Report: Apple CEO Steve Jobs ‘angered’ as music labels try to raise prices for downloads

“Some leading music labels are in talks with online retailers to raise wholesale prices for digital music downloads in an attempt to capitalise on burgeoning demand for legal online music. The moves, which suggest the labels want a bigger slice of the fledgling market’s spoils, has angered Steve Jobs, the Apple Computer chief executive behind the iTunes online music store,” Scott Morrison and Tim Burt report for The Financial Times.

“But music executives expressed caution about their ability to push through unilateral price increases. Among the biggest groups, Universal Music and Sony BMG are known to be particularly reluctant to disrupt the market for downloads,” Morrison and Burt report. One top label said it would not raise wholesale prices now because the market was not yet mature enough for an increase. The three other music labels – which also include EMI and Warner – refused to comment. Michael McGuire, analyst at Gartner, said the move could backfire because consumers who buy music over the internet are accustomed to paying 99 cents or less for downloads. Wholesale prices are thought to be about 65 cents. ‘It seems to me to be singularly bad timing,’ he said, adding that an increase could send fans back to underground services where they could get illegal music tracks free.”

Full article here.

MacDailyNews Take: Raising wholesale prices for music downloads might anger Apple CEO Steve Jobs, but Apple is uniquely positioned to benefit should such an unfortunate increase happen. Such a price increase by the music labels (5-15% wholesale price increase) would serve to clean out the also-rans from the online music business and Apple could continue to keep iTunes Music Store prices at 99-cents while still profiting handsomely from iPod sales. The other online music services have no such hardware component upon which to rely. And the hardware makers that sell players that don’t work with Apple’s iTunes will end up with also-rans players that only work with financially-strapped music services that are struggling even more than they are today.

62 Comments

  1. Well that’s what he gets for pointing out how easy it is to bypass the DRM – in Napster to go, but also in iTunes.

    I’m not surprised, but I do sympathize with Steve. Having a standard price is very beneficial to the industry. I applauded when Apple agreed to pay the extra $.51 per song for that Tsunami relief song earlier this year, rather then allow a precedent to sell a song at $1.50 to be set.

    I know from personal experience that the commercial popular music industry is a very dirty, greedy business. It’s amazing that iTunes success hasn’t weathered challenges like this before now.

  2. MDN,

    I only partly comprehend your point about Apple being uniquely positioned to benefit from an increase. Are you speculating that Apple would use iPod revenues to subsidize iTunes prices as they did with that Tsunami relief song, so we could still by our music from the iTMS for 99 cents while music shoppers at Walmart or wherever else would be paying higher prices?

    If that is your take, I really doubt that would happen. The tsunami deal was 1) to prevent a multi-tier pricing from being implemented (where new hit music costs more than older, less popular songs), and 2) for charity.

    If you are suggesting something else entirely, please update and elucidate!

  3. Raise them too much and people will go get them the old fashion way, forcing the record labels to spend more money on trying to stop illegal sharing. Why mess with a good thing, artists are getting paid again.
    Now if the labels started paying artists more of what they deserve now that there are virtually no packaging costs, that would be a great thing.

  4. Typical capitalist dogs. Find a resource and exploit it to death. These scum sucking record companies are the apex of all that is wrong with the world. They produce nothing, and ride other people’s creativity to finance their incredible egos and expensive cars. Then discard the poor artist who they’ve let burn themselves out to try and please them. Damn record companies are as shorted sighted as ever. I HATE them. I FUCKING HATE them.

    ITMS or no ITMS, Music should be free.

    </soapbox>

    Meanwhile, if Apple is forced to raise the price, who will the consumers blame? Apple of course.

  5. Hey, ‘PCs Rule’: Kindergarten called, you’re supposed to come in from recess now. Hey, look — I keed. No, I mean it, I’ve seen kids write better jokes with crayons. No but seriously, I haven’t heard commentary that funny since Rather started signing off his newscasts with ‘Courage’! Talk about a PC blowhard. Or blow ‘soft’, as the case may be! Really though, the story was up at 12:10 and you posted that at 12:29. Wow. That’s stunning. Nineteen minutes and that’s the best you can do? Carrot Top can be funnier than that in 19 minutes. Yesssss. Even Leno is funnier than you — and everyone pretty much knows that Leno sucks.

    Come onnnn, you know I don’t mean it. I mean, of course I expected your material to suck. You’re a PC user. All PC users suck . . . well, until they see de light, that is. Yessss. The light from using a Mac. Yes, a Macintosh, ‘PCs Rule’. Here, I’ll spell it for you: Y-O-U S-U-C-K. Oh, and I just heard your mother calling you. She wants you to log off AOL now ’cause dinner’s ready. And you know, I think it’s probably something really tasty, like cream chipped beef. You know, a typical PC-user dinner . . .

    FOR ME TO POOP ON!!!!!

  6. Even if it benefits Apple in some way, I do not want the labels to raise prices – not now and not for a very long time. The angry backlash could very well kill legal downloads. I know I would be pissed, and contrary to the normal situation in a price increase, very easily implemented alternative sources (P2P = Free, AllofMP3.com = very cheap) are available.

    Stealing is bad karma but the labels getting greedy is bad karma too.

  7. I actually have to disargee with you MDN! this would benefit no company I know I would stop buying from iTMS, Apple doesn’t own the records how will they keep prices down?? So this is a very bad thing all around and yes Steve has every right to be mad, cuz I’ll be equally as mad if this goes through!

  8. Wow, had my first pop under at MDN. I sure hope Apple can upgrade the Safari pop-up/under blocking soon. I am not used to the things and don’t want to get used to them.

  9. Higher download prices would definately backfire on the music labels.
    There just starting to get people used to the idea of getting music online at only 99 cents a track or less sometimes for entire albums.
    Steve Jobs wants prices even lower but it’s the record labels that prevent him from doing so. That’s why he’s mad. This would upset the entire download market for sure. MDNWS is right though, Apple could keep going and possibly keep prices as they are now because they make most of there money on the iPod sales not the music sales.
    Also there cost to run the store is next to nothing compared to the others in the business.

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