Apple denies reports of Universal's iTunes standoff

[AppleInsider]

Apple is denying reports that record label Universal Music Group does not plan to renew its contract to sell songs on iTunes, according to the San Francisco Chronicle.

"We are still negotiating with Universal," Apple spokesman Tom Neumayr told the paper Monday afternoon. "Their music is still on iTunes and their not re-signing is just not true."

Citing "executives briefed on the issue," the New York Times on Monday morning reported that Universal, the world’s biggest music corporation, had notified Apple that it would not be renewing its annual contract with iTunes.

Instead, the newspaper said Universal would look to market music to Apple at will, which could allow the label to yank its songs from the iTunes service on short notice if the two sides do not agree on pricing or other terms in the future.

Apple and the major record labels have been wrestling over how much people should be charged per tune, with the iPod maker and its chief executive Steve Jobs advocating a simple 99-cents-each model while the music companies are demanding the freedom to charge different prices for certain songs and albums.

[ View this article at AppleInsider.com ]

[ciubecca]

Business 101. Use the press.

[jamezog]

Yep. Seems like SJ is doing some backpedaling today. You don't see this sort of thing from Apple very often.

I'll be interested to see how this one turns out...

EDIT: looks like not too many people on the market are noticing - share prices are still up on iPhone.

[walletinspector]

I'm not sure how Universal can possibly try to apply a supply and demand method for their music. I'll pay more for a higher quality file like what is being done with iTunes +, but I don't believe any music warrants a higher price over any other music.

[addabox]

I didn't get the impression that the original reports were coming from Apple (why would they?), so I don't think it's Jobs that's doing the "back peddling".

[Engine Joe]

Originally Posted by jamezog

Yep. Seems like SJ is doing some backpedaling today. You don't see this sort of thing from Apple very often.

Apple never said anything yesterday - the reports indicated that neither Universal or Apple had any comment. How can you backpedal from silence?

[Abster2core]

Originally Posted by jamezog

Yep. Seems like SJ is doing some backpedaling today. You don't see this sort of thing from Apple very often.

What makes you think that he is backpedalling?

[techno]

I think if Apple did leak the story it was to use the press to help put pressure on Universal. With public outcry it makes Universal look greedy and only gives Apple more leverage. If it was all done under the cover of night and we woke up with higher prices for music from Universal, who do you think would feel the brunt of the pain? Apple. And most people would complain and then either buy or steal, but it would be a done deal. Now, Apple can stand back and let Universal squirm a bit and most likely cave in.

[drtaxsacto]

Universal believes that they still control the system they helped develop. Several years ago David Kessler argued that as technologies change existing providers try to defend their turf. But almost always they fail at it. A short description of how Kessler works including a diagram of the cycle can be found at http://drtaxsacto.blogspot.com/2005/...child-for.html

If Universal wants to cut off 15% of its revenue - then so be it. In the end it probably will not pay for them.

[meelash]

hmmm.... Interesting.....

Universal exec is claiming that they aren't negotiating.

[digitalclips]

I am curious why Steve really cares if some tunes are 99 cents and some are say 125 cents or whatever. I may have missed his reasoning along the way and I am sure he has a good one. To me it seems to me no one would blame Apple if some artists cost more. We'd all know it was the label not Apple and either buy or not buy those that were priced higher. It's all about supply and demand at the end of the day. As I suggested in an earlier thread perhaps it's time for Apple Corp. to come back on line as part of Apple (which I suspect they are now) and offer artists an alternative distribution channel too.

[mugwump]

Without a contract, could Apple keep a greater share of the profits? Could Apple reduce the price of the songs? Apple needs to make a greater incentive for companies to sign year contracts with them, so Universal should be penalized or payment to them be reduced until they sign again.

[SpamSandwich]

Apple does NOT make a generous margin on every sale made through the iTunes Store. The main point is to give consumers a huge amount of choice to fill up their iPods. Even so, Steve himself has said that a miniscule percentage of the average iPod contains product sold to consumers via iTunes... which means that most people have "free" (aka unpaid for music) or music they've ripped themselves from their own CD collection.

[solipsism]

Originally Posted by digitalclips

I am curious why Steve really cares if some tunes are 99 cents and some are say 125 cents or whatever. I may have missed his reasoning along the way and I am sure he has a good one. To me it seems to me no one would blame Apple if some artists cost more. We'd all know it was the label not Apple and either buy or not buy those that were priced higher. It's all about supply and demand at the end of the day. As I suggested in an earlier thread perhaps it's time for Apple Corp. to come back on line as part of Apple (which I suspect they are now) and offer artists an alternative distribution channel too.

I think the answer is two fold...

• If Apple raised the prices per Universal's demands most people would simply blame Apple because they are the vendor. Not many are going to delve into the music industries politics in order to correctly focus the blame. They are simply going to pissed off at Apple and start to hate iTunes and possibility think about not buying another iPod.

• There is also Jobs desire to keep things simple for the consumer. I can tell you right now how much any 128kbps DRMed song on iTS costs withhout thinking twice. No one wants to check out iTS prices and then make a decision to see who has the best deal. And Universal could up that price if it became more popular while you were deciding.

[JeffDM]

Originally Posted by AppleInsider

Apple is denying reports that record label Universal Music Group does not plan to renew its contract to sell songs on iTunes, according to the San Francisco Chronicle.

It would have been nice if you'd link to the stories that you discuss:

http://sfgate.com/cgi-bin/article.cg...UGM5QPPLG1.DTL

Given that I've seen Apple PR say things that turned out to not be true, I'm not going to take Apple at their word either.

[vinney57]

Universal would have leaked the story, not Apple.

This had to happen at some point. A challenge to the potential Apple hegemony. The last throw of the dice for the record companies. Should be fun.

[vinney57]

Originally Posted by JeffDM

Given that I've seen Apple PR say things that turned out to not be true, I'm not going to take Apple at their word either.

No. Really? You must have been devastated.

[caliminius]

Originally Posted by SpamSandwich

Apple does NOT make a generous margin on every sale made through the iTunes Store. The main point is to give consumers a huge amount of choice to fill up their iPods. Even so, Steve himself has said that a miniscule percentage of the average iPod contains product sold to consumers via iTunes... which means that most people have "free" (aka unpaid for music) or music they've ripped themselves from their own CD collection.

You sound like that exec from Warner who called all iPod owners thieves. Just because people don't buy huge amounts of music from iTunes, it doesn't mean the remaining music is "free" (aka stolen). The majority of the iTunes content on my iPod was in fact free, the 2-3 free songs offered in the iTunes Store every week. The other 5000+ songs on my iPod were ripped from MY CD's (not borrowed or copied).

On the major topic, if anyone leaked the story, I would guess it was Universal. I don't really see what Apple would gain from leaking it; it would sort of be like Disney World announcing that 1/3 of the park won't be open any more soon. Apple has more to lose in this case. Imagine the hit the store will take if roughly 1/3 of the selection is suddenly gone. How many iTunes gift cards are going to be sold after that? People might actually be tempted to go elsewhere for their music, maybe even try out a Zune (okay, maybe that's not very likely, but still).

[JeffDM]

Originally Posted by caliminius

You sound like that exec from Warner who called all iPod owners thieves. Just because people don't buy huge amounts of music from iTunes, it doesn't mean the remaining music is "free" (aka stolen). The majority of the iTunes content on my iPod was in fact free, the 2-3 free songs offered in the iTunes Store every week. The other 5000+ songs on my iPod were ripped from MY CD's (not borrowed or copied).

I don't think that's what he meant. It's just a statement of reality, I think you are reading too much into it. Of course not everyone fills their iPod up with infringing copies of music, but there are plenty that do.

[JeffDM]

Originally Posted by vinney57

No. Really? You must have been devastated.

Um, no, but people here do put too much faith in what Apple says, particularly their denials, actually, sometimes any faith at all is too much. I think Apple PR is trying to be Orwellian, hoping that people don't remember when they said the opposite a week or two before.

[anantksundaram]

Originally Posted by ciubecca

Business 101. Use the press.

[SpamSandwich]

Originally Posted by JeffDM

I don't think that's what he meant. It's just a statement of reality, I think you are reading too much into it. Of course not everyone fills their iPod up with infringing copies of music, but there are plenty that do.

You are correct.

[anantksundaram]

Originally Posted by JeffDM

Um, no, but people here do put too much faith in what Apple says..... I think Apple PR is trying to be Orwellian.....

"Trying to be?"

On that great point, see the following by Joe Nocera (a pretty darn good reporter/journalist) from NYT:

http://select.nytimes.com/2007/06/30...f0d&ei=5087%0A

[alienzed]

Apple got the music store business right, that's why they have 75% market share. Universal DOESN'T understand that, obviously.

Besides, for all of you who mentioned supply and demand, you are retarded. Economics is based on finite resources and infinite demand. We are talking digital copies os songs, therefore the resource IS infinite, THAT'S why cd sales are dropping and THAT'S why there's NO reason to charge more for one 6mb file than for another.

[solipsism]

Originally Posted by alienzed

Economics is based on finite resources and infinite demand. We are talking digital copies os songs, therefore the resource IS infinite, THAT'S why cd sales are dropping and THAT'S why there's NO reason to charge more for one 6mb file than for another.

Bullocks!

[solipsism]

Originally Posted by SpamSandwich

Apple does NOT make a generous margin on every sale made through the iTunes Store.

There have been reports that has significantly increased it's per song profit by reducing the cost of bandwidth and making iTunes giftcards ubiquitous in pretty much every store in the US. I think there were more things listed but I'm afraid I'm too tired to look it up right now.

[SpamSandwich]

Originally Posted by solipsism

Bullocks!

Sandra?

I thought it was "bollocks".

[kiseki]

Half of the so-called "reviews" on iTunes are complaints for the higher pricing of one song over another.
Sometimes Apple Japan tries to be cute and changes the price of an album once demand starts climbing. I've seen artists boycotted for that reason. Believe me, NOBODY wins with differential pricing.

I also read somewhere that Universal is considering signing to sell music thru a cellphone service (was it Nokia?) and we've got that type of system over here, but unless you're signed up for unlimited data packet download, a single song, which takes forever to download BTW, can wind up costing over a $100 dollars a shot. 99 cents/song vs $100/song? I mean please...

[britwithgoodteeth]

Originally Posted by solipsism

...but I'm afraid I'm too tired to look it up right now.

Yet you managed to find the energy to make a post.

[JeffDM]

Originally Posted by alienzed

Besides, for all of you who mentioned supply and demand, you are retarded. Economics is based on finite resources and infinite demand.

I hope there is a typo on your part. There is no such thing as infinite demand in anything considered normal economics. I think someone that got that message out of an econ class would be retarded.

We are talking digital copies os songs, therefore the resource IS infinite, THAT'S why cd sales are dropping and THAT'S why there's NO reason to charge more for one 6mb file than for another.

Would you like to buy 6MBs of zeros? or 6MB of white noise? If I priced that at $0.01, then does that mean all music should be priced that? Not all songs are of equal quality or equal interest.

[AISI]

Originally Posted by solipsism

There have been reports that has significantly increased it's per song profit by reducing the cost of bandwidth and making iTunes giftcards ubiquitous in pretty much every store in the US.

iTunes Store a greater cash crop than Apple implies?

Based on per-song cost estimates, the ubiquitous iTunes service generates an operating profit of at least 10 percent, and possibly as much as 15 percent, according to PacificCrest's Andy Hargreaves. The analyst on Monday [April 23, 2007] released a detailed report on the subject. […] Applying that estimate to the $1.2 billion in revenue that iTunes is expected to generation in fiscal 2007, he believes the service will generate $0.09 to $0.14 in earnings-per-share for Apple.

[davidzLA]

Originally Posted by alienzed

Besides, for all of you who mentioned supply and demand, you are retarded. Economics is based on finite resources and infinite demand. We are talking digital copies os songs, therefore the resource IS infinite, THAT'S why cd sales are dropping and THAT'S why there's NO reason to charge more for one 6mb file than for another.

Good - then Apple plans to price Leopard at what it charges today for System 6?

Or will SJ be joining us on the short bus?

Proud Retard

[Abster2core]

Originally Posted by vinney57

Universal would have leaked the story, not Apple.

Who said either one of them leaked the story?

[godrifle]

Originally Posted by digitalclips

I am curious why Steve really cares if some tunes are 99 cents and some are say 125 cents or whatever.

Allowing labels to set prices willy-nilly gives them the ability to undermine iTunes marketshare by giving sweeter deals elsewhere. As it is, the set price gives labels little wiggle room to impose their will on the marketplace. Also, it works as an incentive to new customers who realize that they can purchase downloadable music at a substantial discount over physical CD media.

[danielsmi]

Is this the same Apple that denied the report that leopard would be delayed until October?

I also don't really see how it will really hurts Universal if they don't sell their music on iTS. Will you actually boycott an arists music cause it's not available on iTS? (I know a few apple fanboys will if these thing acually happens) People can get their music anywhere and almost all other ways of aquiring music will work with the iPod except music bought from another DRMed music store such as napster, zune marketplace, etc. People still can buy their music on CD you know. The fact that a song is not available on iTS has never prevented me from ever purchasing a song through other avenues. In fact I've never bought a song from iTS and don't really plan on it, until the DRMless higher quality AAC song come much more commonplace on iTS and even then I still like having a hard copy. I'll just keep purchasing CDs and ripping them at 224kbps MP3 so that they work with all my other media players plus I'll still have a hard copy to fall back on in case something happens to my hard drive or iPod.

I will say that iTS has probably killed the singles market as we once knew it, no more paying $5-8 for a CD with three songs, one song you want and a couple other songs you didn't want!!

[anantksundaram]

Originally Posted by SpamSandwich

Sandra?

I thought it was "bollocks".

Nah, she's bollocks.

[digitalclips]

Originally Posted by godrifle

Allowing labels to set prices willy-nilly gives them the ability to undermine iTunes marketshare by giving sweeter deals elsewhere. As it is, the set price gives labels little wiggle room to impose their will on the marketplace. Also, it works as an incentive to new customers who realize that they can purchase downloadable music at a substantial discount over physical CD media.

Good point

[Swift]

Originally Posted by vinney57

Universal would have leaked the story, not Apple.

This had to happen at some point. A challenge to the potential Apple hegemony. The last throw of the dice for the record companies. Should be fun.

It's true, Universal is the most straight-line source for the leak. It's obvious what their motivation might be. However, in studying these things, you have to always think in three dimensions. If the talks were in an impasse, Apple might have leaked, with the idea that people would rally to them.

On second thought, nah. I think it's Universal.

[Fairly]

I hope they work it out. Apple and EMI are doing a good thing. Those other idiots held up the industry for years until Apple and Jobs finally got them to come around. They've been bitching ever since even though they've been making money hand over fist. Today RIAA is a four letter word. I hope they come around. Maybe it's too much to hope for but it is something to hope for.

[caliminius]

Originally Posted by godrifle

Also, it works as an incentive to new customers who realize that they can purchase downloadable music at a substantial discount over physical CD media.

At least in the popular music arena, iTunes is no cheaper than a physical CD. Most new CD's arrive at the major retailers (Target, Best Buy, Circuit City, Wal-Mart, etc.) at the price of $9.99, the same, or in some instances, less than the same album on iTunes. I purchased Amy Winehouse's most recent CD for $7.41, cheaper than iTunes. Everything I've bought on CD this year has been cheaper or the same cost as iTunes. If you just want a few songs, iTunes would end up cheaper, but for full albums, it's all pretty much a wash.