Universal Music Group parent Vivendi calls Apple iTunes contract terms ‘indecent’

&mpApple iTunes“Vivendi condemned as ‘indecent’ the contract terms between its Universal Music Group (UMG) unit and Apple Inc, the computer maker whose iTunes online store dominates the digital music market,” Astrid Wendlandt reports for Reuters.

MacDailyNews Take: If it was so “indecent,” why did they sign the contract? Of did it have some “indecency time bomb” built into it that only just now went off?

Wendlandt continues, “Vivendi is one of many large media companies that are trying to challenge Apple’s grip on the digital entertainment market and obtain more control over pricing. It said it was in talks with rival distributors.”

MacDailyNews Take: Oooh, we’re sure Apple’s shakin’ now!

Wendlandt continues, “‘The split between Apple and (music) producers is indecent … Our contracts give too good a share to Apple,’ Vivendi Chief Executive Jean-Bernard Levy told reporters at a gathering on Monday organized by the association of media journalists in France. At present, UMG, the world’s largest record company, gets 0.70 euro ($0.99) out of the 0.99 euro retail price charged by iTunes, Vivendi said. Among other things, Levy called for the remuneration of a new release to be higher than for a 30-year-old classic. ‘We should have a differentiated price system,’ he said.”

MacDailyNews Take: Reuters must have left out some things because we swear we heard someone say, “We should have a differentiated price system, so that we can charge more. After all, we are a greedy music cartel. We want a ‘differentiated’ system, which (wink, wink, nudge, nudge) really means we want to charge more for what people are buying and less for what they’re not, thereby giving the false impression of lower prices while we’re actually charging and making more money. They don’t call us fargin’ greedy bastages for nothin’. Capisce?

Wendlandt continues, “UMG renews its music distribution contracts with Apple every month after having failed to agree a longer-term arrangement earlier this year. The music publisher can end its contract with Apple at one month’s notice, but Levy declined to say whether UMG was ready to bypass Apple altogether. ‘We are in a phase during which many different actors are talking to each other … We are trying to put in place several projects to ensure that music is better remunerated … We are not just talking to Apple,’ he said.”

MacDailyNews Take: Oooh, big man. Go ahead and do it, Mr. Big. Come on, do it, we dare you.

Wendlandt continues, “Levy forecast that ‘in the not so distant future,’ traditional music products such as DVDs and CDs would make up less than 50 percent of music publishing revenues. At the half-year stage, digital music sales made up 15 percent of UMG’s total music revenue.”

MacDailyNews Take: 90% of which comes from Apple’s iTunes Store which is why Levy talks like Mr. Big to reporters, but dutifully signs the dotted line of his monthly iTunes contract like the neutered wimp he is.

It’s a good thing that no reporter named Penny was there or Jean-Bernard Levy would have smashed right through the podium, grabbed her, and started screaming, “It’s mine, ya understand? Mine, MINE, all MINE!”

Full article here.


  1. What a depressing industry to have to work with. I hope Apple is isolating their iTunes contract negotiators from the people who are designing the store, the iPods, the Macs, etc. Otherwise I’d say there’s a serious risk of all the hope and joy being sucked out of these people by contact. Yes, record company execs are kind of like the dementors in Harry Potter…

  2. So, do the greedy bastards charge more for a CD by a big name artist? Nooooooooo! Is it not actually less than a no name CD or an old CD you have to look for? Big names sell more and that is where the money is. More volume, more money. How complicated can it be. Books follow the same principle and so do movies. The price for a DVD or a movie theatre ticket is not higher because they are more critically acclaimed or just because it cost more than 10x to produce than the next movie. Volume, volume and volume, that the key. Better or more well known sells more.

  3. What is indecent is what the record industry has been doing to artists for the last… well, since the beginning of the record industry, starting with piano rolls. 70% of the revenue isn’t enough for Vivendi? When they have $0 invested in digital distribution? Literally zero, by the way, as my understanding is that Apple does the digitizing for the iTunes store. .70 US dollars or .70 Euros for doing absolutely nothing but sitting on their fat, indecent asses collecting cash.

    Mr. Jack and Vivendi deserve to be repeatedly reamed for the next 50 years by any distributor that can manage it, and it still wouldn’t be enough for what they’ve done to the creative people who actually create the product Vivendi sells.

    I take that back: Vivendi deserves to be reamed by the artists they have exploited, but the artists don’t have the power to do so.

    I feel the major labels are the most blatant example of pure, diseased greed in the corporate world today — well, maybe M$ is worse, but if so only barely — and as a small business owner myself I think their actions are beyond reprehensible.

    MW: western, as in the record companies must be stopped, before they cause the fall of western civilization! (Okay, that part was hyperbole.)

  4. differentiation can bve accomplished by not releasing new music to itunes until after it is not new. then i can be priced witht he 30 year old music. the fact they do not do that indicates the “differentiation” is a charade as many have stated for getting the buyer to pay more to get it early or go buy the cd. this is a strange corollary to apple’s early adopter tax. the difference is apple holds the keys to the kingdom in music downloads and is unlikely to misplace them.

    mw-miles, as in miles apart from understanding and connecting to what the consumer is willing to pay.

  5. I’m surprised he doesn’t call for a cut of iPod sales, as they did with Microsoft’s Zune. Maybe they *are* learning.

    But, yes, they *are* greedy bastards who screw the artists while enriching themselves. Just how much work are they doing beyond delivering a digital master to Apple? It is iTunes that is doing the real work and bearing the cost.

    But, hey, it’s a free market. If they think they can make more money going with someone besides Apple, go for it. They’ll be crawling back soon enough.

  6. @why oh why

    In physical distribution, you could argue that it is legitimate to charge more for a “big name” music artist or a “tent pole” movie, because the promotional costs are higher. In store displays, TV ads, etc.

    But in digital distribution, like at the iTunes store, who’s doing the advertising? Apple is, by putting someone on the opening store page. There are no extra costs, there are no “in store” displays, it’s all — to the labels — free money. Charging more for a “big name” artist may actually lose money for the label, as the more money someone spends on the big artist the less likely they are to click on the “customers also bought” or “related artists” buttons. If I have a budget of $20, say, and a popular new release is $12.99, that is all I’ll buy. But if it is $9.99, and so is a related artist or a catalog album by the same artist, I’ll probably spend $19.98. That’s ~$4.90 less going into the pocket of the label at $.70 out of every $.99.

  7. I said this a while ago in this forum, and it is still applicable today. Apple does have a weak spot with respect to iTunes Store music and video content right now because the vast majority of content ownership is concentrated in the hands of a few industry giants.

    The ability that the internet provides to independently produce and distribute media at low cost will change this situation over time, and the industry knows that. Some of the big names that were no longer under contract went their own way, and I’ll bet that a lot of small independents have sprung up since iTunes started, too. But these independents may or may not choose to be part of iTunes. Eventually that could prove to be a challenge.

    Long term, there is no guarantee that any existing powerhouse will stay in power. Historically, industries and companies have risen and fallen (and sometimes risen again, like IBM) over the course of decades, such as the railroad, steel and coal industries and companies like Xerox, Atari and Wang. I personally consider Microsoft to be near the beginning of a long downward trend.

    Apple has done extremely well so far in evolving the iPod and iTunes and branching out with the iPhone. Hopefully, that trend will continue for many years to come.

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