“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
