Fellows, this (if true) is absolute genius of the highest order. You have no idea how backward, stupid and self-defeating the record companies are. Or how far ahead Apple is.
You have to divorce the phonographic industry (people who sell pieces of plastic) from the recording industry (people who own sell recordings). One is ****ed and the other could be fantastic.
I cough know people who have been to Apple to discuss the whys and wherefores of their vision of the future; this fits. The whole conception of DRM and piracy there is streets ahead of the RIAA (who would become irrelevant in this instance) and the rest of the industry.
The media layer, the sharing technology, the computer platform, the mobile music device, the hypothetical phone even. They have all this. Stuff to make kids with it look at the Warezboyz and laugh -- the opposite of now. Illegal music? Never going to stop. An experience a bazillion times better if you pay a weeeeeeny bit? Oh YEAH. Sign me up.
IF this is true it is a classic entrepreneurial move. Breathtaking.
Imagine this... your cell phone is now also your music receiver. When you buy songs they are added to your list of owned songs... your cell phone can access this list and stream the music from the servers over the phone network and to you. You could even build a lite version of the buying tool into the phone, creating instant, on-demand music anywhere. Similar receivers in cars would not only act as hands free cell phones but also as an alternative to radio/cds. This stratagy would be key for the teen market, the largest consumers of music and the ones who are downloading the most for free.
Imagine this... your cell phone is now also your music receiver. When you buy songs they are added to your list of owned songs... your cell phone can access this list and stream the music from the servers over the phone network and to you. You could even build a lite version of the buying tool into the phone, creating instant, on-demand music anywhere. Similar receivers in cars would not only act as hands free cell phones but also as an alternative to radio/cds. This stratagy would be key for the teen market, the largest consumers of music and the ones who are downloading the most for free.
Been there. Spent a few million of other people's money on it. Mobile data is CURRENTLY too exponsive to make it a consumer proposition. Soon come though. A phone can be a fun part of the equation though. Specially an Apple phone. I reckon that stock's looking good value.
Also I have read the expected price is 4-6 billion. Last year Universal Music made over 500 million profit. Apple's 4 billion in cash did not make 500 million in interest for them. So if nothing else is a potenitally good investment for all that cash.
According to the story Apple hasn't made an offer yet. Anyway remember that Universal isn't just about "contemporary" music. They have an enormus catalogue of all kinds of music - classical, show, soundtracks, popular standards, easy listening, country. Those recordings have long been paid for and are very profitable to the company.
I agree with fish stick; cash is earning less than inflation and Apple with no debt and 12 a share in cash is very underleveraged.
Music is on the decline in current distribution environment but it still spins off huge cashflow.
The deal has the sort of "bet the company" feel of Seagrams forray into entertainment on a smaller scale. makes me a little sick to stomach...but will earn better than cash in the bank and make the end game very entertaining for the punters
Its a deal that MSFT no matter the cash they have just cannot do even in this permissive environment.
Thats b/c you are Canadian, with N. European social democratic leanings, and thus have had risk taking, entrepenurial (yikes sic) spirit, and derring do sucked out of you.
S.Jobs, alas or not, is not of the same milquetoast ilk.
Quote:
Originally posted by Leonis
I think a partnership will make more sense that just buying it. 6 billion....it''s no small amount of money
Thats b/c you are Canadian, with N. European social democratic leanings, and thus have had risk taking, entrepenurial (yikes sic) spirit, and derring do sucked out of you.
If Apple/Universal embraces new methods of music distribution, the other music cartel groups will turn their backs on Apple and use every dirty trick to get Universal out of the retail scene. Apple is already on thin ice with retailers, and it could only get worse.
Maybe I'm just suffering from a 'lack of vision' but I see a lot of dangers in buying Universal, without a lot of potential benefits...
Also I have read the expected price is 4-6 billion. Last year Universal Music made over 500 million profit. Apple's 4 billion in cash did not make 500 million in interest for them. So if nothing else is a potenitally good investment for all that cash.
I would put a lot of faith in Todd's assessment since he's an actual economist.
Apple does not have enough cash to buy UMG, so they will have to go in debt. They can do it, but is it really a good idea? Apple's cash-on-hand is one thing that has helped it get through bad times, and has provided the means to pick up software companies that are vital to its strategic goals. If Apple buys, they will go from having a cash surplus to a debt, and will lose much of their flexibility. It would financially tie Apple's down, and make them much more vulnerable to business conditions.
It could work and be a great thing, or it could be the downfall of Apple. In my book, it's far too risky. If anyone has the data, it would be interesting to know what Sony's position was when it bought Columbia. I bet Sony was doing a lot better than Apple, and had strong sales in the consumer market.
The last I checked, the price of Apple stock has plunged, so I'm not the only one with severe apprehension about this deal.
If Apple/Universal embraces new methods of music distribution, the other music cartel groups will turn their backs on Apple and use every dirty trick to get Universal out of the retail scene. Apple is already on thin ice with retailers, and it could only get worse. . .
Good point. Here is possibly the most important reason not to do it. If Apple is in the music business, Apple is competing directly with Sony and the other big music companies. How likely are these other music companies to use a competitor's music distribution system? Not very likely. The other's may team up and select another means to distribute their music, leaving Apple all alone with the odd ball system.
If Apple wishes to have a music distribution system, they may do better by not having a vested interest in, or ownership of, one of the music companies. It's difficult enough to survive against Microsoft. Why add four giants in the music industry to the list? Those four would not simply give in and do it Apple's way.
If Apple/Universal embraces new methods of music distribution, the other music cartel groups will turn their backs on Apple and use every dirty trick to get Universal out of the retail scene. Apple is already on thin ice with retailers, and it could only get worse.
You don't get it. The whole idea is to abolish the existing retail music paradigm; the music "cartel" would be forcing Apple/Universal out of a retail space that's dying and which A/U has no interest in expanding. (Assuming they even *could* muscle the largest music company out of retail, a dubious proposition in itself.)
Quote:
Originally posted by Gizzmonic
Maybe I'm just suffering from a 'lack of vision' but I see a lot of dangers in buying Universal, without a lot of potential benefits...
How about this: Apple begins distributing all of Universal's massive catalog (or at least a good majority of it) online with a very consumer-friendly DRM implementation. The service takes off like a rocket. The remaining Big 4 start hearing "Why can't I buy Sony/EMI/Etc. music online?" Execs from these companies finally understand what consumers have been telling them for years: the shrinkwrap CD era is on the way out; downloads are where it's at. Suddenly there's a new paradigm for distributing music that a) protects the publisher's copyrights and b) is un-intrusive enough to be popular with consumers.
The main question at this junction would be: do the remaining music companies circle the wagons and try to put the largest music company in the world out of business? Or do they see where the road is headed and jump on board? My strong feeling is that the latter would happen. Apple has a good reputation in the recording biz already, with strong loyalty among musicians and producers. They have a much better chance of succeeding at this than Microsoft does.
The problems facing this, should the deal actually go through, are formidable: the market could send Apple's stock price fatally low; snags or delays in implementing the download service; FUD counteroffensives by Microsoft to the remaining labels ("You don't want an Apple solution. Try Windows Media Format! The first hit is free!"); and many others I'm sure I haven't thought of. But I think the potential benefits are not only quite obvious, they're immense.
. . . How about this: Apple begins distributing all of Universal's massive catalog (or at least a good majority of it) online with a very consumer-friendly DRM implementation. The service takes off like a rocket. The remaining Big 4 start hearing "Why can't I buy Sony/EMI/Etc. music online?" Execs from these companies finally understand what consumers have been telling them for years: the shrinkwrap CD era is on the way out; downloads are where it's at. Suddenly there's a new paradigm for distributing music that a) protects the publisher's copyrights and b) is un-intrusive enough to be popular with consumers. . .
When the other music companies see the benefits, are they likely to use their competitors distribution system? I think they would select another distribution means, from someone like Microsoft who is not in the music business. With Apple is in the music business, I believe Apple will have a tough time convincing competitors to use the same method of distribution. Competitors could very easily team up against Apple. No doubt, Microsoft would be eager to help them achieve their goals. Such a move would hurt Apple, both in music distribution and music business.
What prevents Apple now from making a very successful distribution system? Apple does not need to own a music company to succeed. They just need to convince one company to take big time advantage of it. As you say, once the others see the success, they will be eager to get on board. If Apple is neutral, and not a competitor, they are much more likely to go with Apple.
Good point. Here is possibly the most important reason not to do it. If Apple is in the music business, Apple is competing directly with Sony and the other big music companies. How likely are these other music companies to use a competitor's music distribution system? Not very likely.
This doesn't explain why AOL Time Warner was gung ho about Apple's music distribution system when they already had their own.
Quote:
Originally posted by Matsu
No one will believe it now, but I told ya something was going on, and that it probably won't happen Apple's way, and that Apple wouldn't break the news, and that it would most likely come as a surprise to them, and that I could say anything because people NOT at Apple might or might not get into trouble.
Amazing what you hear in Idle chatter at University conferences.
This deal reminds me a little of the MCA buyout. Well, especially if it goes through.
Comments
You have to divorce the phonographic industry (people who sell pieces of plastic) from the recording industry (people who own sell recordings). One is ****ed and the other could be fantastic.
I cough know people who have been to Apple to discuss the whys and wherefores of their vision of the future; this fits. The whole conception of DRM and piracy there is streets ahead of the RIAA (who would become irrelevant in this instance) and the rest of the industry.
The media layer, the sharing technology, the computer platform, the mobile music device, the hypothetical phone even. They have all this. Stuff to make kids with it look at the Warezboyz and laugh -- the opposite of now. Illegal music? Never going to stop. An experience a bazillion times better if you pay a weeeeeeny bit? Oh YEAH. Sign me up.
IF this is true it is a classic entrepreneurial move. Breathtaking.
iPhone anyone?
Originally posted by Dogcow
Imagine this... your cell phone is now also your music receiver. When you buy songs they are added to your list of owned songs... your cell phone can access this list and stream the music from the servers over the phone network and to you. You could even build a lite version of the buying tool into the phone, creating instant, on-demand music anywhere. Similar receivers in cars would not only act as hands free cell phones but also as an alternative to radio/cds. This stratagy would be key for the teen market, the largest consumers of music and the ones who are downloading the most for free.
Been there. Spent a few million of other people's money on it. Mobile data is CURRENTLY too exponsive to make it a consumer proposition. Soon come though. A phone can be a fun part of the equation though. Specially an Apple phone. I reckon that stock's looking good value.
Music is on the decline in current distribution environment but it still spins off huge cashflow.
The deal has the sort of "bet the company" feel of Seagrams forray into entertainment on a smaller scale. makes me a little sick to stomach...but will earn better than cash in the bank and make the end game very entertaining for the punters
Its a deal that MSFT no matter the cash they have just cannot do even in this permissive environment.
S.Jobs, alas or not, is not of the same milquetoast ilk.
Originally posted by Leonis
I think a partnership will make more sense that just buying it. 6 billion....it''s no small amount of money
Originally posted by Little Newton
Thats b/c you are Canadian, with N. European social democratic leanings, and thus have had risk taking, entrepenurial (yikes sic) spirit, and derring do sucked out of you.
oh yeah
If Apple/Universal embraces new methods of music distribution, the other music cartel groups will turn their backs on Apple and use every dirty trick to get Universal out of the retail scene. Apple is already on thin ice with retailers, and it could only get worse.
Maybe I'm just suffering from a 'lack of vision' but I see a lot of dangers in buying Universal, without a lot of potential benefits...
Originally posted by salmonstk
Also I have read the expected price is 4-6 billion. Last year Universal Music made over 500 million profit. Apple's 4 billion in cash did not make 500 million in interest for them. So if nothing else is a potenitally good investment for all that cash.
I would put a lot of faith in Todd's assessment since he's an actual economist.
It could work and be a great thing, or it could be the downfall of Apple. In my book, it's far too risky. If anyone has the data, it would be interesting to know what Sony's position was when it bought Columbia. I bet Sony was doing a lot better than Apple, and had strong sales in the consumer market.
The last I checked, the price of Apple stock has plunged, so I'm not the only one with severe apprehension about this deal.
Originally posted by Gizzmonic
This could be a good way to bankrupt Apple.
If Apple/Universal embraces new methods of music distribution, the other music cartel groups will turn their backs on Apple and use every dirty trick to get Universal out of the retail scene. Apple is already on thin ice with retailers, and it could only get worse. . .
Good point. Here is possibly the most important reason not to do it. If Apple is in the music business, Apple is competing directly with Sony and the other big music companies. How likely are these other music companies to use a competitor's music distribution system? Not very likely. The other's may team up and select another means to distribute their music, leaving Apple all alone with the odd ball system.
If Apple wishes to have a music distribution system, they may do better by not having a vested interest in, or ownership of, one of the music companies. It's difficult enough to survive against Microsoft. Why add four giants in the music industry to the list? Those four would not simply give in and do it Apple's way.
low-fi
Originally posted by Gizzmonic
If Apple/Universal embraces new methods of music distribution, the other music cartel groups will turn their backs on Apple and use every dirty trick to get Universal out of the retail scene. Apple is already on thin ice with retailers, and it could only get worse.
You don't get it. The whole idea is to abolish the existing retail music paradigm; the music "cartel" would be forcing Apple/Universal out of a retail space that's dying and which A/U has no interest in expanding. (Assuming they even *could* muscle the largest music company out of retail, a dubious proposition in itself.)
Originally posted by Gizzmonic
Maybe I'm just suffering from a 'lack of vision' but I see a lot of dangers in buying Universal, without a lot of potential benefits...
How about this: Apple begins distributing all of Universal's massive catalog (or at least a good majority of it) online with a very consumer-friendly DRM implementation. The service takes off like a rocket. The remaining Big 4 start hearing "Why can't I buy Sony/EMI/Etc. music online?" Execs from these companies finally understand what consumers have been telling them for years: the shrinkwrap CD era is on the way out; downloads are where it's at. Suddenly there's a new paradigm for distributing music that a) protects the publisher's copyrights and b) is un-intrusive enough to be popular with consumers.
The main question at this junction would be: do the remaining music companies circle the wagons and try to put the largest music company in the world out of business? Or do they see where the road is headed and jump on board? My strong feeling is that the latter would happen. Apple has a good reputation in the recording biz already, with strong loyalty among musicians and producers. They have a much better chance of succeeding at this than Microsoft does.
The problems facing this, should the deal actually go through, are formidable: the market could send Apple's stock price fatally low; snags or delays in implementing the download service; FUD counteroffensives by Microsoft to the remaining labels ("You don't want an Apple solution. Try Windows Media Format! The first hit is free!"); and many others I'm sure I haven't thought of. But I think the potential benefits are not only quite obvious, they're immense.
Originally posted by Nonsuch
. . . How about this: Apple begins distributing all of Universal's massive catalog (or at least a good majority of it) online with a very consumer-friendly DRM implementation. The service takes off like a rocket. The remaining Big 4 start hearing "Why can't I buy Sony/EMI/Etc. music online?" Execs from these companies finally understand what consumers have been telling them for years: the shrinkwrap CD era is on the way out; downloads are where it's at. Suddenly there's a new paradigm for distributing music that a) protects the publisher's copyrights and b) is un-intrusive enough to be popular with consumers. . .
When the other music companies see the benefits, are they likely to use their competitors distribution system? I think they would select another distribution means, from someone like Microsoft who is not in the music business. With Apple is in the music business, I believe Apple will have a tough time convincing competitors to use the same method of distribution. Competitors could very easily team up against Apple. No doubt, Microsoft would be eager to help them achieve their goals. Such a move would hurt Apple, both in music distribution and music business.
What prevents Apple now from making a very successful distribution system? Apple does not need to own a music company to succeed. They just need to convince one company to take big time advantage of it. As you say, once the others see the success, they will be eager to get on board. If Apple is neutral, and not a competitor, they are much more likely to go with Apple.
Originally posted by snoopy
Good point. Here is possibly the most important reason not to do it. If Apple is in the music business, Apple is competing directly with Sony and the other big music companies. How likely are these other music companies to use a competitor's music distribution system? Not very likely.
This doesn't explain why AOL Time Warner was gung ho about Apple's music distribution system when they already had their own.
Originally posted by Matsu
No one will believe it now, but I told ya something was going on, and that it probably won't happen Apple's way, and that Apple wouldn't break the news, and that it would most likely come as a surprise to them, and that I could say anything because people NOT at Apple might or might not get into trouble.
Amazing what you hear in Idle chatter at University conferences.
This deal reminds me a little of the MCA buyout. Well, especially if it goes through.
Originally posted by snoopy
Apple does not have enough cash to buy UMG, so they will have to go in debt.
No, you usually don't pay it all in cash.
AOL didn't pay a dime when they bought Time Warner - they paid $160 billion in an all-stock deal.