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.

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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
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Universal CEO Morris wants iPod royalty fee from Apple – November 28, 2006
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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
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Report: Apple CEO Steve Jobs ‘angered’ as music labels try to raise prices for downloads – February 28, 2005
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41 Comments

  1. “EMI rushed into that deal,” says Ted Cohen, who left a senior position at EMI last year to set up consulting firm TAG Strategic. “It would have been better to put pressure on Apple to open up FairPlay to make it interoperable across multiple platforms.”

    Cohen says Universal, Sony BMG and Warner will watch what happens with EMI’s DRM-free catalog.

    “I have a strong feeling there’s not going to be a move for at least 60 days by any of the other majors,” he said. “If all of a sudden EMI starts increasing market share in digital sales over that period, then they’ll have to act.”

    When the DRM-free EMI music is available, I shall buy at least $100 worth.

  2. No Effing Way I will ever subscribe to music, I “own” LP’s, cassettes, and CD’s and can access the music on them anytime I want, in some cases over 30 years later, try that with an expired subscription. Sometimes the arguments here are so asinine!

  3. No, Iggy, I am hardly boiling with rage…

    I am merely trying to educate some silly children who like all children, think they know everything, but rarely know anything at all.

    No skin off my teeth… I don’t care much about music anyhow, and could care less what happens to the industry… but, the current route will certainly not make for better music choices… it will, if anything, cause the big distribution labels, who underwrite the promotion of new artists to disappear, and then who is going to pay for new artists? It’s not like people pay much to see new bands live… they would be better off getting jobs at WalMart.

  4. For those who want the “Flavor of the Month” there might be some validity in a subscription, but I am building a library of my favorite songs of all time. Renewing those same songs month after month, year after year is a false economy, it makes no sense at all to me to keep paying over and over when I can buy it once and archive it.

  5. AppleMan (I am on a PC at work and can’t type or view the apple),

    Chill the fuck out please. You have like two or three posts and each one is chock full of name calling. Yet, other people are the children? Please.

  6. “…educate some silly children who like all children, think they know everything, but rarely know anything at all.”

    Like the 5th grader who told me recently that because this is a free country and he was born here, he has the right to say anything and do anything he wants. Yep, we’ve gotta do a better job of teaching our kids responsibility.

    and the “pwnd” comment was aimed at “Idiots” not AppleMan.

  7. Where is the boundary of ownership?

    I am writing a novel about this timely question, and will explore the historical, and the future. Of course, as science ficiton, it will have to be funny, and even a bit irreverent.

    The novel is set in 2020, a time when genetic medicine has forced an in-your-face dialogue about what one can do with their own DNA instructions, and a consideration of the sentiment “Once released, it is everyone’s.”

    It’s easy to imagine a world were innovation is so startling that first achievers needn’t worry about intellectual theft – no one will ever catch up, and only two choices present: out-innovate, or re-purpose.

    These are great times.

  8. Hey, Thorin — I agree with Man. Why don’t YOU screw!?!

    All Man did was post his opinion. And he did it without calling anyone “names”. Then DipshitWhoBeatsOffToSkulls showed up and tried to pwn HIM.

    But as is so often the case around here, the “pwn-er” quickly became the “pwn-ee”. DipshitWhoBeatsOffToSkulls got totally “owned” because he doesn’t know what the f-ck he’s talking about. Man is CORRECT! Go learn a thing or two about how the licensing of media works, you fool. Ditto to effwerd — there is no myth, idiot.

    I don’t even know him, and I could even end up disagreeing with him on other thigns, but on this issue — Man is right.

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