Apple and the major labels headed for a showdown over iTMS pricing
posted August 27th 2005 5:14PM
It's no secret that a few of the major labels have been feeling a little, uh, antsy about the price Apple charges
for downloads at the iTunes Music Store letting Apple sell music, they've been making noise for months now about
how they feel like they're getting a raw deal, and the
New York Times reports that at least two of the biggies are headed for a showdown with Steve and co. No label is
definitely pulling out or anything, at least not yet, but apparently the labels are putting pressure on Apple to loosen
up the pricing structure and let them charge more for new hit songs and less for cuts from the back catalog. Oh, and
they're also annoyed that Apple won't open up and let other manufacturers license its FairPlay DRM or allow the iPod to
play DRM'd downloads from other online shops (either move would probably broaden the customer base for
downloads).
We totally get why the labels might want to have the flexibility to charge more for some songs and less for others
(basic supply and demand), but they already get about 70 cents of every 99 cent iTMS download and so jacking up the
price of new music would probably be one of those smooth moves that merely results in plenty of customers returning to
P2P services where they can get the same music for free (and without all that DRM nastiness).
[Thanks, David]
It amazes me how apparently "smart" people can run such large companies, and yet make such stupid decisions. Do they not yet understand how the internet works?
Does anyone truly believe the labels want to LOWER prices? Most likely, 99¢ will be the base price for older songs and the price will climb from there.
I would never pay more than a dollar for a song...more than ten dollars for a digital album would suck too... I hate the record companies.
Apple should just move to Russia and do like AllOfMp3.com does. That would shut the music companies up real fast.
Looking into my CANADIAN crystal ball, i see people heading straight back to bittorrent - oh well
Having just started purchasing music on iTunes yesterday evening, I can safely say that if the record companies had their way and charged $1.50 for new songs or ones they deem to be popular, I'd find somewhere else to buy my music.
BACK to bittorrent? Who has left?
I think it's fair to charge $.99 for everything, and a bit cheaper for whole albums, engadget is exactly right though, increasing prices would tempt me to go back to P2P.
2 Actually they will discount some tracks, even new ones, it just will be the usual promo deals. 60 cents for the new tracks from label x's answer to label y's breakout hit band. That and they will get far cleverer about bundling (buy a track off of the new album and get 40 cents off a track from the old album, etc.) That said there will definitely be inflationary pressure.
How come none of the labels are up in arms over WalMart's 88 cent songs then?
It *would* be nice if Apple opened up FairPlay, but that would seriously hurt their profits.
On one hand, I don't give a crap about what the labels want. They've been gouging me my entire life, and will do whatever they can to suck every available penny from consumers while they exploit artists that are mostly underpaid. On the other hand, I also don't give a crap about iTunes. When they acknowledge that my purchase should entitle me to use my music as I see fit and not be contaminated with DRM intended to promote iPod sales, I'll start dumping money in their coffers. Until then, I'll get what I need (almost exclusively stuff I've already bought hard copies of several times over anyway) through 'other means' and iTunes AND the labels can BOTH go eat a dick. I'll wait for the next 'revolution', thanks.
I wouldn't hate Apple as much if they wouldn't lock up everything like they do. Everyone says MS is in it for the money but they atleast pretend to give a damn about helping their customers. I've heard some pretty bad things about Apple's customer service (or lack thereof) and as far as i can tell, Apple is only in it for the profits and doesn't give a damn about their customers. They only care about selling more products.
Nick
The labels are idiots to think Steve Jobs cares about them in the slightest. He's using them -- 100 percent.
I'm not saying what they should do, but start with the above and work out your strategy from there.
I agree with Null 100%. Eat a dick indeed.
Record companies are forgetting one other thing: In the time of Internet their role is deminishing. iTMS is perfectly able to deal with the artists directly and avoid labels altogether.
This is already happening in Japan where Sony is avoiding to put their catalogue on iTMS and artists are willing to deal with iTMS directly. Apple has the knowledge and the PR muscle to set this up. It will only take few large names to lead the way and then the music labels will discover how Internet does what it does best: route around blockages!
The record companies and the RIAA can indeed eat a dick. If the songs I downloaded were losslessly encoded (like with FLAC) AND they DRM-less AND a lot more of the money went to the artists THEN, and only then, would I consider buying online music. I either get my music via "other means" or buy the albums I really like just so I can have lossless copies.
You know, it's worth noting that when PyMusique came out, it was enough to compel me to install iTunes (for the first time ever). Just being rid of the DRM was enough for me to put aside my other misgivings and feel okay about paying for music I mostly already own (one battle at a time, right?). When I couldn't get PyMusique to work properly (probably my fault), I uninstalled the whole mess and ran back to my alternative source. Until everyone concerned undergoes the requisite craniorectal extraction, I'll buy nary a song. Geddit? Buy Nary? :)
Hey Nick,
http://www.computerworld.com/hardwaretopics/hardware/story/0,10801,103959,00.html
Apple Computers: #1 according to consumer reports in 2004 and 2005. Just sayin'.
I agree. These f'n labels are just too damn greedy.
Of course they should be happy that Apple is even around to get people to pay for music online. And they've gotta be making a good chunk of change.
are you kidding me, "CONSUMER" reports pulls information off the consumer. Most apple consumers are fanboys and would praise Apple whether they had good customer service or not. Also, how much of the market share does Apple control? if i'm correct, 3percent so i could only imagine they would have better ratings then other PC manufacturers.
"are you kidding me, "CONSUMER" reports pulls information off the consumer. Most apple consumers are fanboys and would praise Apple whether they had good customer service or not. Also, how much of the market share does Apple control? if i'm correct"
Non-responsive, and Ad Hom to boot. I would tend to trust statistical information from an organization whose primary purpose is to help and inform consumers. Incidentally, if they didn't ask a "consumer" who would they ask? They can't use a crystal ball. Besides that, consumers are a finicky people. If they got shitty service from a company, they’re going to say so. This information is as accurate as anyone can get, and it says Apple's on top. I'm sorry if reality doesn't mesh well with your strange, unbridled hatred of Apple.
Null:
If you haven't heard of it yet, you might want to try allofmp3.com . It's a pay music site, and *significantly* cheaper than iTunes, and they don't put any DRM on the music they give to you. The legality is a little icky around it, and they are Russian, but they've served me well.
"are you kidding me, "CONSUMER" reports pulls information off the consumer. Most apple consumers are fanboys and would praise Apple whether they had good customer service or not. Also, how much of the market share does Apple control? if i'm correct"
Non-responsive, and Ad Hom to boot. I would tend to trust statistical information from an organization whose primary purpose is to help and inform consumers. Incidentally, if they didn't ask a "consumer" who would they ask? They can't use a crystal ball. Besides that, consumers are a finicky people. If they got shitty service from a company, they’re going to say so. This information is as accurate as anyone can get, and it says Apple's on top. I'm sorry if reality doesn't mesh well with your strange, unbridled hatred of Apple.
What do you mean RETURN to P2P services...? :)
Kodiak, they do understand how they Internet works, but they have a vested interest in attempting to change how it works to better suit their profit model. The old world of business is unwilling to let go of its tried and true methods to embrace the future. They may or may not yet fully realize they don't have a choice; the future will simply happen whether they like it or not. But they will make every attempt to preserve the status quo to the extent possible. Remember, iTMS is an Apple vision. The music labels would not have created it on their own.
Arthur, I love my mac(s), but I have to admit, their service is worse than I've had with both Dell and HP. (Both of those are pretty abysmal)
ok, just to make things clear from the beginning: I am not one of those apple geeks who see the company as some sort of religion... i got myself an imac 3 years ago... (still using it) and with every update of macos the machine gets faster, which i cant say of my pc and windows or any linux... so they really are doing a great job. os x was really the only reasson i got a mac... os 9 sucks ass! and i really cant understand how they kept all those customers for so long?
i cant say anything about US customer support, but here in germany its awesome... two or three weeks before my 2year warranty was over my pro mouse started giving me shit... I called apple and they replaced it within 2 days! a UPS dude rang my doorbell, and gave me a brand new mouse and took the old one with him... cant bitch about that...
and about their marketshare... they're still almost one percent ahead of sony... and in the mp3player market, they're #1 by far...
i share sasha s.'s point of view: apple is going to enter the music production business, and they're definitely not gonna fuck it up, since they already have a superb infrastructure for selling and a huge customer base thats gonna stay with them (dont't forget about the ipod).
and i dont see people starting to download music to their phones (would you? i def. would not since they're gonna overload the content with drm which probably wont allow me to listen to it on anything else than my phone legally, and then once the phone's memory is full, i would probably need to delete the songs. so i will lose the data and rights to the music i purchased - no thanks...
the only problem i see here is that if apple decides to become a "record" label is that EMI who owns "Apple records ltd." is gonna sue the shit out of apple or apple is gonna have to buy apple records for a shitload of money.
otherwise, i think the big labels should be carefull about how they handle apple... in the end, look what happened when the big labels refused to sign the beatles in the late 50s, saying that there is no future in guitar music!!
apple records won that "battle". this time the other apple might win??
"I would never pay more than a dollar for a song..."
And I would never pay more than nothing for a song if it includes DRM.
The only songs I have ever downloaded from iTunes have been the free ones. And surprise surprise! They all stopped working when I reinstalled Windows one day. My PC was no longer "authorized".
I still buy music and officially licensed band merchandise - I want to support the artists that I like - but I do not buy DRM. I just don't. I buy CD's and rip them myself.
The day a song is unavailable without DRM attached is the day I stop supporting that artist. This is not some kind of intentional boycott, this is me acting like any consumer would and saying "there is plenty of entertainment out there, so why would I spend the same amount of money for a less useful product when there are plenty of other options out there that will help me kill my spare time just as effectively?"
I mean, if you buy Pine Sol to clean your floors, your tile, and your walls, and all of a sudden they change the product so that it doesn't work on floors or tile anymore and they sold it for the same price, would you still buy it?
This is what makes me angry about DRM, the fact that it's equivalent to exactly what I just described and yet people still talk about how "necessary" it is. Well, no, it's not necessary. The record labels made billions of dollars on DRM-free CD's over the years and they continue to do so. Why is downloadable music so different? You can just as easily share an mp3 ripped from a CD as you can an mp3 you downloaded, so what is the freakin' difference? If you're going to be a criminal, it doesn't matter where you get the music to begin with, and criminals are just going to end up stripping the DRM out anyway. (So are legitimate users, for that matter, if you give them no other choice.)
DRM is useless, pointless, and a waste of time and money. It is anti-consumer, it takes a good product and makes it worse. How is this "necessary" for anyone? I haven't even seen a study done from the record labels' perspective that suggests that they make any more money because of DRM - my guess is, because of people like me (who have a lot of disposable income yet refuse to use services like iTMS), that they actually make less.
Anyway, so good luck to them trying to raise downloadable music prices. It's just one more incentive to stick with CD's and rip all your music yourself.
Meanwhile Down Under we still don't have iTMS - indeed the current theory is that we will get it when the recording labels and Apple have agreement...
ultimately it is the consumer who suffers...
"Arthur, I love my mac(s), but I have to admit, their service is worse than I've had with both Dell and HP. (Both of those are pretty abysmal)"
Individual results may indeed vary. However, according to an organization that takes a mathematically significant sample of consumers, they have better service. I'm sorry you had poor service, but you happen to be in the minority.
You people who constantly complain about DRM aren't very intelligent:
"The only songs I have ever downloaded from iTunes have been the free ones. And surprise surprise! They all stopped working when I reinstalled Windows one day. My PC was no longer 'authorized'."
Re-enter your username and password, and bam, your tracks play again. So what? How did you learn to use a computer in the first place if you can't follow instructions?
I challenge any of you to tell me how iTunes DRM stopped you from doing anything you really wanted to do. It hasn't stopped me. Am I smarter than you? Probably not.
I'm not an Apple fanboy. I'm not a self-rigtheous loudmouth P2P fanboy either. I do run an indie record label and this is the best thing to come out of the murk of the past 5 years. By far.
Jeff,
While I'm totally sympathetic to your hatred of DRM, it's a losing proposition. While I in no way intend this as a conceit, your average music consumer is not as technologically savvy as you or I.
It is the savvy consumer who comprehends and fears DRM. DRM has everything to do with the media distributors bottom line and nothing to do with the consumer.
Unfortunately, if all of the major media distributors decide that they will ship DRM'd-only product, then the consumer will lose . For an even better example of this, go google on Blu-Ray and HDCP or, if you feel like reading a lot more, click on the link on my name.
DRM is the distributors' attempt to eradicate piracy, plain and simple. If all mainstream distributors switch over to DRM then you will either find yourself (a) fighting an uphill battle of trying to continually workaround slowly improving DRM, (b) purchasing exclusively non-mainstream content (read: no more Britney Spears or Spiderman flicks), or (c) purchasing all of your content and living with whatever impositions that the distributors decide to impose upon you through their DRM.
Personally, I'm hoping that the distributors will implement DRM schemes that are interoperable (although we've already seen a failure here with Microsoft and Apple) and consumer-friendly (even to the tech savvy). I'm extremely skeptical of either of these conditions coming to pass.
In a DRM world, the average consumer will likely be largely satisfied and the tech savvy user will be PO'd. In such a case, if we're extremely fortunate, the EFF will raise such a stink that Congress (at least here in the States) will go after the distributors and demands a more consumer-friendly system. In reality, we'll probably have to live with what we get.
G: Try playing those tracks you downloaded from the iTMS on a portable music player that isn't an ipod. 'nuff said.
Evan: What you are basically suggesting is that the vast majority of users will likely not even notice the DRM, and pirates will continue to work against it (and they WILL crack it). How is this really different from the pre-DRM world?
"Non-responsive, and Ad Hom to boot. I would tend to trust statistical information from an organization whose primary purpose is to help and inform consumers. Incidentally, if they didn't ask a "consumer" who would they ask? They can't use a crystal ball. Besides that, consumers are a finicky people. If they got shitty service from a company, they’re going to say so. This information is as accurate as anyone can get, and it says Apple's on top. I'm sorry if reality doesn't mesh well with your strange, unbridled hatred of Apple."
consumer reports does poll, so results can be biased. The results don't really show the "true" performance of apple customer support therefore its a very inacurate way of "trying" to back up your point.
"consumer reports does poll, so results can be biased. The results don't really show the "true" performance of apple customer support therefore its a very inacurate way of "trying" to back up your point."
Of course, obviously it's far better to take on person's interactions with the service and expand that statement to a representation of Apple's customer service. Or perhaps not even use an example, but claim that it's true for no clear reason what-so-ever. OF COURSE when you deal with customer service there's going to be some bias, but a survey the likes of consumer reports is going to be better at getting to the truth than anything that's been said so far. It's not that Consumer Reports can't be inaccurate to a point, it that Consumer Reports are MORE accurate than anything that has been claimed thus far. Just ask your statistics teacher
I don't know why this hype crap gets posted.
#1. Apple Will ABSOLUTELY not raise the iTunes prices.
#2. This has no effect on iTunes Music Store Customers
If Apple does end up having to pay more, they plan to eat it, there will be no change on the front end pricing. The labels are fighting with Apple over Apple's % of the profits on songs. Not over the price on the tunes.
"supply and demand"?
Doesn't apply here and never will. Demand is only effected by price and quality (why Britney's latest should cost more than say, one of the Beattles' hits is totally beyond me). Supply doesn't exist as a factor: it's digital media - all copies are equal to the original, "manufacturing costs" and "raw materials" don't exist (short of electricity), "supply" (by traditional definitions) is infinite (seriously, is Apple really in danger of not getting enough electrons to meet demand) and without cost.
Charging more for a digital download (again which costs almost nothing - literally, the digital file is a side effect of making a physical CD) of a song than for that same song on a CD (with REAL production costs) is just plain GREEDY.
MBA[nuses] make me sick.
Scott
bufu, it's PC Mag, Consumer Reports and U Of Michigan, or something, they all came to the same conclusion - independently of each other. They are all Apple fan-boys, drinking SJ's KoolAid, apparently.
What's your, ehm scientific, method to get an accurate result.
Since - according to you - running customer surveys by pros, that design it to eliminate personal bias to get it as accurate as possible ( the reason for doing it in the first place ), isn't it.
Number 32, that Is EASILY DONE. EASILY. All you need is a CD burner. Burn your Mp3s onto a CD, then burn them back onto Itunes. You'll lose some quality, but it will still sound pretty similar to what the tunes WOULD have sounded like if it were 128 KBPS MP3 istead of ACC.
I meant :
Burn your DRM'ed songs onto a cd, then import them from the CD to your Computer.
I find legally downloaded music (iTunes especially) has better sound quality than most free services.
Does the greed of record companies know no bounds?
Itunes has made them 70 cents off every ITMS song sold with out them spending hardly any capital themselves apple has done all the work.
Also apple themselves have not made much money off itms they even claim they lost money on the music store but it has sold many ipods on which they do make a huge profit.
That so far has been over 300 million USD profit for the record companies that otherwise would have been lost to P2P.
"The loss due to piracy are allways stated to be 4x larger then they truely are so for somehting resembling the truth divide the numbers stated by the media by 4 or 5."
This alone nearly offsets losses to piracy and they want to charge Apple even more?
If anything they should lower the price per song for apple since ITMS has performed better then all expectations.
It seems like the major labels are punishing those who help them.
Apple should take them to court over this.
Where else can you get a song online with a reasonable usage agreement and DRM system that does not make you jump though hoops?
Personally I feel songs bought online should be DRM free since lets face it if you want to a free song all you need to do is fire up a P2P client.
But apple's system is the only system I find usable and fair.
Wow they are really shooting theirselves in the foot. You barely have any rights to the music you pay 99 cents for, if you download from P2P you can do whatever you want with it. They should be happy people are downloading from itunes for 99 cents. What is wrong with them, people will not hesitate to go back to P2P if they feel they are getting ripped off by how much albums cost.
Please, you DRM freaks are sick. FairPlay lets you do everything you want with your music except give it to your buddy. Ooops, since you can burn, (what?) 7 discs of the same song then you can. Get off your high horse and stop making your piracy cause seem like it's noble.
Most people I know already hate paying 99 cents for a song, and I think if the average consumer saw that a song cost over a dollar it would scare them away from legal downloads.
This is ridiculous. The record comapines and their frankenstein creation RIIA have gotten so abusive because no one has stepped in to protect the little guy from the bully. It has emboldened those greedy s**theads. Isn't a Democractic government's job to stand up for the common man? I know its not its job to defend the biggest and richest yet that is what is happening. Sad, sad - glad I no longer live in the US.
Everyone should forget the record comapnies and RIIA and just buy music from allofmp3.com. It is a perfectly legal music service, though its due to a loophole, who cares? $0.99 for an entire album - thats the price we should be paying if all the record labels dissapeared tomorrow. Lets try and make that happen!
Arthur Barnhouse, That just means Appl is better than the other pre-built computer manufacturers. If Apple would allow the other MP3 players out there (and yes there ARE other MP3 players out there, and no they did NOT rip-off the iPod, at least none of the ones being sold at Best Buy did because the manufacturers would have gotten their asses sued off) to support and play the content downloaded off iTunes, then their wouldn't be NEAR the piracy problem that there is now. But since they won't license Fairplay, that will never happen. Licensing Fairplay is the only thing i support the major labels on. As far as the other stuff they want, they can "eat dick". I do agree with the above that it should be in a lossless format. They could include a converter in iTunes so if you wanted you could bump it down to 128 kbps. My Creative player gave me a converter (however limited the formats might be) that let's me do that.
Nick
I love how few people are complaining about Apple in this situation. Obviously raising prices on some songs would suck, but the labels are definitely right when they Apple to license their DRM to other online sellers. I find it incredible that few people have complained about this. Online stores will never reach that next level as far as sales until there are some consistent standars (ie. any player i buy will allow me to play any music from any store.) If Microsoft was doing this instead of Apple there would be an uproar from everyone.
#45: Nick...
Did I just hear you say that Apple was responsible for piracy because they didn't open up iTunes?
No. You are wrong. Dead wrong.. At the very least, that's a VAST exagerration of the effect of iTunes , and the impact of other MP3 players.
#1, you speak of the iTunes music store as this holy grail of anti-piracy... but really it isn't. If you compare iTunes today with the still existing "free" channels to get songs purely on volume... yeah iTunes is doing well compared to other music stores, but "free" is still winning. I haven't seen any estimates, but piracy of songs isn't going to be stamped out any time soon.
#2, you fundamentally overestimate the effect of the non-iPod mp3 players out there. The latest numbers that I've seen put the iPod at greater than 60 or 70% of the entire market in this country, so even if you figure that every non-iPod owner out there because of Apple's stubbornness is going out and pirating music, that still doesn't add up...
And what about the other music stores? Napster and all of the others work with all of the "other" players just like iTunes does with the iPod... they're roughly the same. Shouldn't the effect of anti-piracy from these music stores be there across the board, regardless of MP3 player then?
Here's what you are forgetting... even though the iTunes store is available for people who own iPods, most iPod owners probably still use "free" channels anyway. This is another hole in your argument.
Apple opening up their store won't help against the fight against piracy as you seem to imply... the effect of minority mp3 players at this point are negligible, and there is not this corellation between non-ipod and piracy... people who own iPods pirate music still, and people who own other players use music stores like napster still...