Negotiations between Apple and record labels turning ugly

It has been reported that negotiations between Apple Computer Inc. and the big four record labels Sony BMG, EMI, Warner Music and Universal have reached breaking point with Apple refusing to change its stance on variable pricing. The argument is over iTunes' single price for all tracks (99c in U.S.). Record labels would prefer to set the prices per track themselves, upping the price of more popular music and lowering that of less popular. However, Steve Jobs believes it's too early to make such a change now.

Last year, Jobs had enough of the complaining and publicly commented that record labels are getting greedy. Edgar Bronfman Jr, head of Warner, retaliated by saying the pricing on iTunes was unfair to artists and commented that record labels should even get a cut out of the sale of iPods. Steve Jobs believes that when there is an alternative to legal download services that offers music for free, upping the price of any tracks is pushing it.

Of course, threats that some record labels could pull their catalogue from iTunes have circulated but to Apple, at this stage, they are empty threat. iTunes has sold over 1 billion songs since it first launched and holds over three quarters of the music download market.

Source:
TechTree

Written by: James Delahunty @ 25 Apr 2006 0:39

Advertisement - News comments available below the ad

9 comments

hot_ice

Fine ask for more money, but you sure ain't getting a dime from me!

25.4.2006 06:30 #1

handsom

ROFL. Quote:"We're not greedy! We want more money!"-Edgar Bronfman Jr, head of Warner

Seriously though; they want a cut of iPod sales? Maybe they should have invested in the millions of dollars of R & D that have gone into both creating the iPod; and actually making it what it is, not to mention the advertising and the millions poured into maintaining and popularizing the iTunes software libraries...

But hey, they're rich media moguls; who have proven that they aren't actually interested in the musicians they represent for any reason but $$$; they want more money, so they should get it. That's not greedy at all.

25.4.2006 11:17 #2

Unfocused

OK, Apple has sold over 1 Billion songs at 99�. I think that if Apple faces any more pressure from the heads of the music studios that they should just close iTunes and walk away with all the chips on the table.

The studios would not ever be able to re-create what Apple has accomplished with iTunes.

If the songs were $2 a pop, does anybody think that iTunes would still be around? Their service cost them nothing except for the bandwidth to provide it.

After you factor in the cost of R&D for all the different iPods and iTunes itself, I'm sure that Apple has at least made a couple of dollars profit.

I myself have never owned an iPod or used iTunes, but 1 Billion downloads says a lot; like it or not.

25.4.2006 19:32 #3

handsom

I agree. I simply feel that with all the investments they've made, and all the legalities they've gone through to make this what it is; it's completely out of place for the industry to suddenly say it's unfair, or that they need a bigger cut. They aren't losing anything here; they're not investing anything at all. They're basically making money for EXISTING. They don't have to print a disc, a case, or inserts for these cds now; and a dollar per song is, on average about what most people pay for the cd at their local target or wal-mart, anyways. It's even less in stores, for older albums. They make MORE money there. I understand that apple makes a certain amount per song, and then some goes to the industry. But when you account for all physical manufacturing costs, as well as distribution costs, and middle man costs incurred by the transferrance to a third party to sell (Target, Sam Goody, etc.) this seems like a much easier, more cost effective manner of selling their music.

The music industry is making even MORE profit this way; with less effort. Demanding more money is a horrible example of someone seeing that they've been outdone, and demanding more, even when they're already receiving a better cut of profits than they had on their own, without having to do anything for them. They've already made an agreement; and the bottom line is, why would they cut out of this, when they've got such a good thing? If they were to try and pull out, apple can make sure that their download formats wouldn't be supported by iPods. And good luck making a new service that's successful without iPod support. I say, let one or two of them pull out, and see how they like their profits. That way they can shut their mouths about wanting more money.

-------------------------------------------------
Will the PS3 dominate the console market?
Maybe, if Sony lowers the price and stops lowering the hardware specs.
For News on this: http://www.megagames.com

26.4.2006 10:42 #4

ZippyDSM

They want more money and are unwiling to work for it they would rather lose Itunes than make a legit buck...

26.4.2006 16:41 #5

handsom

I don't know; but I don't suspect Apple is willing to cave in. If one label pulls their tracks; they'll lose money. And even if they launch their own download system; they can't compete with iTunes, and it will show quickly. So even if they were to leave; they'd go back, because Apple has created more than a function; they've become a commercially recognized icon.

For the major masses; iTunes and iPod *IS* mp3 downloading and listening.

There might be a rocky trip for a few months; but this is a new empire that's not tumbling any time soon.

27.4.2006 10:17 #6

ZippyDSM

handsom

Ture but at the same time Stve jobs could seethe damage that it would doand insted of a slow death he could walk away..and they would coemback becuse they need that money more .

I have a brain...I think......

Windows Vister
I dub thee vister untill thee can prove thyself.

I aint the brightest bulb around but I can feel my way in the dark...

I fuzzy braind mew =0_o=

FIGHT THE M.A.F.I.A.A.
"Music And Film Industry Association of America.."

27.4.2006 10:54 #7

2ndclass

I think it's quite funny that the iPod gets all the exposure and focus from record companies and the media, and Creative, iRiver, Rome etc. get left alone.

28.4.2006 16:49 #8

hans471

Hey, its all about greed. The studios sat back and watched Apple develop something new. Once it was up and running and making a profit then the greedy studios move in and want to get a piece of the action. Pure greed and nothing more. As has been said, its all about the money. These studios didn't spend a dime developing Ipods or the systems to deliever the music yet they think they should have a piece of the action. How much money do these guys think they should have anyway? Them make millions off the backs of poor slobs who are paying too much already for music.

Are the studio managers part of the mob or something? They sure act like it.

28.4.2006 20:26 #9

AfterDawn: News