“With that commanding lead in digital players and rave reviews for its new ultra-slim and sleek iPod nano, some have speculated that Apple will have the upper hand in negotiations over new licensing agreements,” Derek Caney reports for Reuters. “‘The launch of the iPod Nano continues to demonstrate why Apple is likely to remain the dominant force in digital music at least over the next 12 months, if not considerably longer,’ wrote Fulcrum Global Partners analyst Richard Greenfield in a recent note. ‘With Apple’s dominant market share, we believe music companies such as Warner Music and EMI have very little power to alter pricing from the current 99-cent level,’ he said, noting that Apple is more focused on selling iPods than increasing profitability of music sales for the labels.”
Caney reports, “Warner Music Group Corp. chief executive Edgar Bronfman downplayed Apple’s leverage. ‘iTunes needs our music as much as we need iTunes,’ he told Reuters on the sidelines of the Goldman conferences. One record executive who requested anonymity countered that Apple’s dominance is somewhat overstated. ‘The fact is that 50 percent of digital sales is ringtones,’ he said. ‘Mobile phones are going to get a bigger share of the download market over time.’ He also noted that subscriptions services, such as Napster and Yahoo will gain traction.”
Full article here.
Of course, the “anonymous record executive” meant to say that he “hoped against hope,” not “noted,” that subscriptions services, such as Napster and Yahoo, will gain traction. Studies and actual subscriber totals simply do not show that people want to rent their music instead of own it. Not many people seem to want to lose their music if they don’t pay their monthly bill.
[UPDATE: 10:00am ET: Fixed “own” typo in Take.]
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