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NYT: Music execs operate 'in fear of Apple'

In today's New York Times, Tim Arango tells a story of a heated conversation between Sony Music's Rolf Schmidt-Holtz and Steve Jobs on Christmas Eve -- one that "ricocheted around the music industry."

Apparently, before the announcement at Macworld, all the labels except Sony had agreed to a new pricing deal. Sony wanted the new pricing to take effect immediately after the announcement, but Jobs wanted a longer rollout. After the phone call, according to the Times, Sony agreed to the longer waiting period.

During this time, Jobs was allegedly on medical leave, recuperating at home from his much-publicized illness. Arango notes that Jobs' point-man on music industry relations, Eddie Cue, and Apple's entire staff "do their best to follow Mr. Jobs's style in their own negotiating." That is to say: Hardball.

Music executives, according to an unnamed source, are afraid of angering Apple, as Apple can single-handedly remove a label's catalog from the iTunes store, angering the label's customers. At the same time, Apple can claim that their hands were tied, the decision wasn't theirs, and that all the ire should be directed at the music industry. Such a thing hasn't happened -- yet -- but the threat is there, and real.

The labels, on the other hand, feel like they brought Apple back from the dead, blessing the company with content.

Even so, David Card of Forrester Research offered an interesting coda to the story: "if it weren't for Apple, God knows how bad the music industry would be," he said.

[Via 9-to-5 Mac.]



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Apple Corporate iTS

In today's New York Times, Tim Arango tells a story of a heated conversation between Sony Music's Rolf Schmidt-Holtz and Steve Jobs on...
 

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TexRob

The last line is the truth. I will be completely honest, all I used to do was pirate my music before iTunes. It really wasn't so much the cost, it was mostly the convenience. I buy a lot of music from iTunes purely out of laziness and convenience. This is the beauty of iTunes. I don't think anyone can usurp Apple though, not without an effort on the magnitude of Microsoft with the Xbox. The task to dethrone Sony and Nintendo was massive, but it was doable with a good product, money, and time. The problem is, I see the goal to dethrone Apple even bigger than that one. You need time, money, product and momentum. I really don't see how you'd get momentum without something drastically better. What can be better though? Minor improvements can be made, but you would have to have a better device, iPod, a better tool, iTunes. I don't see all these pieces of the puzzle falling together.

February 02 2009 at 10:35 PM Report abuse rate up rate down Reply
mannyv

The music industry has had negative relationships with their sales outlets since the beginning of the industry.

There was a time where they complained about radio...tower records...MTV...Wal-Mart.

I mean, these guys are the biggest bunches of whiners in the history of business. They've managed to kill or cripple every one of their product channels in some way or another.

Plus, they also screw the musicians that provide them with their bread and butter.

Unbelievable.

February 02 2009 at 7:15 PM Report abuse rate up rate down Reply
1 reply to mannyv's comment
jstark

Amen.

February 04 2009 at 4:22 PM Report abuse rate up rate down Reply
Øivind

Interesting. This should explain why music labels are embracing Spotify. I never understood how Spotify got those deals until now. Labels want a real competitor to iTMS, which Spotify will become. As soon as Spotify is on our iPhones (and that will be soon): bye bye iTMS. Apple will have to answer with their own subscription service by the end of the year or suffer a greatly reduced market share in the long run. I wonder if record labels will allow Apple to do that without any kind of delay ...

February 02 2009 at 7:14 PM Report abuse rate up rate down Reply
1 reply to Øivind's comment
G

Right, because no one has ever tried that before.

February 02 2009 at 9:47 PM Report abuse rate up rate down Reply
JaceFace

Personally, I'm confused by this part:
"Music executives, according to an unnamed source, are afraid of angering Apple, as Apple can single-handedly remove a label's catalog from the iTunes store, angering the label's customers."

Perhaps it is true that the executives believe this, but I think the result would actually be the opposite. I don't make my music purchasing decisions based on what label puts out the music. I don't think most people do.

I do make decisions about purchasing music based on convenience, though, so if Apple removes some section of music and I go there looking and can't find it I'm certainly less inclined to return to iTunes next time.

Right??

February 02 2009 at 5:29 PM Report abuse rate up rate down Reply
2 replies to JaceFace's comment
clint Johnson

Come on, really? You know if it wasn't on iTunes you'd just go to Amazon or P2P to get it, and be back to ITMS the next time out of sheer convenience. Apple's playing hardball with these guys to keep the cost to the consumer DOWN (and of course to help with iPod/iPhone sales). If they pull a label's music (as they did with NBC tv shows) because of pricing conflicts, it's to keep prices under control from these jackals. Once it starts hitting the labels in the bottom line they'll relent. The thing is, ITMS service doesn't really do anything more than break even for Apple, which helps sell their MP3 players. They know if the prices get high people will stop paying for content. The media industries' problem is that they're trying to superficially set the worth of content, but what they can't wrap their tiny brains around is that in a world where you can download most of the content for free, the worth of it is essentially zero. All they can hope for is to have a service that charges enough to make a profit and is convenient enough to entice people to pay for it (along with peoples desires to not risk getting caught breaking the law). The labels' greed is their ultimate downfall. Can't wait.

February 02 2009 at 11:49 PM Report abuse rate up rate down Reply
BJ Nemeth

@Clint: "The thing is, ITMS service doesn't really do anything more than break even for Apple, which helps sell their MP3 players."

While that was accurately reported in the early days of the iTMS, even a small margin of pennies per song becomes huge when you sell billions and billions of songs.

Apple does *far* better than just "break even" on the music they sell via iTunes.

February 03 2009 at 12:57 AM Report abuse rate up rate down Reply
elice82

Now the music industry is experience the same thing what they did do, to others, like musicians and online music stores. The music industry had power, back then. Now they have to work for there money, not grabbing it! And the audience is deciding what they want hear. See YouTube and others. They don't like it, they don't have control. Just a little bit.

Problem still is if you get a mighty company back again. They will be calling the shots and you might have the same problem again. They going to decide what the price is. Only if they have all the music of the different record companies or at leased the bigger part. I hope there will be serveral (not two big ones) service, who will offer the same way as iTunes! That makes the prices drop too!

February 02 2009 at 5:25 PM Report abuse rate up rate down Reply
1 reply to elice82's comment
elice82

With music industry I mean music labels... little big mistake.

February 02 2009 at 5:28 PM Report abuse rate up rate down Reply
TerpsFreak

Awww. Poor music labels. Big bad Apple is beating up on you?

I'd don't believe this pathetic PR crap for one second. The labels wrote their own tickets to extinction by allowing their unbridled greed to dictate pricing and shoving one-hit-wonders down our throats instead of focusing on artist development.

How can we hasten their demise?

February 02 2009 at 5:21 PM Report abuse rate up rate down Reply
Brad Strickland

So the record labels live in fear of Apple. Big Deal. I'm sure they have an equal fear of Wal-Mart. Anytime a distributor is such a large part of your bottom line. You live in fear of their demands.

February 02 2009 at 4:46 PM Report abuse rate up rate down Reply
twistedarts

I say let the labels crash and burn.

ex-musician.

February 02 2009 at 4:04 PM Report abuse rate up rate down Reply
required

Amazon is a great place to buy and download music. In fact it's often much cheaper and DRM free.

February 02 2009 at 3:58 PM Report abuse rate up rate down Reply
Orion

And my credit card info I've put all over the web could be used by those sites for their personal shopping spree, but it doesn't mean that just because they have the power to do that, they will.

What is it with music labels and always having their knickers in a bunch...

February 02 2009 at 3:58 PM Report abuse rate up rate down Reply
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