sony has proven that you can't control your music and the devices at the same time (read: ATRAC, MiniDisc, Bean; despite the fact that they were all good products, but that's another argument).
The industry should actually be thankful to Jobs for bringing music to the masses in such a way that is not only cool to own, but the colors aren't that bad, either.
Speaking for myself, I'll never own an iPod for the simply reason that I don't use iTunes - I use Rhapsody and subscribe to my music. But let's not forget who started this lame mini-war to begin with: if the music labels were a bit more tuned in with today instead of keeping things so tight like security at Auschwitz, they'd be a lot happier and I'm pretty sure the consumer would be, too.
The iTunes/iPod model WORKS. I'm 41, and this is the way I've envisioned music sales since I was 20. There are many ways for me to purchase music. I can buy a CD from a variety of retailers, both Brick and Morter as well as online. I can purchase digital downloads from numerous online digital retailers. I can rip my CDs and store them on any number of fine MP3 players from Creative, Sony, etc. I can buy a Zune. I have choice. Plenty of choice...
I choose iPod/iTunes!
The entire transaction is simple from purchase to actual listening. The price, for once in my 41 years, is fair in my opinion. I will never go back to buying CDs. I do not want to manage physical media anymore. It's simply DUMB in this day and age, like using floppy disks.
Instead of Universal ROBBING the consumer, they may have to try a strategy of (get this) EARNING MY MONEY! If Universal wants more profits, they can:
- Charge extra for lyrics with the iTunes download, so it shows on my iPod.
- Sell music videos of my favorite songs.
- Sell expanded album art.
- Sell higher bit-rate songs for the $1.29 price.
Apple, do not cave into Universal. Microsoft was foolish to give in to their $1.00 fee per Zune sold licensing scheme. I mean, what if I never bought a Universal song?! I paid them a dollar FOR NOTHING!
I was once on the Napster network when it was illegal. Most of what I downloaded from Napster were old singles here and there from my youth. Not much really to make a dent in a company's music sales. Most of those old songs aren't even on retailer's shelves anymore, especially in singles format. But when iTunes came along, I erased Napster from my computer, and have never signed up with another illegal music sharing site. I felt that $.99 per song was reasonable, and I was GLAD to pay it.
Don't be a dinosaur, Universal. Evolve or die.
I don?t know about this one, the karaoke novelty of it all might sell for the simpletons. If I need to know lyrics there are plenty of free websites out there that will give me the lyrics.
- Sell music videos of my favorite songs.
Music videos are large files, not to mention YouTube, artists websites, promoters, MySpace, and other music oriented websites give music videos away for free.
- Sell expanded album art.
I can appreciate this as a legitimate cost for making a CD, but I personally am not going to buy CD case sized art.
- Sell higher bit-rate songs for the $1.29 price.
This is probably the most pragmatic suggestion you made, however I don?t see higher bit-rate songs going that cheap. Bandwidth costs go up with the increased download size.
Apple has the leverage and should use it. Universal deserves a spanking.
easily pirate it through a P2P network. The record company will be
screwing over the consumer and the artist, not the consumer who
is pirating their content. Bring it on Universal!
However, the flat iTunes price structure has the effect that easy profits from popular songs subsidize the existence of a huge library of less-profitable less-popular songs. This benefits everyone, since nobody spends his entire life listening exclusively to the current smash hits. Flat pricing allows songs to have a half-life of more than 3 weeks. This benefits our culture, and the artists, and the recording industry.
Hey, idiots at Universal! Popular songs ARE worth more, because they get DOWNLOADED more. Sell more units; make more money. Why is that too hard for your pigeon brains? Now you want to charge more per download, too? Sheesh, talk about greedy!
iTunes is the preferred method for tens of millions of consumers
to feel comftorable <i>legally</i> getting their content online.
<i>The only people UMG would be hurting <b>are</b> the
consumers!!</i><p>Their arrogance, and greed is astounding!
No inventory, no shipping, no old-school (expensive) marketing.
New acts can debut, with low-overhead. All new acts should
sign with online stores just like iTunes, not these guys. We also
no that app. 75 cents, of the 99 cents purchase price goes to the
RIAA. That was the cost breakdown at the inception of iTunes.
With <i><b><font color="green">over a billion tracks sold
through iTunes at a gross profit of 75 cents each, with little or
no overhead</font></b></i> it seems downright stupid for
UMG to threaten the people who are purchasing there labeled
content!.
seems fairly obvious.
On the other side of the coin...Universal can simply hand U2 Content to the highest bidder, and count on the fact that people follow the band- NOT the technology.
Apple.
In fact, the rise of the digital age make all the record labels and the
entire RIAA less and less relavant as time goes on. Why should
artists pay these pr*cks the lions share of the money made from
their hard work when they aren't even making physical records or
CD's any more?
PS - sorry to be so harsh but COME ON!!!
Music Tab in iTunes so people looking for Universal Artists can
find them easier.
Universal can then make the artists they want to push have a
more prestigious location in iTunes. They can add more benefits
to users who choose the universal tab and view the contents...
like extended coverflow or free videos available only if someone
downloads the entire album. (More sales of songs people aren't
interested in)
All major record labels should have their own tabs and compete
on iTunes for consumer attention.
There can be a Tab just for Indie labels and anybody can post
content that gets more attention as more people download the
songs with royalties going directly to the independent artists.
(First Major label to figure out how to take advantage of this to
contract the next upcoming star wins)
There are tons of ways the Music industry can use Web 2.0 and
iTunes to make a ton of money... no need to be narrow minded.
be Universal. As an iTunes listener and buyer, I can assure you
that there's a lot of great music out there -- more than I can
discover in the time I allot -- and if Universal artists aren't
exposed on the largest online music outlet there is, I just won't
discover those artists, will I? How long will it take for artists to
abandon Universal for some other label -- or do with a lot of
new artists are doing and abandon the labels entirely and sell
direct to their fans.
It seems Universal doesn't realize the ground has shifted under
their feet. Dinosaurs.
Obviously, Universal songs aren't going away from iTunes anytime soon, but it proves just how fragile the relationship between Apple and the record labels are.
Before this move, I think it always looked as if the labels are in need of iTunes, but this highlights just symbiotic their relationship is: UMG needs the digital sales, but iTunes needs UMG's artists (Eminem, Mariah Carey, Janet Jackson, Gwen Stefani, Bob Marley & the Wailers etc.) just as much to be successful.
Like I said before: Clever negotiating tactic by Universal, whether I agree with it or not.
P.S. www.coolfer.com has a great write-up of this.
learned his business practices from Microsoft, who once loaned him $100 million to ensure that
there was another personal computer ccompany around they could point to whenthe Feds characterized them as a monopoly. Unfortunatelt, rather than compete against Microsoft, Jobs has simply moved Apple into greener pasture to establish a monopoly, with his "company store" called itunes that his loyal and oh so gullible and tractable following continue to enrich. Between Apple and Microsoft, the entire personal
computer/entertainment business is a licnse to steal - the iphone's 55% windfall profit wouldn't
be tolerated from an oil company. So how does Jobs avoid those anti-trust investigations? I think its high time the Feds started looking into Job's sleazy behavior.
better than he has?
Apple is hardly a monopoly. And even if it was, it's not illegal if
they don't restrain anyone's trade. Which Apple has not - other
than making a player and user experience that is so vastly better
than any other product that people would be fools to use
anything else.
Unless by fool you mean what you said about Jobs.
BTW, it was $150 million of non-voting stock that Microsoft
bought as part of an agreement to make Office for Mac for at
least five years. That was in 1987, and they made quite a tidy
profit from that investment.
Apple's profits were in the toilet back then, but their income was
in the billions. That kind of chump change made no difference
as to whether Apple would, or would not, continue to do
business.
By the way, when you talk about the "company store" (which is
the fastest growing, most profitable per square foot company in
the history of the US), I get the impression that maybe you
worked at one of those old independent Apple stores.
You know, the ones that had prices jacked way up over MSRP,
that didn't carry much in the way of inventory or selection, and
had technicians who showered maybe once a week whether they
needed it or not.
The kind of stores with dusty shelves in grimy buildings on back
streets next to places like Ho Jin's Asian Massage Parlor.
Maybe not.
Surely not the informed consumer.
Why buying anything with DRM is giving up your freedom and asking to be ripped off.
Consumer beware.
intelligence. Have a nice day
I don't spend money on iTunes, and I'm not a pirate. My entire MP3 collection is backed up in hard form by genuine CD or Vinyl. Piracy is rife, but don't go assuming that **everyone** is part of the problem.
record company label whatever would be concerned about
selling their tunes! Think about it. iTunes is one company's tool
that provides functionality with the added benefit of purchasing
3rd party media - Apple does not make all the profit- to users.
Apple designed the tool and the pod so they deserve to benefit.
MIllions of people have made the pod a hit so what? Would the
music companies rather you download it all for free??? It is sad
that the world has allowed microsoft to completely take over
with mediocre product dupe the masses into believing that it is
the ONLY OS worth having all the while they hold a lock on the
market and actually, rightfully so since the masses allowed it.
Yet, in this case, the ipod, THE KING of MP3 players, allows for
increased profit channel for these companies. They should be
thanking Apple not attacking. The real issue is that they would
love to cut Apple out of their piece of the action thru iTunes,
create their own online store and get it all But the ipod was
designed with 2 parts - pod and tunes and the other junk
doesn't matter. Two years ago I bought my first pod. A friend
bought a cheaper mp3 player. Now, this may NOT be the case in
every situation but when I bought my pod and purchased songs I
was able to keep my songs. He, on the other hand, was not. His
software part of the experience only allowed for loading into the
player. Things may have changed in the past few years but I
realized like so many others that iTunes is well thought out and
works well. The iPod is the ONLY mp3 player I would even
consider and record companies need to enjoy their profit
percentage. I am sure that they get the most of the sale anyway.