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Major music cartels demand concessions from Apple before inking DRM-free iTunes Store music deals

Monday, December 15, 2008 · 3:21 pm · 23 Comments

For months now, there have been rumblings that Apple and the major music cartels are very close to a deal to offer DRM-free music via iTunes Store.

HypeBot reports, “Months later their is still no deal. Sources tell Hypebot that each label is looking for a different concession before they allow iTunes to drop DRM:”

• Warner Music Group wants variable pricing on the track level including some hit product above $.99 cents.

• Sony BMG wants to work with iTunes using the agency model. As it is with Rhapsody, Amazon and others, Sony BMG is the actual seller of tracks and iTunes woulc be the agent delivering them. Sony BMG’s concern is that competition will drive track prices lower and the agency model allows them to maintain complete control.

• Universal wants watermarking on the individual track purchase level. Apparently other download stores have agreed or are close to agreeing to do the same. How it will effect consumers remains unclear.

Full article here.

[Attribution: AppleInsider via All About Jazz. Thanks to MacDailyNews Reader "Fred Mertz" for the heads up.]

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Comment Feed

23 Comments

1 2 Next »

Kevin

Monday, December 15, 2008 - 4:24 pm · Reply

gee, there’s no collusion going on there. they all ask for different concessions and maybe all three will get all three.

hopefully more and more artists will be able to deal outside of a label and shut out these guys.
cptnkirk

Monday, December 15, 2008 - 4:29 pm · Reply

I find it surprising that even though Apple really holds all the cards ion this negotiation, the labels think they can actually get their way here. Apple is the elephant in the room. Apple needs to stop selling the music of any one of these crooks and the others will buckle.
Gabriel

Monday, December 15, 2008 - 4:29 pm · Reply

“Sony BMG’s concern is that competition will drive track prices lower and the agency model allows them to maintain complete control.”

So right there, Sony basically admits that they want to eliminate competition so they’re free to drive up prices. Is this not, by definition, “monopolistic” behavior – avoiding competition to keep prices high?
ericdano

Monday, December 15, 2008 - 4:29 pm · Reply

Look, the Music Industry needs to deal with reality. If you offer DRM-free tracks in the iTunes store people will buy them. If you start putting DRM or variable pricing and other things in there (watermarks), people can easily find albums online for FREE.
zmarc

Monday, December 15, 2008 - 4:38 pm · Reply

I’m sure glad Apple’s in control here; the labels need Apple a lot more than Apple needs them. Apple can just wait them out. (Did you see that other report that Amazon, as the clear number two, only sold 130m songs compared to iTunes’ 2.4b? That’s not even a competition!)

If Microshaft was running the show you know that they would have caved long ago to the music cartel’s ridiculous demands and it’s us consumers who would pay the price.
Jake

Monday, December 15, 2008 - 4:59 pm · Reply

Anyone who is not really affected by the current iTunes DRM should stick with them over Amazon, just to give Apple leverage in dealing with these a**holes.
Go Apple!!
HMCIV

Monday, December 15, 2008 - 5:10 pm · Reply

If it were me, I’d keep the Fairplay DRM on and leave the execs to pee themselves. We’ll talk after another music store takes a dirt Nap[ster].
Quad Core

Monday, December 15, 2008 - 5:16 pm · Reply

• Universal wants watermarking on the individual track purchase level. Apparently other download stores have agreed or are close to agreeing to do the same. How it will effect consumers remains unclear.

Isn’t that what iTunes already does with the DRM-free selection they have? If you buy the song it is tagged with your info,so if you spread the track, they know who spread it.
ApplePi

Monday, December 15, 2008 - 5:20 pm · Reply

@Quad Core…

I don’t think it’s the same. Watermarking actually watermarks the individual music in a way that is very difficult or next to impossible to remove. Currently, songs are “Tagged” but that tagging isn’t impossible to remove or change.
Sixvodkas

Monday, December 15, 2008 - 5:57 pm · Reply

@ Jake;

That’s exactly what I’ve been doing since day one.

I refuse to sit back and be a “good little boy, doing what I’m told to do”, because I believe that what they’re doing is wrong.

These cartels imagine they can dictate “where” I must go to purchase music, and after all this time, I’ve managed to prove them incorrect.
Gabriel

Monday, December 15, 2008 - 6:01 pm · Reply

Watermarking would presumably embed identifying information into the audio stream of the AAC file itself. Which would of course slightly degrade the audio quality, and require some fancy processing on the server side to embed the customer’s unique identifying data within the track upon download.

I’m still blown away by the way Sony’s request is worded there. Where are all the “monopoly” bloodhounds, who are so quick to go after Apple’s iTunes “monopoly”? Will they also be outraged by Sony’s clearly monopolistic demands?
84 Mac Guy

Monday, December 15, 2008 - 6:03 pm · Reply

Hey record labels dumb-asses, here is the phone number for NBC. Call and ask them how their threat against Apple and iTunes worked out last year.
Zeke

Monday, December 15, 2008 - 6:41 pm · Reply

Maybe “Sources” will tell Hypebot how to use “there” and “their”.
jjjj

Monday, December 15, 2008 - 7:12 pm · Reply

The hostage here isn’t Apple, it’s you and me, the customers.

Once again, the labels think they are in control. How sadly mistaken they are… and I used to work for one long ago…
ken1w

Monday, December 15, 2008 - 7:14 pm · Reply

Apple needs to “just say NO.”

Apple’s DRM is not hurting Apple, based on sales of iPods and increasing rate of song sales on the iTunes Store. It is clear that most iTunes Store customers do not care about the DRM, because the DRM is mostly seamless and invisible. And iPod customers will still buy iPods, whether they get their music from the iTunes Store, Amazon, CDs, or “other” sources.

And even if iTunes Store sales would be a small percentage higher without DRM, most of that increase will be from non-iPod users trying the iTunes Store for the first time because their non-iPods are now compatible with music from the iTunes Store (as long as they can play unprotected AAC – most can even the Zune). Non-iPod resellers will probably give away iTunes Store gift cards as sales incentives. That does not help Apple. Apple wants to sell more iPods, not more songs on the iTunes Store. If Amazon sells more DRM-free songs, that’s great for Apple, because Amazon is also selling more iPods used to play those songs.

Apple has music label executives believing it desperately wants to sell DRM-free music. In actuality, nothing could be better for Apple than maintaining the status quo. If the music label executives were thinking clearly (instead of being manipulated), they would insist that Apple only sell DRM-free music. That would cut the iTunes-Store-to-iPod exclusivity, which is a major advantage for Apple selling both iPods and songs. But they are apparently stupid, so they will keep trying to play this game; they don’t see that Apple is not even playing the same game.

The bottom line – there is no downside for Apple. Apple has put itself in a position where it cannot lose.
Gabriel

Monday, December 15, 2008 - 10:00 pm · Reply

@ Zeke: My thoughts exactly.

@ ken1w

Dang… I’d not thought of it that way. Apple really *is* in the catbird seat here.

In a related thought, perhaps “sources” within Apple helped leak this story in the first place? It sure doesn’t make the record labels look good, with Sony in particular coming off as the worst.

As an aspiring musician myself, I sincerely hope these anachronistic middle men fade into historical obscurity as soon as possible. Nobody needs them anymore. It just sickens me to buy a $10 CD, knowing that maybe 50 cents of that goes to the actual artist. In fact, depending on how the original music contracts were drawn up, some musicians see absolutely nothing from online sales – since it’s not covered in the contract, the labels pocket 100% of it.

The sooner fans can financially reward musicians directly, the better.
LordRobin

Monday, December 15, 2008 - 11:19 pm · Reply

I agree with those that say keep the DRM, because really, who cares? I’m not aware of some huge groundswell of people wanting to play AAC tracks on also-ran devices.

The only time I’ve noticed the DRM has been when I’ve gotten a new Mac, and even then, it’s an inconvenience of a few seconds.

——RM
papa oochie

Tuesday, December 16, 2008 - 3:18 am · Reply

I think Apple needs to sell music like they sell apps.

If an artist were to put their “own” music on iTunes and sell it for $1 (for easy math) $0.30 would go to apple and $0.70 would go strait to them.

Can you say bye bye to the big record labels!
Will

Tuesday, December 16, 2008 - 7:44 am · Reply

I dare the music catels to try the agency model in Europe. I bet its under 6 months before they’re fined for price fixing and distorting the market.
angry

Tuesday, December 16, 2008 - 8:59 am · Reply

Sony is Microsoft No. 2 and im glad i still boycott them since the day they put trojan virus’ on their music cd’s back in 2005. They went over the line and that did it for me.