“Apple is in discussions with the big music companies about a radical new business model that would give customers free access to its entire iTunes music library in exchange for paying a premium for its iPod and iPhone devices,” Andrew Edgecliffe-Johnson reports for The Financial Times.
“The ‘all you can eat’ model, a replica of Nokia’s ‘comes with music’ deal with Universal Music last December, could provide the struggling recorded music industry with a much-needed fillip, and drive demand for a new generation of Apple’s hardware,” Edgecliffe-Johnson reports.
“Apple would not comment on the plan, but executives familiar with the negotiations said they hinged on a dispute over the price the computer maker would be willing to pay for access to the labels’ libraries,” Edgecliffe-Johnson reports.
“Nokia is understood to be offering almost $80 per handset to music industry partners, to be divided according to their share of the market. However, Apple has so far offered only about $20 per device, two executives said. ‘It’s who blinks first, and whether or not anyone does blink,’ one executive said,” Edgecliffe-Johnson reports.
Apple, which is thought to make relatively little money from the iTunes store compared with its hardware sales, is also understood to be examining a subscription model [which] would work only for its iPhone devices, where it has a monthly billing relationship with customers through the mobile phone operators offering the device, while the ‘comes with music’ model would work with iPhones and with iPods,” Edgecliffe-Johnson reports.
Full article here.
Obviously, we need more details, but our initial response is that if it’s optional, we’re all for it. If it’s not, meaning that everyone who buys an iPod and/or iPhone must pay the premium, regardless of whether or not they will ever listen to music from the participating labels (or even listen to music at all – believe it or not, some people use, for example, iPod touch, sans music, for things like email, surfing the ‘Net, TV shows, etc.), then we’d be markedly less enthusiastic.
@jim swan
> iTunes pays the artist 70 cents of each 99-cent download.
Pays the artist or pays the record company?
If the latter, what does the artist actually make?
@rickw
Thanks for your question.
I can only speak as an indie using the TuneCore uploading service. Apple’s 70 cents comes directly to me thru TuneCore’s accounting, which takes no percentage. Instead I paid them a small initial set-up fee to deliver the album to iTunes and to as many of several other download services as I desire, for 99 extra cents each. Each subsequent year I keep the album current with an annual storage fee (about $9).
The advantage of a commercial record deal is the access to big-bucks advertising. It’s hard for indies to get found by the average mainstream listener. In return for that advertising advantage, the signed artist sacrifices most of the royalty to the record company. You just have to hope that the scale of the sales outweighs the percentage cut, I guess.
Since the Napster deal most musos haven’t received one lousy cent. This model would screw them further. Frankly, I don’t use the iTunes store and will not use it because of their pricing model. Also this is just another form of DRM to protect a dying industry model (as previous posters have already said) and I won’t have a bar of it.
The new music model increasingly being embraced by savvy musos is to release songs and albums (which are also dying) and directly marketing the products to their audience. This is achieved via web marketing and direct sales to the public via tours. And touring is the new cash cow for exploited musicians.
Let me also say that copyright is stupid, dated and anachronistic. I mean, maybe the next research I do for my class should be copyrighted and I should receive a royalty for it. Give me a break.
Say No to all forms of DRM and copyright!
Such great reporting, NOT: “Apple, which is thought to make relatively little money from the iTunes store compared with its hardware sales,”
Apple make relatively little margin from the iTunes store compared with its hardware sales, but makes a huge profit because of volume, volume, volume.
@Jim Swan
Well Jimbo, here’s your chance to plug your musical expressions of emotion
Put the links up, I want to hear it … maybe buy it.
If you only pay once when you buy the device, it’s not a “subscription.”
I think the artists get screwed with arrangements like this, whether it’s a monthly fee or a one time fee. So the label gets $20 or whatever per iPod. What does the artist get from that $20? If this is the future, artists abandoning the labels to sell directly to the public will become a bigger trend.
Apple should stick with its successful a la carte model, then make deals directly with artists.
Whoaaaaa. Look what I got in my pocket.
@skylark
Thanks for your interest. I tested the following iTunes link, and it takes me to the Japan Store — I don’t know whether your mileage will vary or not, but the Japan Store is where I have the “liner notes” for the songs.
In case it doesn’t work for you, a search for “Jim Swan” in any country’s iTMS will bring up my album “None-Too-Great Hits” (along with a few other entirely unrelated items).
Without further adieu, here’s the link:
Jim Swan – None Too Great Hits
They’re all simple home recordings dating back to the 70s and 80s. Each is in a different style, but they’re all very folk-oriented. Not sophisticated at all, but I hope you like them anyway.
Thanks again for the opportunity.
Jim
is this even from a reliable source? Sounds a bit like Microsoft, not Apple. Apple consistently reduces prices, why have a new ‘premium’ model that only offers music as an extra? It is Apple-like to low bid though, because for $20, that would be a no-brainer.
I don’t want most of the music out there – paying for what I want works best for me – my teenage niece however would probably love access to the latest greatest.
Having both options would only be a win win IMO.
Would this mean they stopped selling it as it is sold currently. or would these be on top of the current system. I want to own my music, i would go back to buying CD’s and just import them.
This would actually be a good deal for the labels, Apple, and consumers. I’m undecided about how the artists would come out.
It provides the labels a guaranteed revenue stream. For $20 a unit, Apple gets to advertise iPods that come with millions of songs essentially right out of the box and free of charge. Consumers have two options for experiencing music without any visible overhead charges.
NO BRAINER! Even at an additional $100/iPod for access to the whole iTunes directory EVEN ON A SUBSCRIPTION basis would be worth it. Apple should make this optional for its users – I know I’d run out and buy a new 80gig Classic iPod at the first oppourtunity if such a deal was offered!
Sounds like bullshit, written to put pressure on Apple and condition the public perception.
Way too many potential dirty tricks to further defraud artists, I can’t see Steve being part of it. But he has become a skilled negotiator and can pull rabbits out hats.
However it sounds more like a power play, taking away the earning potential of independent artist. Long term if music appears free (included in the cost of the device) people will refuse to pay for music. Any artist who hasn’t a deal can make zero dollars from their skill and work so the labels increase the power of their monopoly.
The even bigger picture is that it is part of the increasing curtailment of civil liberties, a little bit here, a little bit there, few people notice. One day you’ll need a license to whistle a tune if the powerbrokers have their way.
Copyright is a good idea otherwise the powerful just steal from the weak but it should back to the three years it was rather than several decades that it is and over a century that the media companies would like.
I’ll buy anything that can get me more juice from iTunes store for less. Well, you know, a plan offers less than $.99 a song maybe?
And 320kbps would be nice too!
I think Apple should deal with more musicians directly, cutting out the labels where possible. They could charge the same 0.99 and both have a bigger share – similar to the announced iPhone developers’ plan. Apple maintains the site and gets 30%. The musicians get the rest. At the very least this approach would weaken the labels’ bargaining position. This would work with new music – wouldn’t help with existing libraries.
I’m unsurprised at MDN’s “Oh..um, that’d be fine with us” attitude after years of bashing the subscription model with both hands. How many dozens of times has MDN posted their diatribe about how subscriptions “fly in the face of human nature?”
Business models that fly in the face of human nature are doomed to fail. –MDN, every few days for the past couple of years.
According to this ars technica article:
“Apple’s plan is different in several respects. Since the average iPod owner buys about 20 tracks from the iTunes, Apple wants to make the premium about $20, arguing that it should cover the average consumer’s downloads. Then the owner can make unlimited music downloads from the iTunes Store for the life of the device. Once downloaded, the tracks are yours to keep, even if you get rid of the original iPod or iPhone. And since iPod and phone owners tend to replace devices fairly regularly, the record labels would be getting the fee whether or not the consumer makes any further downloads. Silicon Alley Insider did the math and thinks it’s a good deal all around. But according to the Financial Times’ sources, the labels are looking for numbers closer to the $80 Nokia is reported to be paying.”
Although, that statement isn’t very well supported, but if true, this will have a very large impact.
PC Apologist,
Selective quoting makes you look like an asshole, which, of course, you are. Also included in the MacDailyNews Take to which you linked:
“Now, for the limited amount of people for which a music subscription service would be welcome, we say, by all means, Apple should offer it – if it makes business sense (i.e. development and operational costs are less than profit potential).”
MacDailyNews has stated the exact same quote in multiple Takes spanning years, including, but not limited to:
http://macdailynews.com/index.php/weblog/comments/16114/
http://macdailynews.com/index.php/weblog/comments/14772/
http://macdailynews.com/index.php/weblog/comments/13919/
http://macdailynews.com/index.php/weblog/comments/13471/
http://macdailynews.com/index.php/weblog/comments/13418/
@jimw
Thanks for the reply.