Filed under: Analysis / Opinion, iTS, Internet
Jobs tells it like it is - calls music labels "greedy"
I didn't know you could get away with saying stuff like this if it wasn't on your personal blog, but Jobs at the Apple Expo in Paris told the press that greed is the only reason record labels would raise prices. Jobs then goes on to state something I've suspected for a while: "The labels make more money from selling tracks on iTunes than when they sell a CD. There are no marketing costs for them." [emphasis mine]In a final stab at our music industry overloards, Jobs states yet another fact the labels - even after all this time - still don't get: legitimate music services are competing with piracy. As in: they're trying to sell products and services to people who are used to getting them for free - and as we've seen with iTMS, they're doing a fairly decent job. But if prices go up, customers are simply going to turn back to piracy - especially now that word is getting around that the labels make more money from online sales than traditional CD's.
It amazes me that these companies, with all their wealth and marketing research, still just don't get it. Feel free to discuss in the comments, but since I know these topics remain at the center of a heated debate, we just ask that you keep it civilized. After all, it's just the internets.
[via macnn]
_thumbnail.jpg "Take a stroll down memory lane")
Reader Comments (Page 1 of 2)
trevor said 11:41AM on 9-20-2005
GO JOBS!
I agree. It's rediculous. It's p2p or allofmp3 for me.
Reply
yinyang said 11:52AM on 9-20-2005
no doubt this will cause some waves amongst those stupid greedy dinosaur sharks that run the record companies, but maybe some will see the sense in Job's comments and realise that it is better to have a bit of something than all of nothing. if not then i hope the shareholders in those companies have a bit more sense than the execs.
Reply
Tommy Palmer said 11:56AM on 9-20-2005
You are so right, the record companies want to go back to the days of CD and record sales when they got lots of money and piracy isn't as rife as it is now.
Reply
Nick said 11:59AM on 9-20-2005
I think the RIAA (and all its equivalents in other countries) needs to stop blaming piracy for their problems. The amount they charge is insane and the artists they're backing suck.
Clay Aiken anyone?
Reply
KissTheRing said 12:14PM on 9-20-2005
Steve should start him own record label that he makes little or no money on but the artist makes more, therein attracting artists to the proposed apple label. These songs could be sold a bit cheaper on iTMS and that is where apple would make a slim profit, that and iPod sales. So do it Steve, free the artist from the music industry fat cats.
Reply
Scott said 12:17PM on 9-20-2005
It is not entirely true that there are no marketing costs involved when the sell an album online. People still buy those albums because of the marketing efforts put forth by the label.
I'm not saying they aren't greedy, but it is obvious Jobs is pulling out all of the stops to keep the pricing levels where they are.
It makes me think that if they want to raise the prices, Steve will give 'em the finger and start the Mac Music Label (can't use Apple obviously).
Reply
Wheels said 12:34PM on 9-20-2005
This is Jobs at his best, and he's absolutely speaking the truth. With a compact disc, a record company has to produce the disc itself, print out the the liner notes along with the back cover, put it in a case, distribute it, and promote it. The last time I knew, the cost of producing a CD was $3.
On the other hand, producing a music file involves making the file itself, along with any other digital support media (cover art, etc), putting it in your web store for sale, and promoting it. Your costs will be amortized quicker, because you only need to produce everything once, having backups somewhere else off site, and the more music you have for sale on your website, the less your per unit cost will be, hence a higher profit.
IMHO the records companies greed for money is being overshadowed by their greed for having total control. You can bet that the record companies already know all too well what Steve Jobs has just said about profit of CDs vs. online distribution. It's just that they don't want to go the iTunes route because the didn't think of it.
I just want to know if there'll be a picture of Jobs flipping of the Warner Bros. logo. :)
Reply
David said 12:50PM on 9-20-2005
Seems like one problem w/ the big labels is that they're owned by even bigger corporations, most of whom know nothing about music. It's all MBAs trying to grow quarterly profits for their shareholders, one quarter at a time. Longterm thinking has become as unfashionable in in big business as it has in politics.
Reply
manish said 1:32PM on 9-20-2005
always blaming the MBA's...actually in this case it might be valid. But I wonder if apple uses MBA's as well to come up with the iTMS platform?
anyways, I hope these labels raise the prices and watch the customer leave...then we can hear all about how the customers are bad and RIAA is going to sue all of them. way to love your customers and embrace them.
truely clueless.
Reply
systemsboy said 1:36PM on 9-20-2005
I have to agree with Jobs here (no surprise). I can't see any reason to raise online music prices other than greed. Have music production costs suddently gone up? I'd guess not. In fact, if anything, they've probably gone down in recent years. And services like iTMS reduce piracy, provide additional exposure for artists, and, from what I can tell, cost the labels nothing. Once again, the record execs show their true colors and their utter comtempt for their customers.
Reply
Cecil said 1:54PM on 9-20-2005
There needs to be a shift in paradigm. The simple fact of the matter is that older people have paid time and time again for the same music. They bought it on LP, Cassette, CD, DTS Disc, DVD Audio etc.
Sure, something fundamentally needs to change with the record companies and their formulaic approach to building bands, instead of finding real talent out there, but that is a different argument.
The fact of the matter is, I should be able to rip my CDs, and purchase music online for whatever price, then I am on record as purchaseing/owning the right to listen to those songs. If 5 years from now songs that I have purchased already have been re-mastered from studio recordings and are now available in lossless, DTS 5-channel, MPEG-2 10 channel, whatever... I SHOULD BE ABLE TO FREELY DOWNLOAD THE NEW VERSIONS as they represent a more accurate representation of the recording I purchased the rights to hear. The money I paid was for the recording the artist laid down in the studio. If there is a new means of transmission that more faithfully reproduces the listening experience of that recording, great, give it to me. If not, when I purchase that song, give me the reel-to-reel, or DAT tape, or whatever.
How come no one has ever brought this up?
Reply
Mikey said 5:01PM on 9-20-2005
I agree - the labels are greedy - has anyone Pulled out their iPod Nano headphones during a song or audiobook? nano will count 2 seconds - plug in un-pause - STUNNING - you're back where you left off...
Reply
renesimone said 5:01PM on 9-20-2005
Absouletly agree with the last comment... How many of us have the same music in different formats.
Since it's a given that any future format will be possible to have as a digital file even if the industry argues that you can't download it for free since the remastering was not free then customers should be able to have an "upgrade" option just like software.
Reply
JL984 said 5:10PM on 9-20-2005
Cecil,
Your proposal that you should get the future tech. versions of songs you've already bought doesn't make sense because then no company would invest in new technology.
The cost for research and development of those future technologies, to encode them and distribute them would be eaten by the record companies since you will not pay a nickel towards recouping those costs.
For the record companies, their response would be: "Let them buy 8-tracks."
Reply
renesimone said 6:01PM on 9-20-2005
JL984, you're right... but check out my suggestion...
Reply
dogfriend said 6:55PM on 9-20-2005
Mikey -
Yes, the Nano will automatically pause when you remove the headphone or the dock connector. My 3G iPod also will pause automatically when you unplug the dock connector.
Reply
charles powne said 6:55AM on 9-21-2005
I've submitted nearly 100 titles from my label to the ITMS over the last 18 months, of which 64 have been added (more coming soon). I can't add much to the discussion except to note the irony that Apple are very bad about getting the correct pricing for the materials we've given them. Steve Jobs complains about labels that want to raise prices, but what about when the ITMS charges $9.99 for a 20 minute EP by Daniel Menche? I've informed them about the problem a year ago--A YEAR AGO--and it's still incorrectly priced. We have the bulk of the Legendary Pink Dots back catalog in the store now, but it's supposed to be $7.99, not $9.99. Again, Apple have known about the issue for a year but have done nothing to correct it. Basically, if it's not $9.99 for a single CD, or $19.99 for a double (and so on), they'll get it wrong. This is particularly annoying when we give them a multi disc set, like Randy Greif's "Alice in Wonderland", and ask them to charge $29.95 for it, but after a year it's still $49.99. Big sigh!
Reply
patRice said 12:53PM on 9-21-2005
What do the record companies expect? Loyalty? From people they have been cheating out of money for years? I remember when CDs first came onto the market how they said the prices would drop drastically once the format was established and be to the consumer's advantage. Has this happened? Of course not. They have to get a grip on reality, accept that the hi-life times are over, and maybe also see that some of their high-profile artists are simply overpaid for what they deliver. Did record execs ever consider that maybe poor and bad music had an influence on sales going down? I would not be surprised if the future will be the bands/artists selling their stuff themselves through shops like the iTunes one. Roger O'Donnell - formerly of The Cure - is doing this with the compilation of his new label.
Reply
Matt said 1:17PM on 9-21-2005
See one nifty features on itunes now is podcasting. That is the thing that should scare the record companies.NO not because of talk news and other things like that, but independent artist. Yes i today if I had a band could record something in digital format pretty easily in a home made recording studio and make it an mp3 and throw it on itunes without a problem. THink about all these indie band and how they can use the podcast feature to their advantage. Yes its free but its the artist putting up their own music for the public to see. Anyone in the world can access then newest song my band puts out minutes after i post it on itunes.
Itunes next step in my opinion in the next few years when cds all but disappear out of the market is having individuals hosting their own music but being able to sell it on itunes. Where there is no longer a need for big recording industries and record labels. Well there would be a need but their roles would eb greatly changed.
Reply
Chris Christensen said 1:47PM on 9-21-2005
I think they do get it. Currently the labels make most of the money and iTunes has a danger of cutting them out of the loop. When they go before congress and say that downloading songs steals from the artists they really mean "and that is our job".
Reply