“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.
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