Labels making specific demands in latest iTunes talks

[AppleInsider]

Record labels negotiating the removal of copy protecting measures from tracks sold on the iTunes Store are each looking for Apple to agree to certain concessions, according to a new report.

Citing industry sources, HypeBot claims that Warner Music wants the iTunes operator to instate variable pricing at the track level, which would allow the record company to step outside the 'one price fits all' model and bill more than 99 cents for some of its hit singles.

For its part, Sony BMG is reportedly requesting a shift in relationship that would see its DRM-free tracks sold on iTunes through the same agency model it uses to sell tracks on Amazon, Rhapsody and other services. Under this model, iTunes would be relegated to the role of a delivering agent while the label acts as the seller.

"Sony BMG's concern is that competition will drive track prices lower and the agency model allows them to maintain complete control," the report says.

Meanwhile, Universal is said to be asking that Apple watermark each DRM-free track so that they could later be tied back to an individual's iTunes account should they turn up on file sharing networks. Other digital download stores are said to have agreed (or are close to agreeing) to the measure.

Rumors that the three major labels would join EMI in offering their catalogs unrestricted on iTunes have made the rounds in recent weeks. However, the most recent report from CNet News.com suggests an announcement ahead of the new year would be unlikely.

[ View this article at AppleInsider.com ]

[Slewis]

Hmm, Universal's and Warner's demands aren't so bad, but if Sony BMG has complete control then there would be no competition between online music retailers and assuming Apple offered the same concession to other labels, could be used for price fixing. T_T;

Sebastian

[Dorotea]

Originally Posted by Slewis

Hmm, Universal's and Warner's demands aren't so bad, but if Sony BMG has complete control then there would be no competition between online music retailers and assuming Apple offered the same concession to other labels, could be used for price fixing. T_T; Sebastian

I agree about Sony BMG and Price Fixing. The only way to drive down prices would be a boycott . I assume that it would also drive more people to pirate. NOT GOOD!

[digitalclips]

The record labels are in such a strong bargaining position ... If Apple doesn't play the way they wish I suppose they will what, go back to CDs in stores or sell through their own highly successful online systems? Sooner or later they will all be history. Bands must surely be thinking 'Different' these days when it comes to distribution for the future. Why pay a middle man (who has screwed you all along anyway) to do nothing but argue with Apple? Why not cut them out of the food chain and deal directly. Contracts do expire!

[RichL]

Variable pricing isn't such a bad deal of consumers. I've already picked up a couple of £3 albums off Amazon's new UK store.

[Dorotea]

Originally Posted by RichL

Variable pricing isn't such a bad deal of consumers. I've already picked up a couple of £3 albums off Amazon's new UK store.

A lot of my purchases are spontaneous and one song at a time. Variable rate prices will keep me from impulse buying.

[caliminius]

Originally Posted by Dorotea

A lot of my purchases are spontaneous and one song at a time. Variable rate prices will keep me from impulse buying.

Um, wouldn't you wait to see what the price is before jumping to conclusions? I mean, if you were going to buy a song and it was 49 cents instead of 99 cents, are you going to suddenly decide not to buy it? In fact, wouldn't you be at least slightly inclined to buy 2 songs from that album at that price?

[gregmacoy]

The big record labels still don't get it do they?! The indie labels and DIY scene are doing better than ever, because they can directly reach their audience, iTunes, or otherwise. The big labels are becoming increasingly irrelevant. Unless they change their attitude I'm sure they will see their market share decrease and profits with it.

Home taping is killing music. Balls.

[JavaCowboy]

Why can't Apple bring in the labels piecemeal instead of all at once? That way, if they can bring in, say, Warner on more favourable terms. Once Warner sees their iTunes downloads take off (and they will, if they're DRM-free), then the other labels should fall into line quickly.

[Dorotea]

Originally Posted by caliminius

Um, wouldn't you wait to see what the price is before jumping to conclusions? I mean, if you were going to buy a song and it was 49 cents instead of 99 cents, are you going to suddenly decide not to buy it? In fact, wouldn't you be at least slightly inclined to buy 2 songs from that album at that price?

What I didn't state before is that I tend to buy most of my music late at night when I'm tired. I really don't want to look at prices, but instead want to go about purchasing knowing that I'm not racking up huge sales. It makes it very easy when each song is around $1.

I doubt that the songs that are hits will go down in price I expect that the price will be jacked up. I doubt that the record labels want variable pricing in order to LOWER prices and make less money.

[wobegon]

Originally Posted by JavaCowboy

Why can't Apple bring in the labels piecemeal instead of all at once? That way, if they can bring in, say, Warner on more favourable terms. Once Warner sees their iTunes downloads take off (and they will, if they're DRM-free), then the other labels should fall into line quickly.

Because they probably realize they won't see sales "take off" by simply dropping FairPlay DRM. Most people have no idea what FairPlay is, that their music is encoded in FairPlay, or whether or not FairPlay is good or bad. 1) FairPlay is extremely liberal (no, not in the political sense) in terms of the rights it gives the customer and 2) it's very transparent.

The people who care about DRM make up a minority (albeit, a fairly vocal one) that 1) often doesn't buy the crummy corporate music from the Big Four anyway, favoring indie bands who usually put up their music in iTunes Plus form, 2) any worthwhile music from the Big Four is likely already in their collection via DRM-free CDs or other outlets, and 3) it's trivially easy to remove FairPlay by simply burning the protected songs to a CD (and I believe they can be burned to DVD as well) and then re-importing them into iTunes.

So in a way, I hope the Big Four just keep right on requiring DRM; it's one less advantage they have over indie labels/bands. One thing Apple could do that would make DRM almost meaningless, would be to get The Beatles' entire catalog in iTunes Plus form.

[Guartho]

Originally Posted by AppleInsider

Meanwhile, Universal is said to be asking that Apple watermark each DRM-free track so that they could later be tied back to an individual's iTunes account should they turn up on file sharing networks. Other digital download stores are said to have agreed (or are close to agreeing) to the measure.

How likely do you see this holding up in a suit? You'd have to prove that I was the one that released it to the file sharing sites. It could have easily been stolen from me first.

[Virgil-TB2]

... Universal is said to be asking that Apple watermark each DRM-free track so that they could later be tied back to an individual's iTunes account should they turn up on file sharing networks ...

Isn't this already the case with iTunes Plus tracks anyway? They have your name in them but it can be easily removed.

[RichL]

Originally Posted by Dorotea

I doubt that the songs that are hits will go down in price I expect that the price will be jacked up. I doubt that the record labels want variable pricing in order to LOWER prices and make less money.

I can only use Amazon's UK site as an example.

On the iTunes UK store, albums retail for £7.99. On Amazon's store, albums vary from £3 up to about £10. The vast majority of albums over £8 are double albums. Most albums are £7 or below. The biggest selling album in the UK at the moment is only £3.

Maybe the labels have offered Amazon a special deal to break Apple's dominance. All I know is that the Amazon store is cheaper thanks in part to variable pricing.

[Chris_CA]

Meanwhile, Universal is said to be asking that Apple watermark each DRM-free track so that they could later be tied back to an individual's iTunes account should they turn up on file sharing networks. Other digital download stores are said to have agreed (or are close to agreeing) to the measure.

All iTunes purchases (including DRM free iTunes plus) already have the account info embedded in file, so what's to negotiate?

[flydoggie]

Originally Posted by caliminius

Um, wouldn't you wait to see what the price is before jumping to conclusions? I mean, if you were going to buy a song and it was 49 cents instead of 99 cents, are you going to suddenly decide not to buy it? In fact, wouldn't you be at least slightly inclined to buy 2 songs from that album at that price?

You are assuming, incorrectly, that songs would be sold for .49 cents. The reason the record labels want flexible pricing is to make more money, rather than less money. You are far more likely to see songs for 1.49 and 1.99 than for .49 cents.

[Chris_CA]

Originally Posted by Guartho

How likely do you see this holding up in a suit? You'd have to prove that I was the one that released it to the file sharing sites. It could have easily been stolen from me first.

I doubt very much they could/would file charges simply because of the name on the file. They would have to do some investigation.

[flydoggie]

Originally Posted by caliminius

Um, wouldn't you wait to see what the price is before jumping to conclusions? I mean, if you were going to buy a song and it was 49 cents instead of 99 cents, are you going to suddenly decide not to buy it? In fact, wouldn't you be at least slightly inclined to buy 2 songs from that album at that price?

Originally Posted by Guartho

How likely do you see this holding up in a suit? You'd have to prove that I was the one that released it to the file sharing sites. It could have easily been stolen from me first.

Quite correct. You could assert that defense at your trial after spending $50,000 in attorney fees. Good luck.

[flydoggie]

Originally Posted by Chris_CA

I doubt very much they could/would file charges simply because of the name on the file. They would have to do some investigation.

Where else would the file come from. Did the tooth fairy steal it and put on the file sharing site?

[mrjoec123]

Originally Posted by RichL

I can only use Amazon's UK site as an example.

On the iTunes UK store, albums retail for £7.99. On Amazon's store, albums vary from £3 up to about £10. The vast majority of albums over £8 are double albums. Most albums are £7 or below. The biggest selling album in the UK at the moment is only £3.

Maybe the labels have offered Amazon a special deal to break Apple's dominance. All I know is that the Amazon store is cheaper thanks in part to variable pricing.

The reason those prices are lower now is because the labels want to pressure Apple into caving to their demands. Once Apple agrees to variable pricing, the prices will definitely go up, not down, everywhere, from iTunes to Amazon. Especially on any new releases.

The competition is what is keeping both sides in check.

That's just basic common sense. The labels don't want to do us any favors. They want to make more money.

Apple isn't looking out for consumers, either, although their resistance to this is helping us by coincidence. If the labels get their way, prices go up, piracy goes up along with it, sales go down, and the iTunes store suddenly doesn't make even its current meager profits. Everyone loses.

What the labels STILL don't seem to get is that they should be working WITH Apple, not against them, if they want to increase sales and profits.

[OriginalMacRat]

Originally Posted by flydoggie

Where else would the file come from. Did the tooth fairy steal it and put on the file sharing site?

Your kid's friend visits with a USB flash drive and copies your music?

Not many regular home users log out of their accounts. Their Mac is open to anyone in the family or anyone who visits.

[Chris_CA]

Originally Posted by flydoggie

Where else would the file come from. Did the tooth fairy steal it and put on the file sharing site?

Perhaps.
So you suggest it is okay to file charges based solely on your name/account being in a song file? No other investigation would/should be required?

What if someone gained access to a user's iTunes account and made purchases? This happens quite a bit.

[Angelchild]

Hey people, look on italian iTunes Music store (but it probably works for all nations) and search for Laura Pausini - Resta in ascolto.

That is a SONY BMG but it's in a "plus" format.

And many other tracks are in conerting phase right now.

There is also some iTunes plus without + symbol. Like this.

Here's an article in Italian that explain the situation.

Cheers from Italy.

[hillstones]

Originally Posted by digitalclips

The record labels are in such a strong bargaining position ... If Apple doesn't play the way they wish I suppose they will what, go back to CDs in stores or sell through their own highly successful online systems? Sooner or later they will all be history. Bands must surely be thinking 'Different' these days when it comes to distribution for the future. Why pay a middle man (who has screwed you all along anyway) to do nothing but argue with Apple? Why not cut them out of the food chain and deal directly. Contracts do expire!

Go back to selling CD's in stores? The record labels never stopped selling CD's in stores. They are still sold in stores and online. I still buy CD's from my favorite artists, either locally or from Amazon.

I also buy from iTunes when I am only interested in one song. But I think the record label wants to INCREASE prices, not decrease them. A few prior posts talk about .49 cent songs. I don't think that is what the record industry wants to do. I think they want to charge $2.99 or $3.99 for current singles. They don't like the .99 cent pricing for current top songs. They want to make more money.

[JavaCowboy]

EMI saw their sales go up by 350 percent for some albums when they dropped DRM:

http://www.macworld.co.uk/news/index.cfm?newsid=18342

Berkowitz said that initial success with DRM-free songs seems set to boost sales of digital albums, as well as songs. She confirmed that sales of the legendary Pink Floyd album, Dark Side of the Moon had increased since it shipped DRM-free - these are up 350 per cent.

So you're wrong. Lots of people *do* care about DRM.

Originally Posted by wobegon

Because they probably realize they won't see sales "take off" by simply dropping FairPlay DRM. Most people have no idea what FairPlay is, that their music is encoded in FairPlay, or whether or not FairPlay is good or bad. 1) FairPlay is extremely liberal (no, not in the political sense) in terms of the rights it gives the customer and 2) it's very transparent.

The people who care about DRM make up a minority (albeit, a fairly vocal one) that 1) often doesn't buy the crummy corporate music from the Big Four anyway, favoring indie bands who usually put up their music in iTunes Plus form, 2) any worthwhile music from the Big Four is likely already in their collection via DRM-free CDs or other outlets, and 3) it's trivially easy to remove FairPlay by simply burning the protected songs to a CD (and I believe they can be burned to DVD as well) and then re-importing them into iTunes.

So in a way, I hope the Big Four just keep right on requiring DRM; it's one less advantage they have over indie labels/bands. One thing Apple could do that would make DRM almost meaningless, would be to get The Beatles' entire catalog in iTunes Plus form.

[dblanch369]

Dear Music Labels,

I got an idea, since I'm the consumer, this will be the rules.

1) You will sell tracks for no more than $0.99 on iTunes or anywhere else.
2) You will sell them DRM-free

if not, then I simply won't be buying anything from you... 'nuff said.

I never bought stuff from ITMS until they started offering DRM-free tracks. Needless to say, I don't buy much, due to the selections available.

So music labels... Get a clue.

[cnocbui]

Originally Posted by flydoggie

Where else would the file come from. Did the tooth fairy steal it and put on the file sharing site?

Laptops and iPods get stolen.

[tmedia1]

Originally Posted by flydoggie

Quite correct. You could assert that defense at your trial after spending $50,000 in attorney fees. Good luck.

The idea of watermarking is so silly. Nobody buys tracks just to post them to file sharing. They are stolen in the first place or taken directly from CD's which ALREADY have NO DRM! This is just draconian BS that only hassles law abiding people.

[Rot'nApple]

Originally Posted by RichL

I can only use Amazon's UK site as an example.

On the iTunes UK store, albums retail for £7.99. On Amazon's store, albums vary from £3 up to about £10. The vast majority of albums over £8 are double albums. Most albums are £7 or below. The biggest selling album in the UK at the moment is only £3.

Maybe the labels have offered Amazon a special deal to break Apple's dominance. All I know is that the Amazon store is cheaper thanks in part to variable pricing.

In a sense, I agree! Just change the phrase "variable pricing" and replace it with the word "capitalism" and let the market forces determine the ultimate pricing. What skin is it off Apple's nose. It would definitely be one less bargaining chip at the next negotiations go-around, unless the record companies are like the labor unions and place further demands.

What's wrong with letting the market determine the ultimate value of a songs worth?

Why can't the market decide what a song is worth? If it's new and in demand, the record companies will try and squeeze out as much money as they think they can get. If the song is new and stinks and customers who purchased complain about it's lack of worth for the price paid and no one buys then hopefully it will be reduced in price in order to sell it. Isn't that the way things should be?

[Galley]

Percentage of tracks I have purchased since EMI and the Indies went DRM-free:

DRM-free iTunes Plus tracks: 100%
Standard iTunes tracks: 0%

[aaarrrgggh]

I'd love to see iTunes start promting indie bands (and EMI) at the expense of the holdouts. I think it is actually time for Apple to start playing a little hardball against the oligopoly.

[robb01]

Originally Posted by Galley

Percentage of tracks I have purchased since EMI and the Indies went DRM-free:

DRM-free iTunes Plus tracks: 100%
Standard iTunes tracks: 0%

Same here

___________

[elroth]

DRM-free iTunes Plus tracks: 100%
Standard iTunes tracks: 0%

That's true for me also. But I care more about the quality: 256 kbps vs. 128 kbps. You can always take the DRM off by converting to CD, but you can't increase the sound quality.

[Xian Zhu Xuande]

I don't see these demands going through. I used to worry about crazy stuff like this but Jobs seems to be able to navigate through these forests, keeping his bearings about him in the process—even if it means leaving one of the big companies out alone in the cold. Letting them increase prices would be a huge setback and that is sure to change music purchasing everywhere. Down the road inflation may make it appropriate, but not right now. $.99 is plenty for a single song. And like others, yes, I think it is pretty obvious that they're not asking this so they can reduce prices.

The watermarking thing—beyond what is already done—is pretty excessive and silly. Obviously Apple wouldn't want to do something that involves itself in such investigations. And given the way in which the RIAA has been attacking people this can only result in problems. I'd be completely opposed to such a thing and I'd avoid buying iTMS as a result. What really surprises me is their fear of these store-bought tunes getting out. I don't think I have ever seen an iTMS song on a filesharing network. People who buy their music don't like to toss it out to the world. I know I never do.

And I don't think we'll be seeing any major changes in how the iTMS is run... but I suppose we could be surprised. If they pitch anything to Apple it will have to be something they see as a worthwhile change, and it would be implemented for everyone.

As to the comment earlier that DRM free tracks don't matter in terms of sales: you've forgotten the earlier results shared by those efforts which have already taken off. And don't forget that people who do care about music advise their parents. I know my parents used to buy hundreds of dollars of albums from the iTMS until I explained DRM and audio quality to them. Now they use Amazon and they'll continue to do so until iTMS is DRM-free.

[pmoeser]

Originally Posted by Dorotea

A lot of my purchases are spontaneous and one song at a time. Variable rate prices will keep me from impulse buying.

Totally agree

I've bought more music in the last 3 years than at any time in my life

No I don't file share my tracks

Apple are the ones with the keys to the kingdom. The record companies just have to realise this and agree that the current model works and everyone is making something (except maybe MSFT and Amazon...)

I don't care if DRM is not removed removed and I don't want it replaced with some other kind of stealth-ware.... Remember Sony's previous attempt?

[pmoeser]

Originally Posted by Rot'nApple

In a sense, I agree! Just change the phrase "variable pricing" and replace it with the word "capitalism" and let the market forces determine the ultimate pricing. What skin is it off Apple's nose. It would definitely be one less bargaining chip at the next negotiations go-around, unless the record companies are like the labor unions and place further demands.

What's wrong with letting the market determine the ultimate value of a songs worth?

Why can't the market decide what a song is worth? If it's new and in demand, the record companies will try and squeeze out as much money as they think they can get. If the song is new and stinks and customers who purchased complain about it's lack of worth for the price paid and no one buys then hopefully it will be reduced in price in order to sell it. Isn't that the way things should be?

I think you forgot to attach your Sony business card

[MacGregor]

Originally Posted by pmoeser

Totally agree

I've bought more music in the last 3 years than at any time in my life

No I don't file share my tracks

Apple are the ones with the keys to the kingdom. The record companies just have to realise this and agree that the current model works and everyone is making something (except maybe MSFT and Amazon...)

I don't care if DRM is not removed removed and I don't want it replaced with some other kind of stealth-ware.... Remember Sony's previous attempt?

I agree that Steve's model created the impulse buy and I've spent more on it than I would have on a Sony model .... but ...

I would like to see iTunes try two parallel tracks:

iTunes = just as is for everyone
iTunes DRM-Free = where everything is DRM free, obviously, and the labels get to decide on their own pricing.

Yes, this isn't the nice neat monolithic Apple way, but it does several things. It allows people to chose which musical world within which they want to exist, and it gives the labels a place to experiment, while keeping at least 90% of the downloads in Apple's current, closed space.

The labels could test the markets and do innovative stuff with the platform remaining with Apple and they would lose most of their arguments against Apple's apparent monopoly. Some of the labels will do well, some will probably learn that Steve's way still makes the most sense.

As an aside, I would also create, iTunes Radio, where you can have intelligently selected (Genius) playlists streamed to your wifi enabled iPod/iPhone device. It would be "subscriptions for the rest of us," but would have a minimal footprint on the devices because music is only cached temporarily, and you don't really lose anything if you stop paying 'a la Rhapsody.

Just adding some diversity to the iTunes ecosystem would be nice.

[wobegon]

Originally Posted by JavaCowboy

EMI saw their sales go up by 350 percent for some albums when they dropped DRM:

http://www.macworld.co.uk/news/index.cfm?newsid=18342


So you're wrong. Lots of people *do* care about DRM.

Hmm, I stand corrected. Thanks.

(FYI, that link is broken but I got the gist of it from another site's synopsis.)

[yensid98]

The iTunes Store is currently the biggest music seller in America. Obviously DRM or not, 128 or 256, people are responding to the service and buying in droves. It seems to me that the music industry would do everything in it's power to work with Apple.

Somehow they still do not see that iTunes purchased songs are not showing up on file sharing sites.

Somehow they are not interested in catering to customer wishes.

Somehow they are not realizing that CD sales continue to slip while digital sales continue to grow.

More music is bought from iTunes than from any other source in America. Yet still the record companies fight and run in fear. Imagine if they actually made it more attractive to buy music online. They'd make more money, as would Apple and customers would be happier.

Their blocking progress. One way or another progress will continue. With or without the record companies. Somehow they don't see that either.

[iReality85]

How ironic that the same industry that eschewed the digital medium for years is demanding how it should be run.

And watermarking of audio files? Creepy. I don't need the RIAA playing Big Brother, not that I share my music anyway...