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Thu, Nov 20, 2008 - 06:45 AM EST  —  AAPL: 86.29 (-3.62, -4.03%)  |  NASDAQ: 1386.42 (-96.85, -6.53%)

Warner music exec discusses decapitation strategy for Apple iTunes Music Store
Wednesday, September 28, 2005 - 09:51 AM EST

"Michael Nash, Warner's digital strategy chief, suggested labels might have no choice other than cut Apple's digital music sales off at a stroke," Andrew Orlowski reports for The Register. "'What if Jobs says 39 cents or 29 cents per download - what then? The industry can say, OK we'll cut him of - very few people people buy music from digital downloads,' said Nash, who pointed out that most of the music on iPods is from their own collections. The iPod won't disappear, he pointed out, and the decapitation will really feel no more painful than a gentle shave. '[Jobs] will figure out another model,' said Nash... His comments came at the CTIA Telecomms Show, in a panel titled 'Artists, Labels, Publishers: What Do License Holders Want.'"

Nash also said, "The industry got together and said 'We don't want another MTV'. Well, now we've got another MTV, in Apple. And we have to deal with it." And an unnamed executive stated, "It's going to be difficult to get the consumer to stop thinking about owning music, and think about paying for participation instead," Orlowski reports.

Full article here.

Advertisement: Apple iPod nano. 1,000 songs. Impossibly small. From $199. Free shipping.

Related articles:
Warner CEO Bronfman: Apple iTunes Music Store's 99-cent-per-song model unfair - September 23, 2005
Analyst: Apple has upper hand in iTunes Music Store licensing negotiations with music labels - September 23, 2005
Steve Jobs plays high-stakes poker with greedy record labels - September 22, 2005
Record labels accuse Apple CEO Jobs of 'double standard' as they seek to force iTunes price increase - September 21, 2005
Apple CEO Steve Jobs to repel 'greedy' record companies' demands for higher iTunes prices - September 21, 2005
Apple CEO Steve Jobs vows to stand firm in face of 'greedy' record companies - September 20, 2005
NYT's Pogue to record companies: it'd be idiotic to mess with Apple iTunes Music Store prices - August 31, 2005
Apple CEO Steve Jobs prepares for pivotal fight on digital music prices - August 28, 2005
BusinessWeek: Apple unlikely to launch music subscription service - August 15, 2005
Record labels to push Apple for higher iTunes Music Store prices in 2006? - August 05, 2005
Study shows Apple iTunes Music Store pay-per-download model preferred over subscription service - April 11, 2005
Record labels look to raise iTunes wholesale prices, music industry fears Apple's market domination - March 05, 2005
Report: Apple CEO Steve Jobs 'angered' as music labels try to raise prices for downloads - February 28, 2005
Report: Music labels delay Euro iTunes Music Store fearing Apple domination - May 05, 2004
Greedy Big Five music labels looking to jack up iTunes songs to $2.49 each? - April 22, 2004

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Sep 28, 05 - 09:59 am Comment from: Lazy European

these people really want to decapitate themselves

Sep 28, 05 - 10:01 am Comment from: R

wow... stupidity on parade!

Sep 28, 05 - 10:02 am Comment from: Jesus

idiots
They just don't get it. This has only just begun.

Sep 28, 05 - 10:03 am Comment from: botox

This Nash is a moron, " most of the music on iPods is from their own collections " ? Yeah, that may be true for some people, but my sons, 14 and 12 years old, downloaded more than 50 songs from iTune and they never buy any CD from the store before!!! That's why Apple sold more than 500 million , get this Nash, 500 millions songs and counting!!!

Sep 28, 05 - 10:06 am Comment from: Synthmeister

Unbelievable! Certainly, downloaded music now only represents about 5% of their sales, but it is obviously the future as far as growth potential and buying habits of the next generations of consumers. And can you believe this quote further on down in the article?

”"It's going to be difficult to get the consumer to stop thinking about owning music, and think about paying for participation instead," said one executive."

Talk about understatement of the millennium! These guys are clueless.

Magic Word is "left" as in the record companies have been left behind because of their own delusions.

Sep 28, 05 - 10:11 am Comment from: Synthmeister

Jobs will have figure out another model? It seems like he has figured out another model and the record companies are deluded to think that they can come up with a better model.

Sep 28, 05 - 10:12 am Comment from: MKUltra

PBS "Nightly Business Report" doing series of segments on music business. Last night lots of info on indies and downloads. Musician saying "iTMS downloads have paid my mortgage for months."

Another guy I think IN the industry saying, "Downloads are going to replace CD sales like CD replaced vinyl." (paraphrased)

THIS quote following above: "And I'm not talking 5-10 yrs down the line. I'm saying 1-2 yrs."

Watch that wave guys; you can surf it or get drowned.

MW: "future". (self-explanitory)

Sep 28, 05 - 10:13 am Comment from: Escaport

I'm just shy of 500 songs from the iTunes store. Its the only way I buy my music now. I guess the record companies are willing to let customers like me twist in the wind. Pity.

Sep 28, 05 - 10:15 am Comment from: mike k.

First things first: why does the Register employ 12 year olds to write their articles? They are so hard to read, and they take ridiculously circuitious routes to what are fairly straightforward points.

Next, from TFA, from some exec: "It's going to be difficult to get the consumer to stop thinking about owning music, and think about paying for participation instead," said one executive."

This is some kind of NewSpeak to be sure, but i think it translates roughly to "... i'm a douche-bag ..."

As i have said before, Apple hands them a revenue stream, helps them turn CD sales around, and their response is to try to cut them out of the loop.

The only people who don't like the 99c model are the people making the most money out of it. Riddle me that one ...

Sep 28, 05 - 10:16 am Comment from: Tom

It is obvious to the labels that they are very vulnerable. Would this bonehead throw that card at Walmart who sells far more music than Apple? Nope, but Walmart doesn't have the balls to make a move to eliminate them - Apple is positioning perfectly to facilitate their own brand. No band needs a label then. That is the sound of panic in a punks voice.

Sep 28, 05 - 10:16 am Comment from: Tommo_UK

Music industry execs genuinely believe they are the shapers of contemporary culture, and are thus entitled to view anybody and anything else as merely consumers or tools to be used to sell more records. They have completely forgotten that people want to own their music, and that music is such an integral part of peoples' lives that the very idea of simply renting it is almost repulsive. That may change in generations to come, but not for the next 10 years. If they think they can turn the music industry into a ring-tone business charging $3 a pop for something you can buy on-line for a 1/3 of that, they're in for a nasty surprise.

Unfortunately, the mobile phone industry has managed to delude the music execs even further, and convinced them that mobile-based music is the way forward, at excessive prices controled by unuseable DRM schemes. Until the mobile industry is proved wrong (which IMO will take about 3 years) the music industry will continue to dream that it can sell individual tracks at $3 each, and view a 99c price-point as an anathema to be left behind as soon as possible. However, there's no way Warner, or anyone else, would unilaterally withdraw from iTunes and see its sales drop off the online music charts. Its just noise.. the noise of a bunch of overpaid egos strutting around in their cages, showing off to one another in a way that only music execs can, unaware that they're going to be slaughtered.

Sep 28, 05 - 10:16 am Comment from: mike k.

circuitous

Sep 28, 05 - 10:19 am Comment from: marko

what a knob job this guy is !
I will never pay a subscrption fee to download music, looks like the music exec's want piracy to come back for a while then want to jump in bed with MS to try and save the day. They are nuts

Sep 28, 05 - 10:20 am Comment from: Christopher Powers

The music industry needs to look at another industry that's been affected by the digital transformation of an industry & the digital revolution.

How many people still own & regularly use film based cameras? It seems l ike everyone has a digital camera (be it high end or low end). When was the last time you took a film camera in for development?

Take Kodak for example. They could have paniced and feared the digital revolution when film camera sales declined. They could have paniced when film developing declined. Did they assault the customers with anti-digital propoganda? No. Did they fight back in a positive way, which helped develop an industry that's just as powerful as it always was if not MORE SO? Yes and hell yes!

Every Kodak printer and camera in the digital realm was designed to help assist the user in faster & easier prints. They realized film was declining and stepped up development of more advanced printers, card readers in printers, paper, cameras that connect TO the printers (no need for even a computer if you want).

Kodak fought their battle in a possitive way with the customers at home. They also got into the field of kiosks with helping customers walk into any convience store (Walgreens in my area for example) and scan and print directly AT the store. You can off load your digital prints AT the store and develop them in an hour or less. Every time I am in Walgreens, those kiosks are being used!!

Kodak's attitude towards embracing an oncoming technology should be the model for the music industry. Don't fear change, embrace it!!

Don't fight progress, it alienates your customers and stifles legitimate sales. Bite the bullet, and help be a leader in the digital revolution in your industry.

Sep 28, 05 - 10:21 am Comment from: Ricardo

Unbelieveable idiots.

Sep 28, 05 - 10:21 am Comment from: giofoto

They are soooo self absorbed....they dont even think about the people, tha fans. All they see is Steve Jobs and $$. Sheesh!

Sep 28, 05 - 10:22 am Comment from: down

A possible "new model" is to simply bypass the infestation that is the known as a "label". Labels do less good and more damage as technology advances. Without labels the price could actually have a chance to go as low as 29 cents.

These comments by Nash are paranoid considering lablels like his set the high 99 cent price in the first place. Apple only makes a few cents that much per tunes (labels definitely make more than that), and they don't want to lose money on each track if they can help it. Thus tunes will only be 29 cents if increased iPod sales make it wothwhile (the paranoid nightmare of Nash).

We don't hear the other beneficiaries of the iTunes store like the credit card processors and Akamai (of which Apple own's a part) wanting to dictate higher "more flexible" prices.

Another model is for Apple to become a "label" themselves. That should get the attention of the Beatles.

Sep 28, 05 - 10:22 am Comment from: M.X.N.T.4.1

What if Jobs says the record companies should pay the user for each song downloaded!? If you're gonna talk about theoretical situations and concerns at least be realistic - Jobs has said they're against increasing prices, I don't think I've ever heard anything mentioned about cutting them to less than a third of the price.

Now is the time to forge head first down the route of a one format digital download world, I'll fully admit that apple can't expect to and shouldn't control digital downloads entirely but their model is the best - record companies should commit to it but get Fairplay to be opened up to licencees or something.

Sep 28, 05 - 10:27 am Comment from: Used

I prefer to buy used CDs. I get the music. A local shop gets revenue. Music companies get no additional revenue.

Sep 28, 05 - 10:30 am Comment from: Hemorrhoid Rage

"Very few people buy music from digital downloads". Hmm... just enough to buy 500 million songs. They can eliminate iTunes, but it won't change their sales margins. You'll just see 500 million more downloads from peer-to-peer.

The music industry can strut and cackle all it wants. I'm not buying another CD. Ever. I can get my music legally through iTunes, or illegally through peer-to-peer. There aren't enough lawyers on the planet to prosecute every Tom, Dick, and Downloader.

It's time the music industry either faces the future or gets steamrolled by it.

Sep 28, 05 - 10:32 am Comment from: MacDude

Listen Warner Music is a company headed by a idiot.

The whole movie industry is laughing at him, the rest of the music labels can't be taking him seriously.

http://slate.msn.com/id/1862/

Sep 28, 05 - 10:33 am Comment from: Metryq

"It's going to be difficult to get the consumer to stop thinking about owning music, and think about paying for participation instead,"

Divx failed with that marketing model.
(That is, Divx the home video format, not the codec stupidly named after it. "Not to be confused with the defunct home video format.")

Sep 28, 05 - 10:33 am Comment from: Macaday

Scared. Seriously scared. And I actually don't blame them for it. The new model will ultimately move bypass the record companies entirely. Then it won't be 99c. or 33c, it'll be nought cents.

Because they were:
- shortsighted
- lacking in imagination
- stuck in their ways
- greedy
and above all:
- ungrateful for the lifeline Jobs/Apple threw them. Or perhaps they don't even recognise it as a lifeline?

Doesn't sound to me like much will save them now...

Sep 28, 05 - 10:34 am Comment from: RC

The sooner that the labels themselves are decapitated the better...and it will happen, the only question is how soon. If the labels cut off Apple, the artists will start bypassing the labels knowing that they aren't really needed any longer anyway.

Sep 28, 05 - 10:37 am Comment from: my2bitsworth

So, these idiots prefer to go back fighting illegal downloads. They won't get a penny from those downloads and they will spend millions on lawyers ... all for nothing since they can't win this war. Apple is wining the war for them. What a bunch of short-sighted, money-grabbing, unscrupulous, incredibly stupid morons.

Sep 28, 05 - 10:37 am Comment from: Macaday

Good one 'Used': just buy used CD's.

After all, who one earth needs a CD after it's in iTunes+iPod?

Sep 28, 05 - 10:37 am Comment from: Macgravy

Anyone have an email address?

Sep 28, 05 - 10:39 am Comment from: informed

It's not going to be "difficult," its going to be impossible to get me thinking about renting music.

Sep 28, 05 - 10:41 am Comment from: Brillite

Pay a music sub? Dream on! What a knob. smirk

Sep 28, 05 - 10:43 am Comment from: Black Pearl

What a MORON. I guess it'll be back to pirating. Add me to the Warner boycott list. I refuse to support MORONS.

Sep 28, 05 - 10:47 am Comment from: ndelc

Apple ought to invest in a new company. Call it, I dunno, Banana Records. Artists only sell their music through iTunes. The company and the artist split the profits 50%-50% after production and promotion costs.

Seriously, I'd be willing to bet there will be a mass exodus of artists from Warner if they pull out of iTMS.

Sep 28, 05 - 10:49 am Comment from: gwm

Cut Apple off? All of them? Cut Apple off?

Listen ... I've never taken a single p2p track in my life. Not one. I buy CDs at full retail, in fact. Like about twenty-five thousand dollars worth of CDs, lifetime total.

But I swear to god, if they pull that stunt I'll go steal two hundred and fifty gigs of compressed music and then I'll turn right around and I'll steal two hundred and fifty more. Then I'll give it all away and start over.

Bottom line. I'll never purchase another piece of music again if they try that crap. Not in any formatting.

Sep 28, 05 - 10:52 am Comment from: Petey

Decapiate itunes - decapiate your music buying audience!

They say they dont want another MTV - well guys. put it this way, SOMEONE has to be the market leader!

What do u prefer - Microsoft with it's stail and stifling business ways or Apple, who are doing it 'for the music'.

I think the Record labels should wake up and 'do it for the music' also!

If they don't - no one is gonna buy their records!

The choice is your guys, go with itunes and prosper by watching the market grow OR stifle the legal music download market by over pricing and destroy the download market in one fell swoop!

BASIC RULE IN ALL BUSINESS: 'GIVE THE CUSTOMER WHAT THEY WANT' - Ignore this guys and you lot are gonna be unemployed because there will be no music business!

Sep 28, 05 - 10:54 am Comment from: Jeff

Won't bother me. Maybe then Apple will get rid of the DRM crap and make independent music lossless and DRM-free.

Until then, I'll keep buying used CD's so none of my music makes it to the RIAA labels.

Sep 28, 05 - 10:57 am Comment from: Macs King

Note to Warner Music: I'll hang my entire music library out there for Limewire as retalitation. 10,000 tunes free. Sure is better than making $.69 per song isn't it.

Sep 28, 05 - 11:00 am Comment from: Jack Arends

Oh God, they are gonna fsck it up. Well, I was never a pirate before but if they kill ITMS I might turn into one just to tell them "Screw YOU!"

Idiots

Sep 28, 05 - 11:00 am Comment from: egarc

[I]Nash also said, "The industry got together and said 'We don't want another MTV'. Well, now we've got another MTV, in Apple. And we have to deal with it."[/I]

I'm not a lawyer, but that sure does sound anticompetitive. Can a lawyer answer if this is legal?

Sep 28, 05 - 11:01 am Comment from: hammer

I WILL NOT EVER EVER NEVER EVER RENT MUSIC.

Oh, Im not in the desired demographic? Bullcrap. Trust me, I've bought more music in the last year than any 18-25 year old. Why? I have more money than they do.

Friggin morons.

Sep 28, 05 - 11:02 am Comment from: Don't forget...

Who's paying your freight Warner...better think twice before taking
a dive. Apple's system can be unnerving...Steve Jobs knows his
customers and you should be hip to that, dig? <•>|<•>

iTunes & iPods will be around as long as digital transmission exists...
we got it, it's soooo simple. mad


CT =====]------------ Staying connected

Sep 28, 05 - 11:03 am Comment from: ron

No-one ever 29c or 39c.

It's 99c,----Get it?

Sep 28, 05 - 11:04 am Comment from: ron

Sorry.

No-one ever said 29c or 39c.

It's 99c,----Get it?

Sep 28, 05 - 11:05 am Comment from: Jack Arends

Also these guys just don't get it that ring tones are fundamentally different from a song that you play to listen to once in a while. I could see myself paying 3 bucks for a ringtone. or even 3 or 4 ringtones. But I am not gonna be buying 500 ringtones fer cripes sake.

Sep 28, 05 - 11:09 am Comment from: argusx

Let’s see… Apple owns 75% of the legal music download market. The record companies make pure profit from the iTunes Music Store. No packaging costs, no shipping costs, no distribution costs. It’s 100% profit. The iTunes store recently passed 500,000,000 downloads at $.99 cents each. But the music industry executives aren’t happy with that. This reaffirms my opinion that some people in management are complete idiots. I really hope Warner is stupid enough to do this. I’d buy tickets to see what happens to them.

Sep 28, 05 - 11:12 am Comment from: There is...

Rome and there is Vatican City. Of course, IT is the city of Rome.

Rome fell in a day...REALLY??? Not from where I stand. long face


CT =======]------------ LOL

Sep 28, 05 - 11:36 am Comment from: Tyk

It's the usual BS from these losers. The comment that struck a nerve more than anything was the "participation" comment. It shows the track these greedy whores are going on: You don't own nothing. You pay us for the priviledge to hear what we want you to hear.

Sep 28, 05 - 11:41 am Comment from: billysmom

i have spent about $5000.00 on music thru iTunes Music Store. i follow the DRM requirements, and have no complaints. because of iTMS, i've bought music from artists that i otherwise would not have. i have about 10,000 tracks on my iPod right now; there is no way that i would ever consider any form of subscription service for music. i want to pay once and be done. what a bunch of tools; they don't give a fsck about their artists; they just want to snork up as much money as they can from their artists rotting corpses. if this isn't the behaviour of a bunch of vultures, what is? iTMS provides what we want; neither the artists nor the buying public need any stinking labels; the sooner they're all gone, the better it will be for everyone.

Sep 28, 05 - 11:43 am Comment from: solid

I'm 40 something with a disposable income, why would these record companies want to piss me off? Digital downloads are here to stay. I have not purchased a physical CD since April of 2003, but I have purchased hundreds of tunes at the iTMS. For Christ sakes, they are getting rich off me and they're still whining! Why are they insulting me with this rental music garbage, or $1.79 downloads? I'll never rent my music, and I won't pay more than 99 cents per a download. Period.

Go ahead record companies. Kill iTMS. I dare ya. If you do it, I'll buy even more music from allofmp3.com. At least they pay the artists something, but the best part is they cut out the record companies altogether!

Sep 28, 05 - 11:46 am Comment from: Spark

For years, in forums such as this and others, I have argued strenuously against piracy of music. I've derided those pass copyrighted material around the world with no thought of compensated those that made the product so coveted. I still believe all that, but I no longer have an ounce of sympathy for the record label exec. They say "Jobs will find a new model"? They say they want to "cut iTMS off"? I say Apple cuts them OUT and makes deals directly with the artist. It's been mentioned here before that a natural solution would be for Apple Computers and Apple Records to kiss, makeup, and partner in a venture such as this. That should be the "new model" that Jobs comes up with. I want to see these record label "suits" sitting by the Freeway onramps begging for a handout just so I can drive by without a glance. I'm pissed.

Sep 28, 05 - 11:53 am Comment from: doubletroubleagin

 
"labels might have no choice other than cut Apple's digital music sales off at a stroke... and the decapitation will really feel..."

This sort of action will amount to grounds for breech of contract with artists. Labels will lose their artists in droves. Artists have enough skill to deal directly with Apple's ITMS. With this consequence seemingly a most likely occurrence now given his extreme attitude, the man's just about right in one aspect, I suspect; the labels might have no choice.

The iTunes Music Store has become an institutional bulletin board. Fail to be informed of the content of that bulletin board at your own peril.

Besides, Blackbeard can easily handle guys who in a panic spout, "cut off with a stroke and decapitate."
 

Sep 28, 05 - 12:01 pm Comment from: Baron

Actually, Banana Records already exists...

You didn't REALLY think that somebody hadn't already pounced on the name, did you?

http://www.banana-records.com/

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