“In the United States, recording labels want a bigger slice of Apple’s success in digital music by seeking higher prices on downloaded songs. Japan’s music industry has a different idea: putting fees on iPods” Martin Fackler reports for The New York Times. “The industry has asked the Japanese government to charge a royalty, to be added to the retail price of portable digital music players like Apple’s iPod, which has been explosively popular here. Money earned from the fee, likely to be 2 percent to 5 percent of the retail price, would go to recording companies, songwriters and artists as compensation for lost revenue from home copying… The proposed fee would affect portable digital players that store data on internal hard-disk drives and flash memory computer chips – which include not only iPods but rivals like the Sony Walkman and other portable devices.”
“The recording industry has already succeeded in slowing the arrival of Apple’s iTunes music download service to Japan by its reluctance to negotiate licensing deals, people in the industry say. Apple finally opened a Japanese version of iTunes in August, two years after its introduction in the United States, and without the songs of major Japanese labels like Sony Music Entertainment and Warner Music Japan, which still have not signed licensing agreements,” Fackler reports. “The service got a warmer welcome from Japanese consumers, who bought one million songs in the first four days, according to Apple.”
Fackler reports, “All this comes at a time when the U.S. music industry also appears to be eyeing Apple, whose iPod and iTunes dominate their respective global markets. U.S. record executives have said recently that they want to renegotiate and raise prices of songs sold by iTunes, when licensing agreements expire next spring.”
Full article here.
“The industry doesn’t want to repeat a history of undervaluing itself. In the days when its business plan was simply to promote and peddle music, it footed the bill for producing videos, and initially was only too happy to give them to MTV to help build buzz. For the Viacom-owned network, the videos drew huge audiences, building MTV into a multibillion-dollar asset. ‘We watched people make fortunes and create valuable assets off of our music,’ says a former top exec who feared risking his role, if he were identified by name, as an industry consultant,” Johnnie L. Roberts reports for Newsweek.
“The industry considers Steve Jobs the latest incarnation of this problem. He used songs to sell iPods, and Apple’s iTunes site now sells 80 percent of all downloaded songs. The labels get 60 to 70 cents of each 99 cent iTunes download (the same songs digital pirates often stole, which is why the industry initially saw Jobs as its savior). But now labels have started agitating for a more creative approach to pricing, in which new releases would cost more than 99 cents, oldies as little as 60 cents and recent hits somewhere in between. Jobs disagrees and publicly labeled the industry “greedy” last month, arguing that it’s pushing for price hikes in a still-developing market. Record executives expressed shock, noting his dominance in the MP3-player business. The dispute has gone beyond name-calling. Two major labels, SonyBMG and Warner Music, have refused to license their music for iTunes in Japan. The stakes are much higher in the United States, where the two parties have to negotiate a new license by next year.”
Full article here.
Fackler reports that in Japan, “a fee of 2 percent is already imposed on devices using earlier digital recording technologies, like compact disc and minidisc recorders. Japanese manufacturers have been longtime opponents of such fees.” So, the “iPod Tax” is one issue that can be debated. Of note, Canada’s Supreme Court recently ruled against an “iPod Tax” in that country. However, the music labels like Sony and Warner that continue to hold out on iTunes Japan and Australia look desperate. The music industry at large is deathly afraid of Apple eventually controlling what they consider to be too large a stake in the music business. Sony lost the device race to iPod and Warner must think that they can use their signature as a bargaining chip for upcoming iTunes Music Store negotiations as they try to change Apple’s 99-cent per track model. Hopefully, consumers will remember Sony’s, Warner’s, and EMI’s sour grapes tactics, which also include foisting copy-protected CDs that are iPod incompatible upon the market.
Related articles:
Why aren’t Sony, BMG, Warner, Victor making their artists’ music available on Apple’s iTunes Japan? – October 06, 2005
How to beat Apple iPod-incompatible Sony BMG and EMI copy-protected CDs – October 04, 2005
Dvorak: record companies’ biggest concern about Apple’s iTunes is clear and accountable bookkeeping – September 29, 2005
Sony and Warner holding out on Apple iTunes Music Store Australia – September 08, 2005
Sony Connect President in wake of iPod nano: ‘we will accelerate our challenge’ to Apple iPod – September 08, 2005
Apple close to deal with Sony for ‘online music download service for Japanese iPod users’ – September 05, 2005
Bad news for Sony: millions worldwide choosing Apple iPods – August 22, 2005
Musicians stage mutiny against Sony, defiantly offer music via Apple’s iTunes Music Store – August 10, 2005
Apple’s Japan iTunes Music Store debut more bad news for Sony – August 04, 2005
Supreme Court of Canada: No levy on Apple iPods – July 28, 2005
Sony BMG and EMI try to force Apple to ‘open’ iPod with iPod-incompatible CDs – June 20, 2005
The music industries fear is based on lose of control. The major labels are nothing more than salesmen. They scour the globe for a saleable act then market it to death and hope to make money. They however control the acts that are marketed. They also dominate the distribution channels at Wal-Mart, Target, and music stores.
With Apple’s iTunes, they don’t control. Every track, every artist is the same. This opens a wide door to smaller independent labels to get a foothold with some of their acts. In addition, I can see the day where artists directly “sign deals” to distrbute their content independently of the labels. (despite the lawsuit with Apple Corp.)
This is the fear. And the labels see the writing on the wall. The numbers may be small now (which they are). However times are changing and the major labels are trying to hold on to what they got.
The labels are introducing CDs that aren’t proper Red Book CDs, but a compromised recording which is designed to make copying to an iPod difficult.
Therefore there can be no justification to tax iPods.
If they want more profit, Apple should just raise the prices they charge record companies to maintain & deliver music thru itunes. It’s brilliant, Jobs has already set Apple up as the “Good Guy”. Really screw the consumer and drive em to pirating. Teach the money grubbing bastards a lesson once and for all. $14.99 for a piece of plastic? Come on. If half of that went to artists at least I could stomach it.
Apple should then in turn charge a royalty to use there music store and recover the difference. Do on to others as they do onto you. Now you want to sell your music in Japan it’s going to cost you more because you’re charging Apple more.
Here’s my policy. I shop for the song I want on iTunes. If it ain’t there, P2P I go. Simple as that. I don’t care if anyone thinks it’s wrong or right. I’d rather spend $.99 on a song, instead of $17.00 for a CD in order to get one song. If they don’t want to offer that option, then they get nothing from me. Nice move, Sony and Warner.
As a consumer of international music, I know I can always rely on a Japanese friend to rent a Japanese CD, rip it and pass it on if I have no viable economic option. So where does that leave Sony Music Entertainment and Warner Music Japan? Here’s a clue … do you think I intend to buy from the Fockers? And my coming large flat screen is more likely to smell of kimchi than miso. How’s that for synergy?
“But now labels have started agitating for a more creative approach to pricing, in which new releases would cost more than 99 cents, oldies as little as 60 cents and recent hits somewhere in between.”
I’ve seen this repeated in several stories, but have yet to see any of the music company execs recently quoted in the press say anything specific about lowering ANY prices. It’s always something to the effect of “we want flexible pricing — this doesn’t mean 99 cent downloads are going to disappear.” In Plain English, this means “99 cents will be the LOWEST price offered — with popular songs selling for more, which means ‘as much as we can get.'”
The poor-mouthing and alarmist blather from the labels remind me of former MPAA head Jack Valenti during the Betamax lawsuit, when he said the VCR is to the movie industry what the Boston Strangler is to a woman at home alone. We all know how accurate THAT turned out to be.
Hollywood figured out a business model to make the home video market a profit center without ripping off their customers. The music labels need to do the same.
What’s next a tax on Hybrid cars to be given to the oil companies due to lost revenue for using less gas?
WTF
I have an idea. Let’s put a 50% tax on the income of the big 4 music labels and divide the proceeds among the writers, artists and technicians in the music industry.
Let’s put the massive profits where they belong.
Buy the CD from Amazon (£7.99), rip it then flog it on EBay for a fiver. Simple.
If record companies can’t control their greed they discover that they will get less not more.
“We watched people make fortunes and create valuable assets off of our music,” says a former top exec.
“We watched people make fortunes and create valuable assets off of our music.” says a former top musician.
I want variable pricing, but I want it to be 79c for regular tracks, 99 cents for top-40 and 49 cents for old catalog. That’s variable, and makes sense as WalMart has driven down the wholesale and retail cost of CDs, so should iTMS drive down the wholesale and retail cost of digital downloads. This talk of variable pricing and in particular of raising prices for popular tracks is nothing but posturing by the labels to prevent Apple in its next round of negotiations from doing the obvious thing and lowering wholesale costs and passing on those savings to the retail market.
Echoing other comments – I like my ipod – music I have bought doesn’t work on it (copy protection), so to copying I go – not convenient, illegal, and as an artist I am happy to buy not steal – just can’t do it in OZ.
I have moved on from CDs – record industry should wake up and look after the artists and consumer intersts – times have changed and in marketing you don’t turn the clock back…