Music label exec: dealing with Apple ‘like dealing with a cult’

Digital competitors are ready to take bite out of Apple. “That is the message to Apple Computer CEO Steve Jobs from almost every other company in the digital music space vying for consumer attention after several years of domination by the iPod and iTunes,” The Arab Times reports. “Apple’s successful combination of sexy design and elegant usability has propelled the iPod to the top of the digital music market as the undisputed king.”

“Every move Apple makes these days results in victory. As the rest of the flash-player market floundered, Apple took over the category in a day with the release of the iPod Shuffle. It turned podcasting from a cool-sounding technology that nobody used to a legitimate format by adding it to the new version of iTunes — and generating 2 million subscriptions in less than a week,” The Arab Times reports. “Today, Apple commands 80 percent of the MP3 player market and 75 percent of online music sales. But even as analysts predict another massive holiday sales season for the company this year, many believe Apple’s reign will last only another 12-18 months before the playing field levels out. ‘It’s inevitable that over time their market share declines,’ Piper Jaffray senior research analyst Gene Munster says. ‘It’s safe to say that nobody can sustain an 80 percent market share in a consumer electronics business for more than two or three years. It’s pretty much impossible.'”

“Privately, record company executives say they can’t wait. Not because they want to see Apple stumble, but because a less dominant Apple means a more robust market for digital music. The company by itself cannot bring digital music to account for 25 percent of all music sales, as labels hope it will by 2009,” The Arab Times reports. “Label sources say Apple stubbornly disregards their suggestions for drawing in new digital music customers. They say they would like more flexibility on track pricing and promotions. But more than anything, labels want to see the iPod become interoperable with music services other than iTunes. ‘It’s a monologue with them,’ one label executive who asked not to be identified says. ‘They pretty much say, ‘This is what we want to do,’ and if you disagree with them you’re an idiot. It’s like dealing with a cult.'”

Full article here.
The “monologue” and “cult” comments come directly from the standard anti-Apple talking points memo that’s been circulating for years. That’s about as creative as music label executives can get, which should tell you that they ought to listen to Apple’s “monologue” for as long as they can. Apple showed them the way, yet inexplicably, some of these music executives can’t wait to bend over and grab their ankles for Microsoft. Why?

Most likely, the music label execs are trying to knock Apple down a peg or two or three and split the online market up between multiple successful distribution points. After all, if Apple ends up owning the online market with iTunes Music Store, who would need the labels? Apple could buy The Beatles’ pesky Apple Corps to remove that issue and artists could eventually go straight to Apple and eliminate the middlemen. This is why the middlemen are biting Apple these days.

81 Comments

  1. The music-buying public worldwide have shown they would rather wait for the iTunes Music Store to open in their country, than use existing services. Labels can hope for consumers’ habits to change, but in the end the public will vote with their wallets.

  2. ‘…It’s safe to say that nobody can sustain an 80 percent market share in a consumer electronics business for more than two or three years. It’s pretty much impossible.'”

    Somebody should save this quote and email it back to Piper Jaffray on a daily basis after it officially becomes bulls**t…

  3. The labels are simply scared because their old monopoly over both the marketplace and the artists themselves is slowly eroding. It will be a sweet day when their house comes crumbling down and it’s going to happen sooner rather than later at this rate.

  4. And, not to forget, what they really want is to make more money on the expense of the customers; i.e. they want to charge more per song than Apple allows them to. That is often the truth about the strive for competition: it is not for the benefit of the customers but for the big stockholders who want more and forever more. If one player on the market is becoming big, it doesn’t harm them, as long as that player go along with their desires, but when one like Apple stubbronly says: nope, we’re only going to charge 99 c per song and that’s final, they don’t like it very much. They know that Microsoft wouldn’t have said so. They would probably have gone along as long as they could get their (un)fair share of it.

  5. “They say they would like more flexibility on track pricing and promotions.”

    By flexible, they mean more expensive and by promotions…well, I don’t know what they mean, but it better NOT be ads all over the iTMS.

  6. I’m still trying to figure out how the other MP3 player makers – who have such a paltry share of the market – will catch up in 12 to 18 months.

    As for the music industry, they’re a lost cause… they’re killing themselves.

  7. I used to think that labels would always be needed as buffers and editors. I mean, I’d rather listen to any band that’s signed than the assortment of crap that was, for example, mp3.com. But now with blogs and social software like del.icio.us, I see that labels are superfluous.

  8. “Label sources say Apple stubbornly disregards their suggestions for drawing in new digital music customers. They say they would like more flexibility on track pricing and promotions.

    Yes they want to charge more so it chokes the goose who lays the golden egss

    But more than anything, labels want to see the iPod become interoperable with music services other than iTunes. ‘It’s a monologue with them,’ one label executive who asked not to be identified says.

    How about some other company design a iPod killer and then they can lock their DRM to their device?

    Music makes no money for Apple, just for the Labels, so they don’t have any play. We will go back to P2P or All of MP3.com

    ‘They pretty much say, ‘This is what we want to do,’ and if you disagree with them you’re an idiot. It’s like dealing with a cult.'”

    And how does M$ treat them? It’s our way or else and pay us more money.

    At least Apple is making the Labels money, it only has the online sales and only a tiny portion of the total download market. P2P still rules the roost.

    And actually the Labels are idiots, greedy idiots at that. But they still have the majority of music sales going to them.

    And Apple is a cult, it’s a cult of very intelligent and creative innovators who make the very best products possible.

    I don’t see anyone else generating as much excitement and getting people to buy music like Apple is.

  9. ” and if you disagree with them you’re an idiot. It’s like dealing with a cult”

    Is he talking about Apple or it’s most enthusiastic “supporters”?…

    Anyway, to me, until iTMS offers lossless material for the same price, it’s much ado about nothing.

  10. Spyinthesky, I hate to say this but I just can’t see if you’re talking about the record companies or about Apple because that’s what Apple is doing with the record companies.

    But don’t get me wrong, I’m glad Apple is doing this. ”More flexibility on track pricing” is a scary thought. Apple is the good guy in this by not getting bullied by the record companies. Yet, when you think about it, Apple is the one with more of the power, with 75% of the download market taken by iTunes and 80% of players being iPods. Loosing that would be suicide for the record industry… which, when you think about it, wouldn’t be such a bad idea. ” width=”19″ height=”19″ alt=”grin” style=”border:0;” />

  11. “… one label executive who asked not to be identified says. ‘They pretty much say, ‘This is what we want to do,’ and if you disagree with them you’re an idiot …”

    They are idiots.

    The major labels were all sitting around with their thumbs up their collective asses until Apple provided The Total Solution® to their ‘Digital Download Dilemma’. Now that Apple is kicking ass and taking names, they are saying that they, “… don’t want Apple to control a major portion of the download market …”??? What assholes.

    Apple has done all the hard work and paved the way to make it easy for the labels to make money on digital downloads. The only reason that they don’t like Apple is because Steve plays ‘hardball’ with them and refuses to give them all of Apple’s profits. Honestly, why should Steve grab his ankles and raise prices just because they say so?

    There would be no money (or very little) in it for the labels if it weren’t for all the hard work Apple has done. The major label executives should lick Steve’s ass and thank him for the privilege.

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