Apple pressures record labels for exclusive iTunes releases as streaming cannibalizes download sales, sources say

“Apple Inc. has begun pressuring the major record companies to offer new releases exclusively through its iTunes store — a move that would initially block availability on streaming services such as Spotify or Beats Music, according to several people familiar with the matter,” Dawn C. Chmielewski and Randy Lewis report for The Los Angeles Times. “Apple executives contend that on-demand music services have begun to cannibalize download sales, and its representatives are demanding the labels create a period reserved for digital purchasing.”

“Music industry insiders, who spoke on condition of anonymity for fear of reprisals from the industry’s dominant retailer, said Apple’s push for a new release window — similar to the one that some Hollywood studios impose for films newly released for home viewing — shows the Cupertino, Calif., tech giant is scrambling to retain its competitive advantage in an evolving digital music market,” Chmielewski and Lewis report. “Apple’s iTunes online store accounts for about 80% of all download sales in the U.S. But after a decade of uninterrupted growth domestically, digital song and album sales began to slump in 2013 and continued to slide this year. Song downloads were down 12% through the first eight weeks of this year compared with a year earlier, and digital album sales were off 13%, according to data from Nielsen SoundScan.”

“Industry insiders attribute the decline to a variety of factors, including the growing popularity of streaming services, as well as increased competition for the consumer’s ear,” Chmielewski and Lewis report. “Although Apple remains the single largest manufacturer of smartphones, more U.S. consumers now own Android devices running Google’s software, according to researcher the Yankee Group. As consumers gravitate to Google-powered smartphones, they lose access to the world’s biggest and most widely recognized music retailer, Apple’s iTunes… ‘I’ve never had anyone [at Apple] say streaming is killing our business,’ said Jim Guerinot, whose Rebel Waltz Management handles No Doubt, Trent Reznor and other acts. ‘They’ve been very specific for 10 years about wanting extra content — just like Best Buy, Wal-Mart and Target. They’re very aggressive about trying to do something that will differentiate them from everybody else.'”

Read more in the full article here.

Related article:
Apple’s iTunes Radio already 3rd most popular music streaming service in USA – March 11, 2014

9 Comments

  1. So according to the authors Apple is pressuring folks, but according to non-authors they aren’t (or the definition of “pressure” is not agreed upon, and this request from Apple for unique agreements is nothing new).

    Click bait, then.

  2. A Non-Story. Target has been offering physical ‘Exclusives’ CDs of selected titles for years (bonus tracks, extras, etc). This is no different. Labels should be jumping at this ‘demand’ for its tremendous potential for free publicity. This is Marketing Genius.

  3. Apple strong arming the record labels? Oh, I hardly doubt it.

    My take away on this is Apple went to the record labels and said hey, you are losing millions on sales because there is no incentive to buy if you are allowing subscriptions right out the gate on new releases.
    Apple doesn’t really care one way or the other. Apple makes very little if anything off music sales, the labels are making the most and the artist making a fraction. Contracts for most artist can be different for subscriptions/radio play vs purchases. The artist has to make their money up in sales, concerts, materials, etc. If the labels make a better deal for subscriptions then for sales, the one that gets hurt is most likely the artists themselves, not the labels.
    Maybe the real story is Apple is trying to protect the artist interests.

    1. Agreed. And comparing the first few weeks of this year to last year is fairly meaningless. It very much depends on whether any major artists have released new materials in the first few weeks of this year compared to last year. Major releases may come later in the year to offset lackluster sales in the beginning of the year.

      Music sales are fickle. New artists or one-hit wonders don’t sell as many albums as a Bruce Springsteen.

  4. Ah, nothing like quality journalism. And that’s exactly what this is, NOTHING like quality journalism..

    “I heard from a guy who walked next to a friend of a guy buying a coffee, that Apple is in deep doodoo.”

  5. There is a differentiation option here. Start offering 24/96 ALAC studio masters to the store and charge a reasonable amount for them. When downloading the small number of albums I want from Linn records and the like they are charging £18 per album. Knock this down in price a bit and you are on to a winner.

    Plus it would be very apple to differentiate on the quality of the music you can download. The streaming services couldn’t compete because it would cost so much in bandwidth to do so.

    I do grant you it may be a bit niche however.

  6. I think Apple may have a good point. They have a DRM system that is working. If there is high demand for a product early in its cycle life, and the only place to get it is iTunes, they may sell many more units than if copies are making their way across the internet in the usual “other ways.”

Leave a Reply to jt016 Cancel reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.