“The Beatles’ company, Apple Corporation, may have hit him with a lawsuit following his entry into the music market, but elsewhere Steve Jobs, Apple Computer’s chief executive, is persona grata in the music industry,” Alan Cane and Adam Woods report for The Financial Tmes.
“Just as Mr Jobs’ iPod has provided a stylish vessel for storing music files digitally, so his iTunes Music Store has given Americans an easy way to buy downloads legally and handed the big labels proof that large numbers of people will pay for music online,” Cane and Woods report. “But with an estimated 50m downloads sold by iTunes Music Store in its first year, and with a still unspecified European launch planned, music executives have good reason to take another look at the direction Apple is taking the business in.”
[MacDailyNews Note: Apple is estimated to have 70-75 million or more songs song via iTunes Music Store in its first year which is marked on April 28, 2004. More info.]
Cane and Woods report, “Alarm bells rang in November when Mr Jobs told analysts that iTunes was ‘not a money-maker.’ Apple stresses that iTunes is out to make a long-term profit but is a volume business. Yet if Apple cannot make money on 50m sales, what hope is there for smaller web retailers?”
[MacDailyNews: Who cares? If they can’t compete, they can’t compete.]
“At the heart of the debate is the price consumers are charged for legal downloads and the subsequent share-out of revenues among record labels, rights owners and retailers. Apple does not discuss the share-out of iTunes revenue. But the consensus among music executives, who asked not to be named, is that on every 99-cent download bought from iTunes, Apple takes about 10 cents, after it has paid 65 cents in record company royalties and 25 cents in credit card fees and distribution costs,” Cane and Woods report. “Mark Mulligan, senior analyst at Jupiter Research, suggests Mr Jobs’ words should not necessarily be taken at face value. ‘It discredits his competitors’ chances of making money and strengthens his position in negotiating with the labels,’ he says.”
Cane and Woods report, “Mr Jobs’ position is undeniably getting stronger all the time… ‘Everybody in the software industry knows what Bill Gates did, which was to seize a key strategic choke point and milk it,’ says John Beezer, founder of the legitimate, Seattle-based file-swapping service Weedshare. ‘It looks like Jobs is making a strong bid to do that to the music business.'”
Full article here.