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Wal-Mart VP: We lost the 'philosophical argument' with Steve Jobs

post #1 of 60
Thread Starter 
Wal-Mart on Tuesday said sales during this year's "Black Friday" shopping bonanza faired much better than last, due partly to a more desirable selection consumer products like Apple's iPod.

During a conference call hosted by J.P. Morgan & Co., Wal-Mart Senior Vice President and Treasurer Jay Fitzsimmons told investors that Black Friday sales "were good," noting strong sales of computers, dolls, portable DVD players and video games.

According to Fitzsimmons, this year's Black Friday event was more successful because Wal-Mart stepped-up marketing efforts and picked better items for early-bird specials and other ad blitzes.

Some of the hot items included laptop computers for under $400 and a 15-inch LCD TV for less than $200 -- both of which sold out within minutes.

"Last year, we had a fair number of blitz items left (on Saturday), meaning we picked the wrong items," Fitzsimmons said.

Fitzsimmons also noted that Apple Computer's iPod digital music players were among the items conspicuously absent from Wal-Mart's shelves last year. He attributed the company's decision not to cary the iPod to a "philosophical argument" with Apple chief executive Steve Jobs over whether the iPod player should play music from more varied sources.

"He won, we lost. Now we have nanos in the stores," Fitzsimmons said.

The Bentonville, Ark.-based Wal-Mart operates nearly 5000 locations worldwide and is also largest private employer in the United States, with over 1.1 million U.S. employees.

Apple and Wal-Mart entered into a sales partnership earlier this year, running pilot programs to test sales following the release of Apple's iPod shuffle and updated iPod mini players.
post #2 of 60
He didn't win. The number of people buying tracks from iTMS and iPod owners won. He's just part of a big team. It's not like he's solely responsible for the success of iTMS/iPod. We should give credit to Apple as a company, not feed Jobs' already giant ego.
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post #3 of 60
Quote:
Originally posted by AppleInsider
"He won, we lost. Now we have nanos in the stores," Fitzsimmons said.


I believe that statement show be, "The consumer won, we lost..." Sometimes, they have to listen to the consumer...
post #4 of 60
Quote:
Originally posted by kmok1
I believe that statement show be, "The consumer won, we lost..." Sometimes, they have to listen to the consumer...

Yes, because the consumer certainly wouldn't want to be able to have more choice as to what they can put on their expensive mp3 players.
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post #5 of 60
Quote:
Originally posted by groverat
Yes, because the consumer certainly wouldn't want to be able to have more choice as to what they can put on their expensive mp3 players.

I think we can see from the sales of the iPods vs other players, and the sales from iTunes vs other sites, that very few people indeed, care.

As long as iTunes has the vast amount of music it does, and as long as that satisfies the needs of the vast part of the buying public, and as long as the prices are in line, why would most people care about going anywhere else?
post #6 of 60
Walmart tried to force Apple to put Windows Media songs on their iPods? Why in the world should Walmart care what plays on an iPod?

[edit] Oh, nevermind, I forgot that Walmart had its own music download store.
post #7 of 60
Quote:
Originally posted by melgross
I think we can see from the sales of the iPods vs other players, and the sales from iTunes vs other sites, that very few people indeed, care.

As long as iTunes has the vast amount of music it does, and as long as that satisfies the needs of the vast part of the buying public, and as long as the prices are in line, why would most people care about going anywhere else?

You're right - but you show exactly why I would like choice. Today, iTunes offers the best service and selection for me. However, there is no promise that this will always hold true. I don't mind that I'm locked in today, but music is a good that is consumed for a lifetime...
post #8 of 60
Quote:
Originally posted by sworthy
You're right - but you show exactly why I would like choice. Today, iTunes offers the best service and selection for me. However, there is no promise that this will always hold true. I don't mind that I'm locked in today, but music is a good that is consumed for a lifetime...

Of course. You can burn your tunes to cd, and lose the DRM, so that you could play it anywhere else.

You can also buy music from other sites and do the same. If you worry about re-compressing, you could use Apple's lossless codec. you lose drive space, but the quality is the same.

And of course, the iPods play a number of other formats as well.
post #9 of 60
Quote:
Originally posted by groverat
Yes, because the consumer certainly wouldn't want to be able to have more choice as to what they can put on their expensive mp3 players.

The problem is that that's not what would have happened. You basically have two choices: get yanked around directly by the music companies, or put iTMS between you and them. If sales had shattered across a hundred music sale sites, the labels would have won, we'd have songs selling for $2.50/ea, and everyone would have to play ball or no deal.

The fact that iTMS exists has protected our choices of what we can legally download and put on our MP3 players.

Of course, you're free to rip CDs all you want. Many even find some warped self-justification for illegally copying the music. But don't pretend that freeing FairPlay and similar measures would have opened up the market. It would just have been one monopoly [edit: against you] instead of two [edit: against each other].
post #10 of 60
Quote:
Originally posted by melgross
I think we can see from the sales of the iPods vs other players, and the sales from iTunes vs other sites, that very few people indeed, care.

Actually, that means nothing. That's like saying people liked MS all those years because of all the people who bought windows.

Fisrt off, to say that people buy iPods, so they must love getting themselves stuck into an all apple provided package is naive. First and foremost, the iPod is hip and cool and boss and all those other things. A lot of people get it because of that. Most probably don't realize they can't get music from Napster or the like.

Secondly, comparing music store purchases is also an iffy proposition. If you make the assumption that choice of music player has no effect on store sales, then your arguement is generally correct. But most sane people believe that the iTMS sells tons of music because people want digital music to put on their portable music device, which, it turns out, is the iPod by a large majority. This basically forces those who want to buy online to go to the iTMS.

Now if the iPod was open to all formats, or the iPod had such a small share that it woudl only marginally affect the sales percentages, and the iTMS still sold a large margin, then your argument would be valid. However, its so hard to say, just based on numbers, that people are content with the arrangement.

Quote:
As long as iTunes has the vast amount of music it does, and as long as that satisfies the needs of the vast part of the buying public, and as long as the prices are in line, why would most people care about going anywhere else?

Yes, because we know no company would ever take a large success and marketshare, like the iPod and iTMS, and use it to first bully competitors out of business (or doing business their way) and then using it to hike prices and lose concern over things like ciustomer service and the like. That would only occur with a company like Microsoft. Or oil companies. Apple never would do such a thing.

And if anything in your "as long as" hypothesis changes, guess what? The consumer is screwed. Because they can't go anywhere else to buy music. And they can't get another music player and transfer their music to that. They are stuck in Apple-hell for as long as Apple says they need to be (again, look at all the people still stuck in MS-Hell, because changing would be so costly).

Quote:
You can also buy music from other sites and do the same. If you worry about re-compressing, you could use Apple's lossless codec. you lose drive space, but the quality is the same.

Yeah, nothing like going that extra 15 miles to "buy music, burn it to CD, re-rip said CD into iTunes". And exactly why is this 'acceptable'. Why shouldn't consumers be allowed to just take their WMA audio and slap it on their iPod? Why must I play by Apple's rules (yet people are so hell-bent not to play by MS's rules). It also kind of defeats the whole "impulse buying" concept, since you can't just buy a song somewhere and listen to it on your iPod, you have to spend a half-an-hour to get it there.
post #11 of 60
Quote:
Originally posted by Louzer
Actually, that means nothing. That's like saying people liked MS all those years because of all the people who bought windows.

Fisrt off, to say that people buy iPods, so they must love getting themselves stuck into an all apple provided package is naive. First and foremost, the iPod is hip and cool and boss and all those other things. A lot of people get it because of that. Most probably don't realize they can't get music from Napster or the like.

Secondly, comparing music store purchases is also an iffy proposition. If you make the assumption that choice of music player has no effect on store sales, then your arguement is generally correct. But most sane people believe that the iTMS sells tons of music because people want digital music to put on their portable music device, which, it turns out, is the iPod by a large majority. This basically forces those who want to buy online to go to the iTMS.

Now if the iPod was open to all formats, or the iPod had such a small share that it woudl only marginally affect the sales percentages, and the iTMS still sold a large margin, then your argument would be valid. However, its so hard to say, just based on numbers, that people are content with the arrangement.



Yes, because we know no company would ever take a large success and marketshare, like the iPod and iTMS, and use it to first bully competitors out of business (or doing business their way) and then using it to hike prices and lose concern over things like ciustomer service and the like. That would only occur with a company like Microsoft. Or oil companies. Apple never would do such a thing.

And if anything in your "as long as" hypothesis changes, guess what? The consumer is screwed. Because they can't go anywhere else to buy music. And they can't get another music player and transfer their music to that. They are stuck in Apple-hell for as long as Apple says they need to be (again, look at all the people still stuck in MS-Hell, because changing would be so costly).



Yeah, nothing like going that extra 15 miles to "buy music, burn it to CD, re-rip said CD into iTunes". And exactly why is this 'acceptable'. Why shouldn't consumers be allowed to just take their WMA audio and slap it on their iPod? Why must I play by Apple's rules (yet people are so hell-bent not to play by MS's rules). It also kind of defeats the whole "impulse buying" concept, since you can't just buy a song somewhere and listen to it on your iPod, you have to spend a half-an-hour to get it there.

Wow, you took a very long post to come up with no real information.

Don't try to compare this to the Windows OS. That's a poor comparison. People buy that because companies buy that. companies buy that because it was an IBM product that they were buying, not an MS one. They would never have bought an MS OS at the time, even if they had one.

The lock-in from that reverberates even today. It's possible that we may be seeing people starting to move away from it.

The iPod was bought in the beginning because it was a clearly superior product. No other company could compete with it. I remember the numbers rising every month when the Times showed the sales numbers of the mp3 players. Apple's marketshare rose from nothing to 43% at the time iTunes was released.

iTunes made the experience far better - and cheaper- than any other combination ever before. No wonder many went to it.

With 75 to 80% of the market now, Apple has an effective monopoly. They won't drive out the competition, but there is a shakeout of the weakest players. That's normal.

But people don't have to buy an iPod.

It's not what's required at work. They can get the same songs elsewhere. It's all pretty cheap. We're not talking about hundreds or thousands for a computer system plus hundreds or thousands for software.

I know people who have switched over the years - to the iPod.

If your friends have it, then you want it as well, so what? this is what happens all the time. Is that some evil scheme?

If someone comes up with something better, people will start to switch over to that. Fine, that's the way it works.

Just remember that nothing is forever.

Can you still play an Edison cylinder today?

How about all of those 70 to 82 rpm records from the 20's to the late 40's?

What about Lp's over the next couple of decades?

VHS tapes?

You can preserve your iTunes. you may not like it, but too bad. Nothing's perfect. There isn't any guarantee that the WMP will be around any longer, or Real's format, or Sony's, or any other. What about OGG Vorbus? do you think that will be here in 20 years? I doubt it.

Whatever you buy, you should save it on hard transportable media.

I hope my Lp's and cd's will be usable 20 years from now as well.
post #12 of 60
As a side note, when comparing music stores, you have to consider the DRM. With Napster, for exampole, you have to keep paying in order to keep the music, whereas with Apple you own it, alebit with some anti-copying devices.

I would support the theory that iTMS and the iPod are simply superior products to the competition's offerings.
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post #13 of 60
hmm, i've just read this whole post and it seems there's a sort of negative reply towards the limited choice of music sources of the ipod.

the music choice is unlimited, providing you can burn it to cd.

90% of my music is bought from any music store i see fit to buy from, then i simply rip it onto my ipod.

the other 10% is from any other sources i find the album or songs from, if you download it from somewhere else what's stopping you from transfering it into the itunes library, if you rip it or even import it from file itunes converts it into the ipod format itself.

really, the companies that disallow cd burning are in the wrong, as that is one main thing stopping you from actually owning the music you've paid for.

steve job's deserves his big ego, but obviously 'apple' as a whole deserve it to.
post #14 of 60
I've yet to meet anyone who says they won't buy an ipod because they want to use WMA music or a WMA music store. I've met a couple who like the idea of a subscription and I believe that maybe thats somthing Apple should/will get into - it doesn't interest me, but if it interests some people and the lack of it for ipod is preventing them buying one, then Apple should probably provide the service.
post #15 of 60
Apple bests Wal-Mart... that is un-frickin-believable. Good job, er... Jobs!

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post #16 of 60
I believe the correct thing to say is 'PWN3D'.
post #17 of 60
Quote:
Originally posted by sworthy
but music is a good that is consumed for a lifetime...

I don't understand this statement. The file doesn't necessarily deteriorate when played, there is no consumption.
post #18 of 60
Quote:
Originally posted by JeffDM
I don't understand this statement. The file doesn't necessarily deteriorate when played, there is no consumption.

Hey Jeff, read my last post. He thinks that when iTunes goes out of business, or the iPods are no longer manufactured, he will no longer be able to play his music. That was my response.
post #19 of 60
Quote:
Originally posted by Gene Clean
He didn't win. The number of people buying tracks from iTMS and iPod owners won. He's just part of a big team. It's not like he's solely responsible for the success of iTMS/iPod. We should give credit to Apple as a company, not feed Jobs' already giant ego.

Ah, just a point; Steve has a right to his large ego - he grabbed Apple by the balls, put the political bullshit aside, and single handily picked it up and swivelled it above his head - so yes, he does have a right to be a little smug being the one that rescued it.

Whilst the other CEO's were running their Anti-Microsoft programmes at the detriment of the company, Steve realised that its necessary to occasionally eat a little humble pie and perform a little ass kissing - and its paid off, now Apple is in a strong position than ever.

Believe me, when Apple stores become so ubiquitous, the need to rely on third party resellers will be very small.
post #20 of 60
Quote:
Originally posted by kaiwai

Believe me, when Apple stores become so ubiquitous, the need to rely on third party resellers will be very small.

I don't know if I would ever discredit Wal-Mart's market compared to that of Apple stores. We have one Apple store in Iowa and I wouldn't expect more in the near future, but there are dozens of Wal-Marts. You're probably never more than a 30 minute drive away from one. It's a lot easier to bite the bullet make that big iPod purchase when you don't have to plan a trip to get it.
post #21 of 60
Quote:
Originally posted by rasnet
I don't know if I would ever discredit Wal-Mart's market compared to that of Apple stores. We have one Apple store in Iowa and I wouldn't expect more in the near future, but there are dozens of Wal-Marts. You're probably never more than a 30 minute drive away from one. It's a lot easier to bite the bullet make that big iPod purchase when you don't have to plan a trip to get it.

I am glad that Steve Jobs stuck to his conviction, and walmart had to accept things on those terms. Usually the producers have to back down to wlamart's demands, it seems.

I don't go to walmart, it has ruined a lot of American companies like RubberMaid was taken down, and the factory sold off. I don't care if they have achieved a huge market and are bigger than intel, ms, hp, and others combined, it can take a leap in to the lake so far as I am concerned. I do go to best buy, as it is one of the few electronics stores around.

But since like you say, there are so many wlamart stores, it helps exposure for the iPod, if Apple can make enough. For Apple it is a matter of business. If a company can have its goods in wlamart, and make money at it, then that is entirely a matter of that companies business.

There are a lot of people in Apple who have worked to make it what it is now.

I would certainly still use my iPod if Apple allowed in other music formats.
post #22 of 60
Quote:
Originally posted by melgross
Of course. You can burn your tunes to cd, and lose the DRM, so that you could play it anywhere else.

If I have to burn it to a CD to re-rip it afterwards, what is the whole point of buying via download vs. ordering a CD in the first place?

Quote:
There isn't any guarantee that the WMP will be around any longer, or Real's format, or Sony's, or any other. What about OGG Vorbus? do you think that will be here in 20 years? I doubt it.

Well, Ogg Vorbis is an open specification with an opensource implementation, so chances are it will still be around in 20 years time. After all, GIF is now 18 years old and still widely in use and JPEG is 13 and even stronger.
post #23 of 60
Quote:
Originally posted by mynamehere
As a side note, when comparing music stores, you have to consider the DRM. With Napster, for exampole, you have to keep paying in order to keep the music, whereas with Apple you own it, alebit with some anti-copying devices.

I would support the theory that iTMS and the iPod are simply superior products to the competition's offerings.

Man, I hate it when people don't know the businesses they talk about (esp. when they trash them over and over again).

What you say is true for Napster's subscription service. However, you can still buy music from napster without having to pay a monthly fee, just like the iTMS.
post #24 of 60
I don't think it is realistic to expect Apple to licence WMA and its DRM from M$ (it ain't free) just so iPod users can shop at the competition's music stores.

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post #25 of 60
Quote:
Originally posted by funkfeend
I don't think it is realistic to expect Apple to licence WMA and its DRM from M$ (it ain't free) just so iPod users can shop at the competition's music stores.

It's also not realistic to license Freeplay so that people can buy songs from iTMS for their non-iPod players.

Let's face it: Apple doesn't need to change what their doing right now. iTMS and iPod are both getting stellar results for Apple and its shareholders.

Let's also face the fact that Apple *knows* that people can find ways around iTMS songs not working with non-iPod players. Apple *knows* that people can figure out a way to get music from Napster into iTunes. Apple *knows* that people can free their bought music from DRM. People can gripe, but options are available. Consumers are NOT totally locked out from having choices. The options just are a little less convenient.
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post #26 of 60
Quote:
Originally posted by CosmoNut
It's also not realistic to license Freeplay so that people can buy songs from iTMS for their non-iPod players.

Let's face it: Apple doesn't need to change what their doing right now. iTMS and iPod are both getting stellar results for Apple and its shareholders.

Let's also face the fact that Apple *knows* that people can find ways around iTMS songs not working with non-iPod players. Apple *knows* that people can figure out a way to get music from Napster into iTunes. Apple *knows* that people can free their bought music from DRM. People can gripe, but options are available. Consumers are NOT totally locked out from having choices. The options just are a little less convenient.

Jobs did say, some time ago, in an interview, that Apple would license this back and forth, as well as introduce a subscription service IF THEY FELT IT WAS NECESSARY.

Sorry about the caps, but that had to be emphasized. They aren't just sitting with their arms folded and their eyes closed. They will do what they need to do.
post #27 of 60
Apple should license WMA and sell tunes with that DRM at $ 2.99 each....
post #28 of 60
How is it that tunes from other sites don't work with the iPod? My old 30GB model is stuffed with tunes, and none of them come from the iTMS. I would assume that any MP3 or AAC would work. So we're talking about two things. One: Windows media. The sooner that dies, the better. Two: other players. They won't play iTMS tracks, but that's no reason not to stock or buy iPods so much as a reason not to frequent the iTMS.

So what's the real argument?

Walmart expects, demands, better margins than other sellers. They muscle a lot of suppliers with their capacity to shift stock -- you give walmart a few points off the wholesale, they sell a few a points lower than competitors' retail, and voila, they shift a lot of units, make lots of money for themselves. For some manufacturers this helps them make a lot of cash by selling lots of units quickly; though their margins shrink, it can be a good deal for a manufacturer. There are times when it's also a bad deal, ie, when you alienate/piss off other retailers, hurt your brand value, and overextend you production capacity only to have Walmart demand further, very aggressive wholesale price cuts. Now you can't go back to other retail partners because they're invested elsewhere and you can get stuck doing business on Walmart's terms.

Apple had no other interest than protecting its brand, by not letting Walmart dictate the terms.

Let's be clear, none of this makes either company good or bad, just wise or unwise as it pertains to furthering their own business. Walmart ran into a company that's just as staunch about controlling pricing, margins, and MSRP, as they are. Apple refused to have the terms dictated to them. Walmart came around when they realized that even at Apple prices, the iPod is a good draw, and it's better to have them inthe flyer to draw the shopper in, than advertise a number of cheaper models that nobody wants.

When you suceed, you dictate the terms. It's the same reason playstations, and xBoxes sell at the same price at walmart as they do anywhere else. Powerful brands, desired product, proven draw. If they want it, the manufacturer sets the agenda. No different with the iPod and Apple.
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post #29 of 60
Quote:
Originally posted by Matsu
If they want it, the manufacturer sets the agenda.

Not necessarily. Walmart is well known in the industry for being a bully. They are so dead set on having low prices that they don't play nice a lot of times.

Manufacturers even have whole divisions that are set up in Bentonville, AR specifically to work with Walmart.
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post #30 of 60
I think we're saying the same thing.

It's very important for Walmart to be seen in the industry as a powerful retail player. They would rather have press about losing a 'philosophical argument', than losing a market battle.

They can only muscle people that need Walmart's distribution channel. Apple doesn't. What's more, they interview itself indicates that not only did Apple NOT need Walmart, Walmart felt the need for more compelling consumer items in order to draw holiday customers.

Really powerful brands don't get muscled by Walmart.
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post #31 of 60
Quote:
Originally posted by Matsu
[B]How is it that tunes from other sites don't work with the iPod? My old 30GB model is stuffed with tunes, and none of them come from the iTMS. I would assume that any MP3 or AAC would work. So we're talking about two things. One: Windows media. The sooner that dies, the better. Two: other players. They won't play iTMS tracks, but that's no reason not to stock or buy iPods so much as a reason not to frequent the iTMS.

You know. It's just the DRM. If you rip those songs from other sites onto a CD, you can put them onto the iPod. The CD rip removes the DRM - legally.
post #32 of 60
I was actually trying to be slightly rhetorical. In my experience all my tunes work on my iPod, none of them come from iTMS.

I think it more a question of iTMS music not working on non-iPod players, not the other way around. Am I wrong? Haven't followed this too closely.

As for the rest, I'm sure the argument is economic, not philosophical.
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post #33 of 60
Quote:
Originally posted by Matsu
I think it more a question of iTMS music not working on non-iPod players, not the other way around. Am I wrong?

No, you're right.

Apple's Music Strategy 101, or "Why Apple Locks Everything Else Out (Right Now)."

We start with the question "Where can Apple make the most money regarding music?" This must be underscored by the premise that people want/have an mp3 player in concert with music purchased online for it.

If Apple keeps iTMS "ala carte" songs and iPods mutually exclusive for each other (as they currently are), anyone wanting an iPod will have to buy from the iTMS. Apple makes money from the iPod and (a little from) each song sold. Apple has always been very clear that iTMS is solely for the purpose of selling iPods.

If Apple allows non-iPod players to play music from the iTMS, Apple loses potential money on iPods but makes (a little) money from iTMS songs and licensing fees. Apple loses quite a bit because licensing fees probably won't cover what's lost from iPods not being sold. Bad news. So it is best for Apple to keep the iTMS and iPods exclusive to each other. People with iPods buy from iTMS. People buying from iTMS use iPods.

The Options

If iPod sales start to slip, Apple could license other DRMs to play on the iPod. Then everyone who's been "locked out" can buy an iPod and play the music they've bought at other stores. Boom, iPod sales go back up.

If iTMS sales start to slip, but iPod sales stay steady or soften a little, Apple could institute a subscription service on iTMS with the flip of a switch. Revenues would start to flow back in consistently every month and all is well with the iTMS. iPod sales stay steady.

"But CosmoNut," you ask, "Why doesn't Apple have a subscription service now?" The simple answer: They don't need one right now, and don't forget that making money of the iTMS is NOT Apple's biggest focus.

If the bubble bursts out from under Apple and iTMS AND iPod sales both begin to slip significantly, then Apple could both license other DRMs to play on iPods AND implement a subscription iTMS. More revenue (consistently) into iTMS through subscriptions and more iPods sold because they can play other DRMs.

Here's the important part. As long as Apple still wants to sell the iPod, there is NO scenario by which it makes sense for Apple to license the Freeplay DRM for non-iPod players. Doing so would only negatively affect iPod sales, which is the key to this whole thing.

Class dismissed. Don't forget tomorrow's exam.
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post #34 of 60
Quote:
Originally posted by CosmoNut
Apple makes money from the iPod and (a little from) each song sold. Apple has always been very clear that iTMS is solely for the purpose of selling iPods.

In fact, a recent O'Reilly book reveals that the German iTMS, for one, makes a loss (of a few cents) on every song sold. I wouldn't be surprised if that is the case for (a few) other countries as well.
post #35 of 60
Quote:
Originally posted by CosmoNut
If iTMS sales start to slip, but iPod sales stay steady or soften a little, Apple could institute a subscription service on iTMS with the flip of a switch. Revenues would start to flow back in consistently every month and all is well with the iTMS. iPod sales stay steady.

"But CosmoNut," you ask, "Why doesn't Apple have a subscription service now?" The simple answer: They don't need one right now, and don't forget that making money of the iTMS is NOT Apple's biggest focus.

If the bubble bursts out from under Apple and iTMS AND iPod sales both begin to slip significantly, then Apple could both license other DRMs to play on iPods AND implement a subscription iTMS. More revenue (consistently) into iTMS through subscriptions and more iPods sold because they can play other DRMs.

Here's the important part. As long as Apple still wants to sell the iPod, there is NO scenario by which it makes sense for Apple to license the Freeplay DRM for non-iPod players. Doing so would only negatively affect iPod sales, which is the key to this whole thing.

Class dismissed. Don't forget tomorrow's exam. [/B]

Very good!

One more reason against a subscription.

At this time, there is NO agreement between the subscription companies and the music industry. This may be hard to believe, but it is true.

Since the subscriptions have started, money has been put in escrow accounts for the music industry, but has not been paid out. Other than the parties involved, no one knows how much money is being deposited in those accounts.

People might remember that not too long ago MS gave up in its negotiations with the music industry about subscription pricing, saying that they were too ridged, and were asking too much. The industry was demanding between $6.50 and $8.50 per individual subscription per month.

Match this to what Yahoo was charging.

The music industry said not long ago that they were at the end of their patience, and would not let negotiations go on much longer.

This leaves the question of what happens if they are not able to come to some agreement.

Will a lack of an agreement force the subscription companies to close their doors?

If that happens then:

Will those with subscriptions lose all of the songs?

Will some way be found to let them maintain some ability to use them?

Apple would be smart to stay away from this until it is resolved.
post #36 of 60
Quote:
Originally posted by Chucker
In fact, a recent O'Reilly book reveals that the German iTMS, for one, makes a loss (of a few cents) on every song sold. I wouldn't be surprised if that is the case for (a few) other countries as well.

Apple was losing money on each song sold here as well. They have to sell a certain minimum a month to cover costs. Below that no one can make money.

From what I've read, Apple is the only one making money on this. No one else is selling enough. The subscription companies can make money as well unless what I posted above ends up happening.
post #37 of 60
Quote:
Originally posted by melgross
Apple was losing money on each song sold here as well.

That wasn't the same; that was to cover their initial investments. They have done that now.

Quote:
They have to sell a certain minimum a month to cover costs. Below that no one can make money.

No. For Germany, Apple pays more than they earn. Simple as that.
post #38 of 60
Quote:
Originally posted by Chucker
[B]That wasn't the same; that was to cover their initial investments. They have done that now.

It isn't just the initial investments that count. It's the costs of running the sites, cost for network bandwidth, updates, and upgrades to the sites, costs involved in updating the song databases, etc.

Those costs, while not exactly fixed, don't vary much as the number of song sales go up. When the number gets above whatever number is needed for break even, the start to make a small profit.

The money paid to the music industry is fixed per song, but, of course the total per song sold

[QUOTE[
No. For Germany, Apple pays more than they earn. Simple as that. [/QUOTE]

Where do you get those numbers from, and what would they be?

I doubt very much that Apple would be that dumb.
post #39 of 60
Quote:
Originally posted by melgross
It isn't just the initial investments that count. It's the costs of running the sites, cost for network bandwidth, updates, and upgrades to the sites, costs involved in updating the song databases, etc.

Those costs, while not exactly fixed, don't vary much as the number of song sales go up. When the number gets above whatever number is needed for break even, the start to make a small profit.

I realize that. You're missing my point. It doesn't matter how many songs get sold: certain prices will stay fixed, as you said yourself. Therefore, unless pricing changes, German iTMS will continue to make a per-song loss.

Quote:
Where do you get those numbers from, and what would they be?

I doubt very much that Apple would be that dumb.

How is that dumb? They make a lot of revenues from iPods.

My information is from fscklog.
post #40 of 60
Quote:
Originally posted by Chucker
I realize that. You're missing my point. It doesn't matter how many songs get sold: certain prices will stay fixed, as you said yourself. Therefore, unless pricing changes, German iTMS will continue to make a per-song loss.



How is that dumb? They make a lot of revenues from iPods.

My information is from fscklog.

Bacause Apple isn't going to negotiate a deal where they never have a chance to recover their money.

They have to keep iTune finances seperate from those of the iPod. It's basic accounting. Jobs is too shrewd to allow this to happen.

If what you said was true, then the more songs they sold, the more money they would lose. I can't see that happening. Whatever you read must have misunderstood the situation.

Where did you get this info? I haven't seen it anywhere. It would have been big news, if true.

I should get my year-end financial report from them soon, as it has been released. It might have a breakdown.

EDIT! Sorry, didn't see the link at the bottom. It would be more helpful if I could read it.
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