Filed under: Apple Corporate, iTS
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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Reader Comments (Page 1 of 2)
Frank said 3:16PM on 2-02-2009
innnteresting. and very believable. the thing is, i believe that the labels are fooling themselves. apple was on the way back before they so generously deigned to "save" apple.
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Ridgecity said 4:15PM on 2-02-2009
Apple just created an mp3 player, then they created the Itunes store, thus saving the music industry from total collapse, and even still, most people already know what an mp3 is and how much it costs.
Slappy said 3:25PM on 2-02-2009
I think David Card is on to something, that the music industry would be beyond screwed with out iTunes. Not sure who they think they are fooling.
And, personally, I like that the record labels are getting threatened by someone else for a change. The idiotic way they treat their customers and artists is infuriating.
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Bryan said 3:29PM on 2-02-2009
"The labels, on the other hand, feel like they brought Apple back from the dead, blessing the company with content."
It's their fault for not having the vision to do this themselves. I recall when Apple first rolled out the iTMS, the execs were quoted as saying they would consider it a success if Apple sold a million songs in the first year. When Apple passed that milestone in a week, they should have seen the writing on the wall.
Of course they would never have been able to implement such a system to the level of success Apple has, so from my point of view, it's the music labels that should be thanking Apple, not the other way around.
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Ridgecity said 5:15PM on 2-02-2009
Actually I think their content is what brought so much people to the internet, actually most ISP still brag about downloading movies and music if you get their fast broadband access!
Jonathan Stark said 3:43PM on 2-02-2009
This statement sums up how completely out of touch music labels are:
"angering the label's customers"
Music labels don't have customers - retailers do. Labels don't have fans - musicians do. Music labels are a dying gatekeeper made irrelevant by the awesomely free distribution channel that is the internet. Bye bye middlemen - I, for one, won't miss you.
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HughSF said 3:53PM on 2-02-2009
Music execs believe they can revive their ill gotten fortunes by crapping on Apple? Put it another way, if musicians had been treated fairly, they would be the first to complain about Apple. Now the execs cry, as do American auto execs, when no one buys their bs. 2009's economy is put-up-or-shut-up time for industries on the ropes due to their bizness practices.
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Orion said 3:58PM on 2-02-2009
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...
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required said 3:58PM on 2-02-2009
Amazon is a great place to buy and download music. In fact it's often much cheaper and DRM free.
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mort said 4:05PM on 2-02-2009
I say let the labels crash and burn.
ex-musician.
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Brad Strickland said 4:56PM on 2-02-2009
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.
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TerpsFreak said 5:22PM on 2-02-2009
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?
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elice82 said 5:25PM on 2-02-2009
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!
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elice82 said 5:28PM on 2-02-2009
With music industry I mean music labels... little big mistake.
TurdFurg said 5:30PM on 2-02-2009
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??
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Clint said 11:50PM on 2-02-2009
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.
BJ Nemeth said 12:57AM on 2-03-2009
@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.
samuel said 7:14PM on 2-02-2009
I fucking hate SONY and you can print that.
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Øivind said 8:17PM on 2-02-2009
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 ...
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G said 9:47PM on 2-02-2009
Right, because no one has ever tried that before.