Newsweek article about Apple and the music industry.

Posted:
in iPod + iTunes + AppleTV edited January 2014
Viacom/Mtv made a killing off music videos and it appears the music industry is afraid Steve is making too much money off their music with the ipod.



http://www.msnbc.msn.com/id/9629461/site/newsweek/



"The industry doesn't want to repeat a history of undervaluing itself. In the days when its business plan was simply to promote and peddle music, it footed the bill for producing videos, and initially was only too happy to give them to MTV to help build buzz. For the Viacom-owned network, the videos drew huge audiences, building MTV into a multibillion-dollar asset. "We watched people make fortunes and create valuable assets off of our music," says a former top exec who feared risking his role, if he were identified by name, as an industry consultant.



The industry considers Steve Jobs the latest incarnation of this problem. He used songs to sell iPods, and Apple's iTunes site now sells 80 percent of all downloaded songs. The labels get 60 to 70 cents of each 99 cent iTunes download (the same songs digital pirates often stole, which is why the industry initially saw Jobs as its savior). But now labels have started agitating for a more creative approach to pricing, in which new releases would cost more than 99 cents, oldies as little as 60 cents and recent hits somewhere in between. Jobs disagrees and publicly labeled the industry "greedy" last month, arguing that it's pushing for price hikes in a still-developing market. Record executives expressed shock, noting his dominance in the MP3-player business. The dispute has gone beyond name-calling. Two major labels, SonyBMG and Warner Music, have refused to license their music for iTunes in Japan. The stakes are much higher in the United States, where the two parties have to negotiate a new license by next year."

Comments

  • Reply 1 of 19
    Since this thread will likely be deleted, locked, or at the very least moved to another forum, I'd just like to ask everyone to please signup under me for a free iPod.



  • Reply 2 of 19
    BTW, if Apple plans to SELL music videos through the iTMS (which could happen as soon as this week), the music industry should be happy just to be making money off something that was previously distributed for free.



    But most big labels are greedy and dumb and will try to screw their customers by price gouging and essentially driving business away (and/or back to piracy).
  • Reply 3 of 19
    Quote:

    Originally posted by geekdreams

    BTW, if Apple plans to SELL music videos through the iTMS (which could happen as soon as this week), the music industry should be happy just to be making money off something that was previously distributed for free.



    Apple is selling some music videos for $2 per.



    But what a bunch of lazy, greedy, f'ing assholes. They're turning greater profits off of iTMS than they are off of their CD sales. They have no prospect for greater earnings right now than iTMS and they're asking for more.



    In return, Apple should start signing artists directly. Let the artists have the $.70/song. See how that plays with the labels.
  • Reply 4 of 19
    elixirelixir Posts: 782member
    Quote:

    Originally posted by johnsonwax



    In return, Apple should start signing artists directly. Let the artists have the $.70/song. See how that plays with the labels.




    i dont think they would have enough resources to do all that but it's worth a shot.



    think of how HUGE that could be.
  • Reply 5 of 19
    Moving to iPod + iTunes.....



    and for future reference dont just post a link and then half the article your referring too.... add some original content and comments as well.....



    b.
  • Reply 6 of 19
    Quote:

    Originally posted by Elixir

    i dont think they would have enough resources to do all that but it's worth a shot.



    think of how HUGE that could be.




    They are currently doing this in Japan because the labels are being idiots over there. Who knows, maybe one day Apple will start doing this in the US. but the only way it would happen is if they could build up enough (read a ton!) secret negations with artists so they could then just do it in one fell swoop. Because the second Apple starts putting up artists direct, the labels will pull off their catalogs in retaliation. so Apple had better have a shit load of artists ready when they pull a move like this (if they ever do).
  • Reply 7 of 19
    Quote:

    Originally posted by benjamin_r

    Moving to iPod + iTunes.....



    and for future reference dont just post a link and then half the article your referring too.... add some original content and comments as well.....



    b.




    The sentence above the link was my own/original thought
  • Reply 8 of 19
    cosmonutcosmonut Posts: 4,872member
    If Apple were to negotiate directly with artists they could be seen as a label, and that's a BIG no no in the Apple Records agreement.



    Hey, is all this crying from the recording industry really a surprise? Based on how they've operated for years and knowing that they are a business -- and business people always want to make as much money as they can, everyone else be damned -- I'd be surprised if we didn't get this reaction from them.



    I hope Apple releases a video store and sells music videos. Apple would have more ammunition against the labels when negotiations happen next year.
  • Reply 9 of 19
    lundylundy Posts: 4,466member
    Steve has it right. He can get away with calling them greedy because they need him. What are they going to do, move their catalogs to Napster WMA at $1.39 per track and lose all the iPod owner purchases? The first one to do that will see their online sales go to zero while the other labels continue to get $0.65 from iTMS.



    Steve has 'em by the nuts.
  • Reply 10 of 19
    brussellbrussell Posts: 9,812member
    Quote:

    Originally posted by lundy

    Steve has 'em by the nuts.



    I don't know. I bet the iTMS revenue is a very small fraction of the total music industry revenue, whereas iPods have become essential to Apple. Sure, people could still put their CDs on their iPods, and even use non-sanctioned P2P download services. But the iTMS is one of the keys to the success of the iPod, I think.



    The question is: Who would it hurt more if the iTMS ceased to be, Apple or the music industry? I think it would hurt Apple more. Napster or the other services would capitulate, that would drive people toward WMA players, and iPod sales would start to suffer.



    I personally wouldn't care if they had a tiered pricing structure. It doesn't seem that unusual to me to have variable pricing. They already do it with albums. In any case, I'd personally pay less because I don't ever buy new hits anyway.
  • Reply 11 of 19
    Quote:

    Originally posted by BRussell

    But the iTMS is one of the keys to the success of the iPod, I think.



    This is what the record comanies assume too. I believe this assumption is just plain wrong.
  • Reply 12 of 19
    cosmonutcosmonut Posts: 4,872member
    Even if the iTMS ceased to be -- which it wouldn't because of all the independents and podcasts -- Apple could flip the switch and license the other DRMs to work on the iPod and iTunes. Problem solved.
  • Reply 13 of 19
    The MTV analogy is interesting, because once the record companies started to try and monitize their videos--MTV simply switched to cheap reality programming instead, and goes on it's merry way. Really, you could make an argument tracking MTV's decline in showing videos tracks pretty well with the current decline in CD sales.
  • Reply 14 of 19
    Quote:

    Originally posted by D.J. Adequate

    The MTV analogy is interesting, because once the record companies started to try and monitize their videos--MTV simply switched to cheap reality programming instead, and goes on it's merry way. Really, you could make an argument tracking MTV's decline in showing videos tracks pretty well with the current decline in CD sales.



    I don?t now if its correlation or causation in that instance but the parallels are indeed interesting.
  • Reply 15 of 19
    I quit buying CDs from the big labels, partly because of the lawsuits they conducted against small people, and partly because of the prices they like to get from many of their CDs. I do buy from smaller labels.



    I listen to classical music, as well as other musics, and there are artists I like on several labels, like Sony, and so I would not say that I would never buy CDs, or recordings that the larger labels have. But I have cut down from having bought thousands of dollars from the big labels to less than 100$ per year, probably more like 25$ per year from large labels which like to try to throw their weight around and be asses.



    But on this, Apple has tried to be a help to the music industry. I would say that getting say 60 to 70 cents on the dollar is a pretty good return for the music labels. They are doing fine. It should be in their interest to have a good relationship with Apple.



    Apple does need to keep itself connected to the industry, as it has a good thing going for itself. So it will need to come to accomodation with the industry, while maintaining its own view.



    There are plenty of pc trolls in the world. I see them at Best Buy, which is the nearest place to buy iPods around here. The trolls stand around, showing iPods to people, but being quickly willing to suggest other alternatives, because 'some people don't like that Apple has it all.' I hear that in conversations that sales clerks have when they are trying to sell other products. But there are many clerks who like the iPod, and some of them are switching to Macs, too.



    It is a time when Apple needs to keep itself in the best place possible to sell music, as this helps to fuel sales of iPods.



    Now that Real and miscrosoft have come to peace, we may expect to see more action on that front, and the labels will be happy to help them.



    Frankly, I would love to see Apple do a lot more with the independents. But the deal with Apple records will keep Apple from becoming a music label.
  • Reply 16 of 19




    Yes, iPod the Reebok of MP3 players!



    No, Apple isn't going to take over Sony, they are Sony!



    On iTMS and iTunes, these are the loss leaders necessary to grow Apple in the long term. iPods, then Mac mini's, then iMacs, then PB's and PM's, etcetera.



    Get over it.



    In regard to iTMS, count on the music industry exacting a higher price per track in '06, or a tiered pricing model.



    Why?



    Do the math, how many iPods are there now? 50 million?



    How many tracks per iPod? 1000?



    How many iTMS tracks have been downloaded? 500 million?



    That's like 1% of iPod capacity!



    Where's the rest of the music coming from? p2p, CD's, and sharing of iTMS tracks (I don't own an iPod (yet!), so I don't know exactly how Apple's DRM works with regard to transferring tracks between desktops and/or multiple iPods).



    What is the breakdown of tracks downloaded from iTMS? Albums versus single tracks (precentagewise).



    Apple AND the music industry both know the answers to these questions much better then we do, that's for sure!



    But I'm willing to bet that most of the tracks sold are single tracks, that these are the most popular tracks, and that these are shared amongst multiple iPods.



    We also know that the music industry is in a sale's slump. Why? I'll give you one guess, iPod!



    As Newsweek pointed out, look what happened to free music video's and the growth of MTV.



    Fool me once, shame on you, ...



    Look at what the cellular companies want to get per track for wireless delivery, $2.99!



    So you can bet that the music industry will get at least a tiered structure, that Jobs must pony up in order to grow Apple, and that this WILL happen in '06.



    nuff said.



  • Reply 17 of 19
    andersanders Posts: 6,523member
    But a higher price most likely WON`T give the record companies more money. More people would use the "greedy music industry" argument and fire up their P2P engines.



    I have bought a total of 50 songs from ITMS. In the same period I have bought at least 70 CDs. I use ITMS when I need the music NOW and quality, cover etc doesn´t matter for me. With a higher price I would cease altogether using ITMS. Most of the times I can find the album cheaper at gemm.com anyway.
  • Reply 18 of 19
    Quote:

    Originally posted by Anders

    But a higher price most likely WON`T give the record companies more money. More people would use the "greedy music industry" argument and fire up their P2P engines.



    I have bought a total of 50 songs from ITMS. In the same period I have bought at least 70 CDs. I use ITMS when I need the music NOW and quality, cover etc doesn´t matter for me. With a higher price I would cease altogether using ITMS. Most of the times I can find the album cheaper at gemm.com anyway.








    But it's not about what YOU want, now is it? It's about what the RIAA and the MPAA want, now isn't it? Then it's about what CIJ and Apple wants, now isn't it? It's about the "free" market, supply and demand? It's about the buying habits of the AVERAGE consumer, now isn't it?



    I do agree with you on a personal basis, I would prefer to buy CD's IF they are cheaper then iTMS, but $9.99/album IS cheaper then CD's currently, it probably won't be in the future? Thus MY personal buying decision will change to the lower price point IF I purchase my music on a per album basis. Does the AVERAGE consumer purchase on a per album basis from iTMS, I personally don't think so, and I do think that there's a high demand for the most popular tracks, so even though there's infinite supply (bits), higher demand will exact higher price points, that's a given. With regard to p2p, I believe that within the next year or so, the SCOTUS will make them history (in terms of illegal downloads), and I think the RIAA and MPAA will pursue this vigoriously throughout the world. Regardless, the RIAA/MPAA will exact a high price at the door to mitigate to a large degree illegal copies. After all they own the content to begin with. I personally don't agree with this policy, I'd like the individual artist's to profit more directly.



  • Reply 19 of 19
    Quote:

    Originally posted by franksargent





    But it's not about what YOU want, now is it? It's about what the RIAA and the MPAA want, now isn't it? Then it's about what CIJ and Apple wants, now isn't it? It's about the "free" market, supply and demand? It's about the buying habits of the AVERAGE consumer, now isn't it?



    I do agree with you on a personal basis, I would prefer to buy CD's IF they are cheaper then iTMS, but $9.99/album IS cheaper then CD's currently, it probably won't be in the future? Thus MY personal buying decision will change to the lower price point IF I purchase my music on a per album basis. Does the AVERAGE consumer purchase on a per album basis from iTMS, I personally don't think so, and I do think that there's a high demand for the most popular tracks, so even though there's infinite supply (bits), higher demand will exact higher price points, that's a given. With regard to p2p, I believe that within the next year or so, the SCOTUS will make them history (in terms of illegal downloads), and I think the RIAA and MPAA will pursue this vigoriously throughout the world. Regardless, the RIAA/MPAA will exact a high price at the door to mitigate to a large degree illegal copies. After all they own the content to begin with. I personally don't agree with this policy,







    "I'd like the individual artist's to profit more directly."



    Now there is a very good idea, one of the best things I've read here.



    Support the independents. When you talk with an independent musician or two who has been approached by the major labels, you see how self serving the big labels are.



    The only thing that gets me to purchase a major label CD now is if I really like the artist, like Murray Perahia on Sony. There are many fine recordings that the music industry has. Frankly, I would think that they would sell better at a lower price point, like 8$ per CD. Certainly 10$ is better than 17$.



    I would like to see Apple be more related to the independents, however, they must needs be in good relationship with the big labels, business wise.













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