Microsoft Corp. has broken off licensing talks with the four global music companies, and, by doing so, raises queries about the software giant’s plans to start a subscription-based music service, according to the Wall Street Journal, which cites unnamed sources.
The Journal reported negotiations broke down Friday over what Microsoft considered high royalty rates sought by EMI Group, Warner Music, Universal Music, and Sony BMG.
Microsoft has not announced a subscription music service, but it was widely expected to make such an announcement soon. However, the company said the breakdown in its talks with the labels would indefinitely postpone a launch, according to two of the people close to the situation, the Journal said.
Full article (subscription required) here.
Perhaps it’s not the proposed rates at all. Maybe Microsoft has simply realized that its music service is a nonstarter due to lack of interest in subscription-based, Windows-only, Apple iPod-incompatible schemes with millions upon millions of iPods flying off the shelves each quarter. Complaining about rates publicly and ending talks is either a face-saving move or weak negotiating tactic.
(Note on negotiating tactics: Steve Jobs is not complaining publicly about rates Apple doesn’t have; he’s complaining publicly about “greedy” record labels attempts to change those prices. Jobs is doing so in order to preserve a rate structure that’s already been established by his market-dominating iTunes Music Store. Microsoft can’t even seem to get a music deal off the ground. Hence our position that Apple is negotiating on strength vs. Microsoft on weakness.)
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Related articles:
Apple’s iTunes Music Store dominates as digital music sales more than triple – October 03, 2005
BusinessWeek: Apple unlikely to launch music subscription service – August 15, 2005
Study shows Apple iTunes Music Store pay-per-download model preferred over subscription service – April 11, 2005
Dvorak: record companies’ biggest concern about Apple’s iTunes is clear and accountable bookkeeping – September 29, 2005
In 99-cent fight with ‘Looney iTunes’ labels, Apple CEO Jobs will get whatever Jobs wants – September 29, 2005
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
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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
MDN is right on the money here:
– non-iPod compatible DRM
– Subscription model
– Windows only
The top three things people DON’T want all rolled into a Microsoft Solution – no thanks!
MDN word: Thirty
MS appears to be copping it from many angles – perhaps not the beginning of the end – but almost certainly and end to the ongoing dominance most people seem to take as a given.
MDN take: ’nuff said.
MaWo, ‘trying’. As in, ‘Mafiasoft is trying to be seen as an innovator, but since they can’t come up with anything original, they continue to use Apple as their R&D department.’
Could it be that Microsoft is just starting too late this time? Apple got in early and negotiated a good deal which it customers like. Microsoft is starting at the same point where Apple is telling the record companies to pound sand on higher royalties. In a twist of fate, Apple has leverage. Microsoft does not – at least in this realm.
This may be good news for Apple and Microsoft because the record companies are looking greedy yet again.
MDN says “Complaining about rates publicly and ending talks is either a face-saving move or weak negotiating tactic.”
So, is Steve Jobs trying to save face or making a weak negotiating tactic? Because the last I read, he was complaining about the record labels asking for too much.
Why o why do people still insist on going different ways than our mighty apple; MSFT should know already that there is no place for them on that market it is ruled by apple and they are not going to make the same mistakes of the past, friends, apple is keeping this market no matter what.
Secondly on dvd formats, several companies including apple announce that they are going the blu-ray way and then just to pick a fight MSFT goes the other way.
Its not that hard to admit that you are not an innovator, Shick says that they wait for Gillette for them to copy their products, got a hit with quattro but thats it no more…
Se let Apple innovate and let redmond buy new copiers…
I don’t know about Microsoft backing off because they can’t win. Microsoft loves recuring payments for no output on their part. Subscription music is something they would embrace eagerly.
I just think the labels are too greedy.
That should shock no one.
…or just maybe the high royalty rates that MS is complaining about are the same high royalty rates that the labels want from Apple.
Just maybe MS stopped negotiations because they didn’t want to charge an insane rate for their songs. Now if Apple decided to stop negotiations with Warner music because of unacceptable terms, like royalty increases or variable pricing, would you guys be saying the same thing about Apple? Of course not because that would holding your beloved Apple to the same standard that you view MS, which you’ve repeatedly shown you are incapable of doing. Zealotry at its best.
or maybe Microsoft has discovered there are more greedy companies than themselves and have hit the wall with them.
Oh damn, I had the story backwards this morning. I thought the four Major labels wanted to license stuff from Micro$oft. Damn radio news casts…
Maybe their business plan was simply
MS “Leave Apple and come with us”
to which Label replied with
“You are kidding, right?”
MS “Absolutely not. See it our ways: Windows only, no iPod but “Play for Sure” players: more choice for customers. Windows DRM, no need to add. Waddaya say?”
Labels “WHATEVER”
MDN – Microsoft will be back and the record labels will make a deal with them.
The record companies hate Apple as much as Microsoft and would prefer to have at least two players to play against each other than just one (Apple).
Microsoft will bring out their music sooner or later. This is just part of the normal negotiating….not some religious event that MDN thinks, that some god has annoited Apple as the sole deliverer of downloadable music via the internet.
As usual, MDN looks at everything through the perspective of the Apple marketing dept. viewpoint and not as a logical thinking outsider.
To wow: what a comparison. Apple has over 80% of legal download market already, remember? And Apple already refused to raise prices per download as it was requested by Labels. Microsoft would have gladly agreed to it in no time!
Wow: you confound pee with champagne.
RC, you are kidding right?! Part of normal negotiating? LOL “the company said the breakdown in its talks with the labels would indefinitely postpone a launch, according to two of the people close to the situation, the Journal said.”
What do you think the above is going to do to M$ stock?! Is normal negotiating shooting one own’s foot? Never have seen this from Micros*t: ruling themselves out? Be a true Reality Check.
AAPL +1.02% and climbing
MSFT – 0.62% and falling
MDNews:::: Regarding your take on Steve´s discussion of rates: “…he’s complaining publicly about “greedy” record labels attempts to change those prices. “
Hunh??? Greedy? This is from the guy who charges premium prices for everything from computers to ram and you believe that line? Apple knows that there is a fine tipping point at which it is better for the consumer to just get their music from an alternative source.
And why should all music be priced the same? Are all shoes the same price? Cars? Your ad placement space on your website? Go into a music store – are all CDs the same price?
Steve is looking out for himself, not us consumers and not the music makers. MDN is looking out for Steve.
Bill Gates and MicroShaft is a turd ranch.
iPodder – Microsoft and the music companies will be meeting again soon. I am sure their are already lower level discussions going on.
Microsoft: “You guys really want Apple to control all your music?”
Record Guys: “Uh, no….”
Microsoft: “Well, then, what´s it going to take?”
If you think this issue is dead you are living in the unreal.
Don’t know what store you go but CDs over here are all the same price unless promotion or special editions or indies. Especially from same label they come with same price mostly.
Difference in prices is minimal, and would be risible on a per-track count.
So what do you support, tracks at 99 cents, others at 98, some at 1$ ????
Never said “the issue is dead”. What I said is that if you think this is normal negotiation practice for Microsoft you are the one living in the unreal.
Considering their investment in Janus, them thinking it’s a non-starter.. ouch
Microsoft: “You guys really want Apple to control all your music?”
Record Guys: “Uh, no….”
Microsoft: “Well, then, this is what is going to take”
Record Guys: “Whatever”
MSFT -1.64% and falling
And AAPL is at yet another all-time high as of early this morning.
MSFT – 2.03% and falling
Indeed normal negotiating practices from Micros*t that investors show to appreciate.
At last Microsoft has something in common with Apple: a distaste for record labels.