Labels hit back at Apple, now want share of iPod revenues
posted Sep 25th 2005 11:44AM
Apple and the major record labels have been cruising towards a confrontation over iTunes Music Store pricing for months now, and one label head, namely Warner Music Group CEO Edgar Bronfman is responding angrily to Stevie J's comments last week about "greedy" record labels. There's a perception that the labels (which these days don't exactly have a reputation for, um, generosity) want to raise the price of downloads across the board, but Bronfman says that flat-rate pricing is unfair and that, "Some songs should be $0.99 and some songs should be more. I don't want to give anyone the impression that $0.99 is a thing of the past" (note that he doesn't say much about songs costing less than 99 cents). The problem, as Red Herring reports, is that the labels are used to people buying full albums — and in the process paying for songs they might not have wanted — while the iTunes Music Store lets consumers pay for only the songs they're interested in. Buying only the songs you want seems way more fair to consumers, but it hasn't exactly done much to keep the labels' revenues up. Bronfman's solution? Well, if Apple is "artificially" keeping the price of downloads low to promote sales of iPods (you can debate amongst yourselves whether 99 cents is artificially high or artificially low), then as he sees it, the labels should get to "share in those [iPod] revenue streams." We'll go out on a limb and predict they're never ever going to get a slice of the iPod, but we do have this funny feeling that things are going to get a lot uglier in the next few months.
[Thanks, CoreyTheGent]
What most people don't realize is the music business is a money loser for 99% (it might be 98 or 97) of all artists. The record companies give the artists a lot of money up front and try to recoup that money after the product is finished. Most of the time they don't make a penny.
On ther other hand, the very few albums that sell 500,000 or more copies (it might be 300,000 or 600,000 but you get the point)generate 100% of the profits.
Now you have iTMS cutting those profits because instead of buying a whole album, the customer buys one or two songs off that album (rarely the whole album).
The record companies would be much better off selling hits for 2 or 3$.
I admit the consumers would not.
Steve Jobs can just kiss his little white ass goodbye now. Why can't this dude just keep his mouth shut?? He may as well just close the doors now. He's screwed!
The record Companies arn't used to trying to bully around a company as large as Apple. Normally, they just go after grandmothers and young children.
Bronfman is a Canadian. The Bronfman family made their money selling whiskey across the border to Al Capone and other mafia wise guys during prohibition. If Steve Jobs doesn't watch himself he may wake up some morning with a horse's head in his bed.
The labels are going to screw with the prices, trying to make Apple's stranglehold on pay per download digital music weaker. Apple should drop any label that tries to extort more money from music lovers and just keep those that play fairly as well as all the independent labels they now carry. They should also make it easier for individual artists to join up.
Screw the money grubbing record label bastards. I hope all of their customers revert to the P2P networks.
There's never been any doubt about how greedy the industry is. The words "industry" and "greed" should become synonymous. Mr. Bronfman's claims that some songs should be more than $.99 seem rather arrogant; who would determine who's songs are worth more? What criteria would there be besides personal preference? If overall length is the criteria, then intros that last 15 seconds should be reduced to about $.05 or free. They're just not going to be happy until the internet is completely shut down, which will not happen any time soon.
In my view, the problem with raising the cost of a song over $.99 is that people will see that they're paying more per song than they would if they went out and bought the cd, so they'll just get fed up with the process in general and go back to downloading it for free. The nice thing about the iTunes store (as well as other pay-per-song or pay-per-month services) is that record companies are getting buyers that for the longest time didn't bother buying full cd's, and when the opportunity came along to legally get only what they wanted, they did it. I think this is a bad play by the music industry labels.
Fine. I guess the Label companies have not learned a lesson yet. People start purchasing and before you know it they want to raise the prices. This will happen more than once. Kazaa Lite K ++ anyone ?
What will happen with in one year, is that you will see many of the music artist going away from music label, because they don't want to see the label get even more money, that they don't see. What will happen most of the artist by late 2006 will start going with an independent label, or sell their music in different ways like whats going on with podcast everyone is doing their own thing. The record companies have been in charge of everything that has happened with music today, and now is when everything changes, the artist are going to take back what their deserve. And will work with iTunes to get their songs out there for $0.99 a song.
2006 will be R.I.P for the record companies, if you work for a record company say good bye. And people like Edgar Bronfman, your LIFE IS ABOUT TO CHANGE !!!!!!
" APPLE COMPUTER FOR LIFE "
First charge a lower price. Second, make it higher bitrate or Apple Lossless. Third, market it and it happens. Problem is that record companies won't let them lower the price. To get them to go this path, we have to buy used CDs to rip and sell, unless it just came out. Then, a few people will buy it, then we'll rip and sell. Then the labels get even less money, because then we don't buy fresh copies, and they get $0.75 per song from iTunes. That should teach them that when they higher the price, they get like a turkish lira, and if the lower the price, they get like a googolplex(1 with googol(1 with 100 zeros after it) zeros after it) euros.
The interesting thing is that more and more "high-end" artists hire their own producers and such and use their own home studios to make music. the fact is that we no longer require record companies to "make" records! This means that shortly artists may choose to sell directly to Apple and collect the 0,69$ for themselves (see what is starting in Japan with iTunes). Many forget that Apple absorbs pretty much ALL the costs of distributing online music (credit cards, servers, comm lines, billing transactions...) The record company simply delivers the "files" which they must do for Disc production anyway and Apple does the rest. No risk of pressing too much stock or too little. Think how much less risk that is for the record company! And they complain... As for Mr. Bronfman, well as a Montrealer let's just say I am not overly impressed by how well he has managed the family's empire (Seagrams).
LASTLY ... PLEASE DO NOT EQUATE RECORD COMPANY WITH ARTISTS.
1. 99 cents for an iTunes is more than a generous price because you're getting pretty crappy sound quality. Play an iTunes song (128AAC) on a good quality home audio system and then play the CD version of the same song. No contest. If you're only going to be listening on a portable sound system (iPod or equivalent) or if you're only going to be listening in your car, 128AAC is probably OK.
If you're interested in a complete CD, you can almost always find it used, in very good to excellent condition, on Amazon, for less than the cost of downloading it on iTunes--and you're getting much better sound quality.
2. 95 of 100 audio CD's have some pretty lousy songs on them. The labels are pissed off because then can't cheat consumers if consumers can download only the songs they want. Cry me a river!
3. A few songs, for a brief period of time, may in fact be worth more than 99 cents...but the flip side of that argument is that many, many songs are worth much less than 99 cents. There are some on the iTunes music store that should be given away.
4. Case in point: I'm a 50 year-old guy who still likes 70's and 80's classic rock when driving. I mostly listen to smooth jazz at home. Anyway, I wanted to add 3 Deep Purple CDs to my collection. 128AAC was OK because I would only be listing in my car. On iTunes, each would have cost $10. I was able to buy all three for roughly $20 total (including shipping) by buying used via Amazon. What does that tell you about whether $1 a song on iTunes is really worth it.
The majority of you people have no idea what you are talking about (#35 excluded), and have no perception of how the music industry works at all.
@Bruce(52)
Maybe record labels have trouble making money on an artist because of all the overhead they have, like your salary for example?
I have an idea. How about 99 cents from some songs and less for others? Yeah. Anything less is unacceptable and would drive me away from their service completely. How is that for revenues? MP3's aren't like gas, where if you need it you have to pay what they are charging. I would not encourage anyone to stay with iTunes if they raise prices (if fact, I would encourage them not to!), and I sure as hell won't stay myself.
...I also think it's about time for Bronfman to take a pay cut. Yup.
"IMHO Apple should go to a variable pricing model and convince the labels to do so as well. That means that deep catalog prices will fall dramatically and newer tunes would probably start out priced higher then $.99 but those prices would also fall as the songs move from mainstream commercial to back catalog. Search Wired.com for "long tail theory"."
Your opinion isn't more valid just because you throw in the word theory. the problem here is WHY? The consumer certainly shouldn't want this. The WHY here is "to make more money, just because we can". A song is eternally the same song. To charge more for the same exact product, which is esentially infinte in supply, just because you can, is to GOUGE the customer, which is greed. This is really simple.
Does Bronffman request cut of all CD player sales? So why is he asking about iPod? Or for that matter, how about cut of all sales on PC and Mac's, since they all have ability to run iTunes on them.
The odd part of him logic is that, iTunes cost them nothing... Unless Apple requires the Record company to pay more for putting the "Hit or Exclusive" track in iTunes... Which I don't think Apple is doing.
The record company can't say iTunes is eating into sales of CD's. Even if that is true, putting songs on iTunes cost them much less money. There are no cost of producing CD's and the materials. it's a one time deal for them. So how could they be bitching about "songs are not the same" value... Digital files are same. The logic behind their bitching is astronomically ridicules.
Hit single cost just as much and track 11 on iTunes and why should that matter to anyone?!?!?
The whole iTunes model has chnaged the balance of power when it comes to buying music. In the past, it has always been the Record company holding all the power and the music stores selling the music were always a comodity. Then iTunes Store came along. Because it is the biggest in the market, the music store is no longer the comodity. The problem for the record companies is that they are no longer in full control. I wouldn't be surprised if they do try and twist apples arm, just so that they can once again make the music store the comodity just so they can rake in more profits.
they want a cut of ipod revenue too? i wonder, do the record companies get a cut of the sales of every record, tape, or cd player? what about radios? what about the cd drive inside of a computer? those can play music cd's just fine. should they get a cut from every cd-rom equiped computer as well? how about dvd players?
if apple was able to sell a lossless format from the labels I would pay more for it. lossy music does not sound that great on my home system.
I would sell my archos to buy some model of an ipod.
I would be great if Apple could work straight with artists and just cut the record industry out. Were it not for an unfortunate choice of a company name perhaps it would be so....
http://en.wikipedia.org/wiki/Apple_Records
HAHAHAHAHAHAHAHAHAHHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAH
Stupid Record Companies....when will they ever learn. I find it hilarious that they want in on the ipod sales. And why is it only itunes they're after? What about Napster and yahoo with there monthly fee for unlimited downloads. Is that not good enough for them as well?
If I pay 99 cents today, will I have the music five years from now? Do you have any files from ten years ago? This is clearly a temporary, limited use (DRM'd) product. For me, 99 cents per track ($10 per album) is to high by a factor of ten.
At $10 per album, I am unlikely to by any. At one dollar, I would probably buy many per month.
Good point about the longevity of a file. But the $1/per song for me is reasonable. I'll not buy an album just to get 2 songs (been there) but I will pay for a song or two. So I'll pay $2 - take it or leave it...
The same fight, over and over and...
Player pianos were going to stop people from learning to play.
Records were going to kill live performances.
Movies were going to kill theater.
Radio was going to kill the record industry.
Television was going to kill movies and radio.
Cassettes (and DAT) were going to kill the record industry.
Video players were going to kill movie theaters, video recorders (and cameras) were going to kill the movie industry - and the ad business.
CD recorders were going to kill the music industry.
DVD players were going to kill movie theaters, and DVD recorders (and cam-corders) were going to kill off the rest of the movie industry.
------
Now, some of these things have become moribund if not dead. You can still buy sheet music, but even in upper-middle-class homes it is no longer common for the family to sit down with/at instruments and play selections from Broadway. Live theater is no longer so common as to provide a training ground for acting. Live music is back to the lone bard or quartet, not the big band or local symphony.
Heck, you can still buy buggy whips, and the buggies too. But how many of us know someone with a one-horse shay?
RIAA and MPAA need to find a way to adjust - darned if I know how - but are trying to adjust us instead, which is at best a stop-gap. There will be a market for entertainment as long as there are people: if current industries cannot figure it out, someone else will.
I haven't bought a CD in about 6 years, $15 to $20 for a couple of songs is too much. Since getting my iPod about 18 months ago, I have spent about $2000, got the songs I want. At a $1.20, I'm going to slow my purchases, at $1.50, I'll be done buying music for a while again. The music industry has bitched and bitched about piracy, and when someone, (Apple), comes up with a good idea, then they want to see how much they can rob from them. I have a news flash for the music industry, I can get along without you, can you get along without me?
#35, indie labels selling their songs for 5 cents each? How will they pay for their bandwidth? Amateurs talk strategy, the pros talk logistics, or something like that.
Cut the middle man !!
Let Apple interface DIRECTLY with the artist.
That way $0.99 can be split ONLY between Apple and the singer.
Now, How do you like THAT, Mr. Greedy Record Company??
#60 I don't work for a record company.
But most of the people on this forum are typical Apple fanboys who don't understand simple reality. Apple sells "product" owned by someone else. Apple has taught the owners of the "product" how to make money off of music downloads:
Proprietary DRM that works best on your own hardware.
It was pretty dumb of Jobs not to get a longer deal.
Now all the record companies have to do is sell their product to someone who will give them a cut of the profits on hardware sales.
If I was Bill Gates, I'd already have a billion dollar cheque made out to the record companies signed and dated the day Apples deal ends for an exclusive 10 year deal that includes a cut of all hardware licensed for WMV 10 or 11
#73. You honestly think the music industry is gonna give up their BIGGEST source of income these day to some shit company that is clueless from hardware to software? This is no fanboy genius. Apple gave the music industry a life line...Apple SAVED them. Now that they have a little money, they go back to their old ways. They do that, its the END of the music industry as you will ever know. The day industries like the music and other media outlets got a gun pointed to their heads was when the internet was born.
So get real, and enough with your horse-ass comments.
If you were Bill Gates, you'd be in court as he is getting your ass whipped and begging your shareholders to stop selling that shit stock.
The music today should have gotten cheeper because of the cost of technology. So I will never pay 99 cents a song for one they have lost their minds. They want their pockets to continue to fill they suck!
http://www.allofmp3.com
i wonder if any record execs bother to look online and see that 90 percent of the online community thinks they're all fucking pig dogs. Greedy pieces of shit. ...and they think raising the prices of online songs is ever going to fly? i'll never pay over 99 cents for a song unless it's fantastic quality, 5.1 surround or higher, etc. More than 99c = straight back to pirating for a huge amount of people.
They need to get the idea out of their heads that they should make $12 off of 2 good songs. that's a dated business model and just wont work with consumers anymore. "padding" songs to fill an album with crap but force people to buy it... we've had a taste of relative market freedom. do you think we'll go back? fuck you.
If i knew where that Bronfman fucker lived, i'd sneak into his house at night and take a shit in his mouth. ...like his reputation for being a douche isn't already prevalent. what a cock holster.
#35 RS said
"The majority of you people have no idea what you are talking about (#35 excluded), and have no perception of how the music industry works at all."
Hey RS who cares? I am the customer, and regardless of what barfman wants, he has to play by my terms or I won't put out the $$$ If the Music Industry B@$t@rd$ want variable pricing that starts at say .99 for a real hot popular today even as we speak hit, followed by maybe .79 for a song that was so last month, and finish off with .59 for a golden moldy, thats something I would buy in a minute. OH, wait, I already am! Only its .99 whether its a moldy or a hottie. OK, fine.
What Barfman won't say is that stuff will start at .99 for the trash that no one will listen to, much less buy, and go up from there. Where do I get my info? well, read the whole interview. He says that the most popular digital down load is the ring tone, accounting for 60% of all downloads, and they are priced starting at $3
Follow that to it (warped) logical conclusion, and he wants us to pay a MINIMUM of $3 per song. Worse, what happens when we get variable pricing? Then the record labels will demand variable rights. We will not be able to burn our shiny new $3 song, or put it on a portable player.
I may not know the music industry and how it works, but I know what I will and will not pay for a downloadable song. I will pay .99, I will not pay more. In fact, if music goes past .99 I'll go to allofmp3.com and labels and barfman can go to 7734
#74 BIGGEST?
Please. Get real. iTMS probably costs the record companies more in album sales than they make in revenue.
Warner Music: Digital Revenue is 6% of revenue for quarter ending June 30, 2005
http://investors.wmg.com/phoenix.zhtml?c=182480&p=irol-newsArticle&ID=739499&highlight=revenue
Look, you Apple fanboys have taught the big record companies an important lesson. Suckers will pay a buck for crappy DRM laden songs. Now they will push Apple aside and try for more.
The CD allowed them to ripoff consumers for billions for price fixing. Now they'll do it again.
If you idiots had not bought any crappy AAC songs for 99cents you might have made them reform.
Now you just taught them that you people are suckers all over again.
"At $10 per album, I am unlikely to by any. At one dollar, I would probably buy many per month."
But would you buy at least 10 times as many? If not they're never going to do it. The industry is a bunch of greedy bastards and they only look at the bottom line. They will never lower the price unless they expect to make it up in volume so their profits will stay the same.
OK I'm not reading all of them, but halfway through no one even pointed out that .99 is even pretty high as it is. They don't have to print or package, stor or distribute millions of copies of a release.
That's a huge investment in infrastructure they are easily avoided. I am sure that the computer hardware etc is expensive, but effectivly this is what the film indusrty is poised to do. Instead of shipping porcessed film to a theatre, the digital "prints" are sent in hard drives.
What's cheaper than copying files?
Just when I had convinced my grandson to stop stealing tunes too! Now he'll probably stop buying from iTunes. Well, well, Mr. Dorkman, I guess you'll never get any more of his money.
iTunes downloads are not worth more than 99 cents. If you download the average 10 - 12 songs that make up an album, you're paying close to the price you would had you purchased the CD from a discounter. Also, with the CD, you get full quality CD digital sound, which you can then encode to MP3 or AAC at the bit quality you choose (128, 160, lossless, etc). iTunes downloads are only available in 128 format.
If the record companies want to make more money, they should offer something different. They could charge more for a lossless format download for the people who don't want to sacrifice any sound quality. They could offer downloads that include music videos (in addition to the regular 128 music only download.
I refuse to pay more than 99 cents for a 128 compressed music download. Seeing as how no production is involved (cd, cd case, lyrics and photo sheet, theft-proof shrink wrapping and shipping costs), iTunes downloads should never have cost 99 cents in the first place. 75 cents is more like it. However, the 99 cents price is reasonable when you factor in the iTunes/iPod experience of seemlessly purchasing a song, having it downloaded and synched onto your iPod. Nothing else matches that experience. Apple enables that experience, not music companies.
The reason labels are mad, is because now people dont have to buy the full cd for a half rate artist who has a hit. perhaps warner and the other majors should put more effort into signing bands that dont suck, and that would provide more than one "hit" record off one catchy pop song.
I think the comments about record labels should be scared of iTunes Music Store cutting them out as middlemen are right on. You guys get "it" but the labels don't.
Apple owns the single most powerful entity for marketing music to the "hipster" generation, namely, iTunes Music Store! If Apple were to sign up artists directly, iTunes Music Store is the ideal place to promote them, through charts, playlists and Podcasts. These artists won't need any labels to market them. (Yeah, payola is history)
I don't know if anyone will have the stamina to get to this post but I'm probrably echoing what everyone else is saying and that is if the record companies push it, you know, try any shit, they'll end up back to where people don't pay for music.
This is a good examample of how conglomerates shoot themselves in the foot as a product of their own avarice. I do not condone Piracy but I can't help but but hope that piracy grows atleast 300% as a consequence of their actions just so they can have something to cry and bitch about.
Those RIAA guys need to freakin relax. Dont some of these people have family or kids that carry around an IPOD or another mp3 player.
They are not making life easier or funner for anyone, and their constant nagging over digital rights, sales, pricing, and distribution is starting to get on my nerves. What gives them the right to affect so many people?
I dont get it anymore. can someone in plain simple language explain it to me? please.
If the record companies keep up their already failed strategy I think we can expect Steve Jobs to go into the music business. He can certainly contract with musicians to record on the Apple label. In this age who needs record companies.
In 5 years no one will be buying CD's
Record lables are very greedy, and they miss not having the same cash flow before the age of file swaping.
But lets face it, Apple and a few other music stores are keeping these guys off the streets. I'd like them to just see what happens when they think they can call the shots.
-Bill
Record lables are very greedy, and they miss not having the same cash flow before the age of file swaping.
But lets face it, Apple and a few other music stores are keeping these guys off the streets. I'd like them to just see what happens when they think they can call the shots.
-Bill