In 99-cent fight with ‘Looney iTunes’ labels, Apple CEO Jobs will get whatever Jobs wants

“Record execs are clamoring for price flexibility in music downloads, but Steve Jobs is adamant that 99 cents per song is perfect,” Arik Hesseldahl writes for BusinessWeek. “…The iPod Nano has turned out to be Apple’s knockout punch. Having secured a large chunk of the supply of flash memory from Samsung and Toshiba and a price break from Samsung, Apple is going to constrain the supply for flash chips. That’s going to make it difficult for competitors making flash-memory-based players that work with other music services to get their products on the shelves this holiday season.”

“How bad will it be for Apple’s rivals in the music-player business? A research report by WR Hambrecht says manufacturers of flash memory will be experiencing an uncomfortably tight supply environment this quarter and into the first quarter of 2006. Samsung and Toshiba both have their second- and third-tier customers on allocation — which means lots of smaller companies will be told to get in line and wait for their flash chips,” Hesseldahl writes. “…Rumors are also buzzing that Apple may soon tie up even more flash supplies by cutting a deal with Hynix Semiconductor. That same research report suggests it’s going to be a Nano Christmas. UBS says Nanos could account for almost half the nearly 32 million iPods it thinks Apple will sell in its fiscal year 2006, which begins next month.”

Hesseldahl writes, “The more iPods sold, the more people will be patronizing the iTunes Music store. “The iPod drives people to iTunes, not the other way around,” observes analyst Michael Gartenberg of Jupiter Research. A strong quarter of iPod sales will only solidify iTunes’ position as the Microsoft of the digital-music industry, leaving RealNetworks, Napster, and others to bring up the very distant rear. That makes the path for record companies clear: Jobs will get what Jobs wants. In the end, that means download prices will stay right where they are. When asked earlier in the week at a press conference in Paris about the possibility of the music company raising prices, Jobs said: ‘If they want to raise the prices, it means that they are getting greedy.’ Greedy? Maybe. But right now, Steve Jobs is holding all the cards and can afford to talk tough. He knows this war of words is all but won.”

Full article here.
Warner’s Bronfman, never one to be accused of being the brightest bulb in the pack, ought to just seal up his pie hole now, shelve his “Looney iTunes” decapitation strategies, and just get in line with the other labels to sign on Apple’s dotted line to continue the ride aboard the profit train.

Related articles:
Warner music exec discusses decapitation strategy for Apple iTunes Music Store – September 28, 2005
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

36 Comments

  1. Time to start an iTunes label. I bet at least 60% of artists currently on iTMS would be willing to leave their label to join up. Imagine instead of $0.02 per song sold, they can make $0.30. CD sales are in decline anyway, and the labels only put big promo dollars on the famous “stars”. On iTMS, they all get face time and everyone gets their 30 seconds of fame (previews). Also, wouldn’t starting an iTunes lable absolve Apple Computer of any conflicts with Apple Corp? Just a thought.

    MW: hold. Steve is indeed holding all the cards.

  2. They should payoff apple corps(beatles) to settle and then start a music label. i would garentee that they would get more than 50% of the worlds recording artist within 10 years. Cut those greedy bastards(music labels) out of the picture.

  3. PT, that’s a good idea. I think that can solve the problem with the various iTMS having different catalogs. If the artists sign up with itunes label, they can be on ALL the iTMS and expose themselves to even more customers. I for one would love to be able to buy songs from the UK and Japanese stores. Didn’t some Japanese artists break contract with Sony to put their songs on iTMS? This thing can really happen! And when it does, I’m putting all my $ into their stock. ” width=”19″ height=”19″ alt=”wink” style=”border:0;” />

  4. By constricting the availability of flash memory Apple is actually doing these other companies a big favor. If more memory was available they’d build large amounts of terrible players that would go unsold during the holiday season and then require big write offs for unsold inventory. Apple is simply helping keep those other MP3 companies out of the red ink (or less red ink…).

  5. Barry, I bet most of the mobsters already own hefty amounts of AAPL as advised by their money cleaners, i mean financial advisors. Even if the music labels go down, they would still make money hand over fist.

    MW: federal. Doesn’t take a federal case to see the mob’s behind the labels.

  6. to those clamoring for an iTunes label – the day Apple announces that is the day the Big Five pull their content from iTunes. That’s all they can do. Even if it is ten years from now and they have to use iTunes to sell music, they will partner with someone else. In the end, iTunes without a product to sell is just a webservice.

    MDN word: most

  7. i agree; it’s time for Apple to make the move: buy out Apple Corps, which would shut up the Beatles and put their catalog on iTunes. then, create the Apple iTunes label. little edgar will soon be looking for other employment. i buy music to support the artist, not the labels.

  8. Let the record labels increase the price for music downloads and you can say goodbye to the music download business in one fell swoop.

    Raise the prices and everyone will go back to illegal downloading – it’s as simple as that!

    Music is now a comodity that people are NOT willing to pay a premium for.

    The days of Record companies charging £16 for a chart album are gone and so are the days of Record companies being greedy.

    It’s a simple equation:

    Give consumers what they want. at the right price and you will make a fortune. Get greedy and you will lose a fortune (and all your customers!).

    EMI, SONY, etc better listen to Steve Jobs!!

  9. “Also, wouldn’t starting an iTunes lable (sic) absolve Apple Computer of any conflicts with Apple Corp?”

    Yep…all the lawsuits against Apple Computer for breaking their agreement not to use the Apple trademark in music-related activities would instantly disappear.

    In other news, something just fell off the turnip truck again.

  10. That where the record companies lost thier money, In the rental services like Napster and others. You pay one price per month and download your heart out. But if you can find a way to keep it and they have, the record companies are losing and crying. So they know ITune can make them money, so they are trying to pressure Steve.The record companies have been stealing the money from the artist for years and now this.The record companies are very greedy. GREEDY get you nowhere, Ask ENRON

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