Apple enters re-negotiations with music labels in position of strength, to push for DRM-free music

Apple Store“When Apple Inc. sits for contract negotiations with the major record companies over the next month, it will probably seek further concessions from them on selling music without copy-protection software,” Yinka Adegoke reports for Reuters.

“The owner of the market-leading iPod digital media player and iTunes online music store has already cut an early deal with EMI Group, the third-largest record company, and enters talks with the other labels from a position of strength, according to music industry executives,” Adegoke reports. “That leaves Vivendi’s Universal Music Group; Sony BMG Music Entertainment, which is a joint venture of Sony Corp. and Bertelsmann ; and Warner Music Group in a tough spot.”

“Universal, Sony BMG and Warner will aim to steer contract renewal negotiations with Apple to discussions on variable pricing for songs, a subscription service for iTunes, and more bundling of tracks and other features into digital packages, music executives and analysts say,” Adegoke reports.

“The separate talks are scheduled to start toward the end of April and go into the summer,” Adegoke reports. “The music companies also want to improve their margins on the wholesale pricing of digital songs. There has even been talk of getting a cut of sales of iPods themselves, or future devices such as the highly anticipated iPhone set for availability in June. But analysts see that as unlikely, with EMI’s deal probably pushing the issue of dropping digital rights management to the top of the agenda.”

“The other three music companies say publicly that they are only experimenting with dropping DRM, but privately, executives accept that following EMI’s move it is only a matter of time. The industry will be watching Universal Music, which dominates with a market share of about 30 percent,” Adegoke reports.

Adegoke reports, “Analysts say the record companies hope to talk Apple into introducing a subscription model… ‘The record companies like the idea of the recurring revenue,’ said Gartner analyst Mike McGuire. ‘The challenge will be to convince Apple that it’s worth the extra costs involved in setting it up.'”

Full article here.

Related articles:
EMI provides Apple with opportunity to fortify digital content distribution dominance – April 11, 2007
Apple’s DRM-free EMI deal ‘a master stroke that should cement Apple’s dominance’ – April 03, 2007
In Apple’s DRM-free EMI music deal, the big loser may be Microsoft – April 03, 2007
Apple’s DRM-free iTunes play trumps Microsoft’s huge bet on DRM – April 02, 2007
Apple: Higher quality 256 kbps AAC DRM-free music on iTunes Store coming in May – April 02, 2007
Warner’s Middlebronfman: Jobs’ DRM-free music call ‘without logic and merit, we’ll not abandon DRM’ – February 08, 2007

A royalty fee for iPods? Universal CEO Morris must be dreaming – December 03, 2006
Universal CEO Morris wants iPod royalty fee from Apple – November 28, 2006
Universal Music Group CEO calls iPod users thieves – November 11, 2006
Warner’s Middlebronfman: ‘We sell our songs through iPods, but we don’t have share of iPod revenue’ – October 05, 2005

Apple inks deal with big four labels: iTunes Music Store prices stay at 99-cents per song – May 01, 2006
Analyst: Apple in driver’s seat when it comes to renegotiating with music labels – March 31, 2006
Why music labels want to force multiple price points on Apple’s iTunes Music Store – November 21, 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
NYT’s Pogue to record companies: it’d be idiotic to mess with Apple iTunes Music Store prices – August 31, 2005
Report: Apple CEO Steve Jobs ‘angered’ as music labels try to raise prices for downloads – February 28, 2005
Greedy Big Five music labels looking to jack up iTunes songs to $2.49 each? – April 22, 2004
FT: Steve Jobs’ position in negotiating with music labels ‘undeniably getting stronger all the time’ – April 06, 2004


  1. Do these “execs” understand that it is only a recurring revenue stream if customers buy into the model. From the performance of every other renter of music, nobody is buying.

    MW fall, as in what proceeded the head injury that causes Subscription Delusion that so many Music companies croonies suffer from.

  2. I’ve said it before, and I’ll say it again… I’ll happily pay UP TO $11.99/month for a subscription service to iTunes. I don’t care about “owning” the music (as if anyone actually “owns” the music they ripped from a CD, etc.). I am perfectly content with FairPlay DRM, and 128Kbps bit rate is fine with me.

  3. P.S. I have no interest in the non-iTunes subscription services because they are not compatible with the iPod. The music execs are probably right… If iTunes/iPod were to have a subscription service, it would likely do very well. The disadvantage to Apple is more than the expense of setting it up, but the additional costs of bandwidth to operate a subscription system.

  4. Just when you think that you’ve heard every possible variation on “how I want to have DRM’s love child”, this vomitus shows up — you don’t own something you rip from a CD! Ohmygeez. So who owns it? Does ownership magically transfer to Thor? How about the record companies — do they own your copy? Wait, I’ve got it. How about your landlord or the state owns any digital copies you make for your own use and can seize them at any time to procure additional revenue? Silly boy. I think you’ve just been owned.

  5. A subscription service may be good for parents of those teeny bopper kids who listen to the latest fad music. Rather than buying the crap either on line or on CDs it may be more cost effective for them to rent the music instead. After a year they would have forgot all about Hilary Thingymibob and be onto some other one hit wonder.

    The other good use of a subscription service would be to really check out a band’s portfolio and then buy the songs you like. I probably would keep the service all the time but just when I want to get some new music.

    Apple would have to have a bigger cut because the overheads will be greater with a subscription service.

    How come the music barons want more money? Don’t they get 2/3s already?

  6. I guess you need to bust your own skull, since you clearly are one of the idiots that thinks that you own music on a CD because you bought the CD, that you own the movie on a DVD because you bought the DVD, that you own the software on your computer, because you bought the CD it came on, etc.

    Here is the fact dumbass… if you bought a CD full of music, YOU ONLY BOUGHT A LIMITED LICENSE TO LISTEN IT FOR PERSONAL USE! There is no strict “fair-use” law in the US. There is a generally accepted , but not binding, definition, which is that you can copy it to your computer, music player, etc. for personal use. That means that yes, you can play it in YOUR car with your friends in the back seat. You can play it on a boom box with friends listening to it, and so on.

    You CANNOT, however, give those copies away. You cannot CHARGE a fee for others to listen to the music. You cannot broadcast it over the radio, over the internet, or otherwise. For those things, you need to negotiate a public exhibition license from the OWNER OF THE MUSIC, which is NOT YOU!

    The same goes for movies… You only bought a right to watch the DVD in your private home, back seat of your SUV, etc. You can loan the disk to a friend, or give it to them, and within certain limits, you can trade it (that is barter, a TAXABLE business deal).

    So, no… you mouthy ass… you do not <b>”OWN” the music.

  7. Man: I’ve said it before, and I’ll say it again… I’ll happily pay UP TO $11.99/month for a subscription service to iTunes.

    I’d happily pay up to $11.99 for a month’s subscription service to iTunes, in which time I can use Audio Hijack Pro to make permanent copies of thousands of songs.

    I don’t think the labels or Steve would be quite so happy, though.

  8. Hey, I got “Superunknown” and “Goodbye Yellow Brick Road” each for only $7.99 from iTunes the other day.

    I generally don’t buy but a few songs from them, but less than 8 bucks? Well, alright…..

    New Artic Monkeys next Tuesday. CD, of course.

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