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Apple faces off with record labels over iTunes pricing

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By LC Angell

Contributing Editor
Published: Saturday, August 27, 2005
News Categories: iTunes

According to the New York Times, two major record companies are pushing for an increase to Apple’s 99-cent per song pricing on the iTunes Music Store.

“Two and a half years after the music business lined up behind the chief executive of Apple, Steven P. Jobs, and hailed him and his iTunes music service for breathing life into music sales, the industry’s allegiance to Mr. Jobs has eroded sharply,” the Times’ Jeff Leeds reports. “Mr. Jobs is now girding for a showdown with at least two of the four major record companies over the price of songs on the iTunes service.”

“If he loses, the one-price model that iTunes has adopted could be replaced with a more complex structure that prices songs by popularity. A hot new single, for example, could sell for $1.49, while a golden oldie could go for substantially less than 99 cents. Music executives who support Mr. Jobs say the higher prices could backfire, sending iTunes’ customers in search of songs on free, unauthorized file-swapping networks.”

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Comments

21

Buy 4 tracks - $3.96 their cut - about $2.80 all in a nice trackable, instantly updated report - tansaprent for EVERYONE to see.

Buy 1 CD - $12 their cut - in 3-6 months, they’ll print up something for artists to see how many they’ve sold minus “promotional costs” (CD’s traded to employees at other labels, record club CD’s don’t count, and of course, to radio stations and er - other stuff not important enough for artist to know details - “trust us, all good”).

Much harder to hide $2.80 in sales when Apple handles it - much easier to hide $12 when they handle the tracking themselves.

Hard to sell $3 phone downloads when Apple is selling it at $.99.

Notice the two major holdouts - one is a DIRECT competitor in the ipod market and the other has about $5 BILLION of borrowed money they just spent in order to buy the label.

Posted by jbelkin on August 27, 2005 at 4:37 PM (PDT)

22

Sony and Warner just lost ANY possible future sales for music from me.  I will not stand for bs like this and ANY company that pushes for raised rates on iTunes will loose any possible sales they had to me.

I am sick and tired of these stupid record companies that just don’t get it!  I will not pay more than 99¢ for a song and even then 99¢ on its own is pushing it.  Especially when you consider that music when I buy music off iTMS I am not owning it, I get the music with limitations (DRM) and I am getting a lossy encoded song.

Anywho, tough luck Sony and Warner, you pushed for it and you lost my dollar as a consumer.

Iggy *wanders off mumbling* “stupid record companies”

Posted by TheIguana in Calgary, Alberta, Prarires, Canada, North America, on August 27, 2005 at 4:40 PM (PDT)

23

We’re all implying it, so let me just come out and say it.

F**k the record companies

Posted by thebrain on August 27, 2005 at 6:14 PM (PDT)

24

ok, well that didnt get past the censors, so..

In the words of Eric Cartman..

You’re breakin’ my balls…

My balls…you’re breakin’ ‘em *sigh*

Posted by thebrain on August 27, 2005 at 6:15 PM (PDT)

25

Apple needs to allow independents more access to iTunes.  This is the best direct to consumer platform.  screw the record companies and their no talent garbage.  Start selling real artists to the public.

Posted by synergy on August 27, 2005 at 6:19 PM (PDT)

26

iTunes really started me buying music again.  When I first started I’d buy a CD or 2 a week and then the past few years I’ve only bought the releases from artists I already like, the new U2 CD or a new Sloan disc.

Now with iTunes I easily buy 2 or 3 albums a week plus the odd single track.  It’s easy, it’s hassle free, it doesn’t leave me having to handle a bunch of jewel cases and CDs and it’s a really great impulse buy system.  If the per song prices and therefore the album prices go up I will probably end up cutting my purchases by at least half. 

99 cents and $9.99 is a good price because it’s cheap compared to the stores and it’s low enough that I don’t really think of it as a particularly expensive purchase so I don’t really budget it I just buy it.  The albums that are double albums or are more than $9.99 tend to sit in my shopping cart for a few weeks before I decide to buy them (I had the Foo Fighters in there for two months before I ended up buying it and I’ve taken out and not bought most of the above $10 albums).

Posted by Jeffery Simpson on August 27, 2005 at 6:50 PM (PDT)

27

what these executives fail to realize is that they need Apple a lot more than Apple needs them. they are doing this under the assumption that iPod sales will take some hit. Not a chance. People don’t buy iPod just to download from iTunes. People buy iPod to listen to music and that includes CDs, used CDs, illegal downloads, etc.

Also, from what I have been reading for a while, Apple barely makes about 5 cents per song or something like that. while there will be some damage from losing Sony and Warner, it won’t be significant enough to rattle Apple.

Sony’s last days are near, as there is some credible underground reports that Samsung is ready to buy Sony. I highly doubt Samsung will do this.

Posted by Make Trades Fair on August 27, 2005 at 7:07 PM (PDT)

28

The artists definitely don’t see much of a cut on music on a major label. For the $15-$18 a consumer spends on the CD, the artist makes maybe 10 cents (if they’re lucky).

On independent labels, the return is much higher. Ani Difranco was getting as much as $4 a cd back. Now you know why she won’t sign to a major label.

It’s very interesting to see bands like Arcade Fire getting somewhat major exposure despite being on an indie label. It speaks volumes to what a majority fans think about the majors right now.

iTunes definitely supports indie labels that’s one of things that I like most about them. And the indie labels hopping on early in the game is a big nod for Apple.

Posted by Amalea Fisher on August 27, 2005 at 7:54 PM (PDT)

29

greedy record execs!

Apple can’t give in

Posted by scottishfishes8 in Chicago, IL on August 27, 2005 at 8:15 PM (PDT)

30

The record companies JUST DON’T FREAKING GET IT!!!!

When I buy music I want to listen to it the way I want to! It is my responsability to follow copyright law! We live in a nation (be it the US, Canada, or the rest of the first world) where you are innocent until proven guilty but with the extensive use of DRM I can’t listen to my Norah Jones CD on my iPod!  They’re assuming I’m a bad, evil, demonic, FILE SHARER!!!!!

And you know what I AM! the record companies made me this way!  When Napster came out in 1999 I was pissed off with the cost of cds and how much the artist actually got I formulated the attiude towards P2P that I have today:

If they are a big name artist signed to a label I refuse to buy the CD (the aforemetioned Norah Jones CD was given to me) the artist simply does not get enough funds from their hard work!

I am more then happy to buy CD’s from artist’s that and completly independent/on small labels I feel good when I go to a show, like the artist, want to buy the album, and when I buy the cd I hand the artist a $20!  Sure it’s more expensive but I feel good knowing that a up and coming artist won’t have to sell out to the record companies that much longer…..


I’m with thebrain (even if it won’t make it past the censors) #### the record companies

Posted by Blue@Heart on August 27, 2005 at 10:10 PM (PDT)

31

I will gladly pay for the songs if the artists just post their music on their website and charge $1 per songs or something like that. Music labels are really testing my patience/sanity.

What Apple could do is to drop these labels and sell music artists the rights to post their music in iTunes, sorta like what Apple is doing to podcasting (sans posting fees). That will change the music industry forever. Artists will make so much more money by doing this.

Posted by Make Trades Fair on August 27, 2005 at 10:50 PM (PDT)

32

Stupid record companies. Do they really want us to download all of our music files illegaly?. I’m with blue@heart and thebrain. #### the record companies.

Posted by Pissed off consumer on August 27, 2005 at 11:08 PM (PDT)

33

When I first started buying CDs in 1983 the typical price of a single disc CD was $14.99 to $16.99, usually depending upon the vendor and country of manufacture. When I left Best Buy the other day, the highest price I paid for any of the audio CDs I walked out of there with was $13.99. Even the DVD-Audio disc I had was only $15.99.

So what’s this mean? Well for one, I have a tough time understanding why people gripe about how expensive CDs are these days. After 22 years and all that inflation, it’s seems like it’s a hell of a lot CHEAPER than it once was.

As a comparison, the fully optioned Honda Civic four-door I bought back in ‘85 cost me $9500.  When I took my parents’ Accord in for service a month ago, the ‘05 Civic sedan (non-hybrid) down at the Honda store had a sticker nearly double that. 100% more in 20 years for comparable econoboxes.  A buck LESS for a comparable audio CD in even a slightly LONGER time span.  So what’s expensive again?

Posted by flatline response on August 28, 2005 at 12:25 AM (PDT)

34

$28.88 in UK at todays conversion prices that why p2p was so prevailent untill p2p and itunes album prices were rising to $36.
Another reason that cd sales were falling was that record companys had reduced the number of new cds they were realising so actual cd sales per a artist actually went up.

Posted by Matthew on August 28, 2005 at 2:10 AM (PDT)

35

Get over it guys…the price is gonna go up…and the price should go up.  Selling singles at $.99 is a bad business model for the labels and they’re not gonna shoot themselves in the foot.

Sorry to the poster who said the Labels need Apple more than Apple need the Labels.  How blind are you?  Just take one out of the equation and see what happens to the other.  Take the music out and iTMS has nothing to sell.  Take iTMS out of the equation and the Labels still have a hundred other avenues to distribute their product.

I don’t think either side should push too hard, but the Labels control the product.  The product is what we’re buying.  If you couldn’t get the new Dave Matthews CD on iTMS, does this mean you wouldn’t get it at all?

Posted by Talking Madness in Los Angeles on August 28, 2005 at 2:19 AM (PDT)

36

I don’t know how the prices compare in the States but here in the UK iTunes is still way too expensive, especially on back catalogue items so if charging more for the Top 100 singles means they can compete with CD retailers on albums then it makes sense. For example: Goldfrapp’s new CD “Supernature” is £8.97 at Tesco, £8.49 at Amazon and £7.99 on iTunes so iTunes just undercuts the rest but to save 50p you get a compressed file and all the hassle of DRM.

Meanwhile,Goldfrapp’s five-year old “Felt Mountain” CD is £4.99 at HMV, £5.97 at Amazon and £7.11 on iTunes so you have to pay £2 more for restricted access to a lower quality version!

(By the way, Felt Mountain is still better than Supernature so just pop down to HMV and get it NOW!)

Posted by Andrew C (UK) on August 28, 2005 at 2:23 AM (PDT)

37

Huh!

and you guys in the US think you have problems with record companies increasing iTMS pricing.

here, down under, the record companie$ wont even let us have an iTMS!

i look forward to the first record company going broke.

d.

Posted by Darren on August 28, 2005 at 2:35 AM (PDT)

38

YourMusic.com offers 14,000 CDs at $5.99 each with free shipping.

Posted by Galley in Greenville, SC on August 28, 2005 at 5:37 AM (PDT)

39

I’ve said it before and I’ll say it again. I get all my AAC files (and many other formats with customizable bit rates) DRM free from AllofMP3.com. I’ve done so for two years now and I only pay about $1.50 PER ALBUM! All other music services are overpriced.

If you really hate record labels send them as little money as possible.

Posted by Mooseroo on August 28, 2005 at 6:23 AM (PDT)

40

Why should the price be higher or the same as CDs? The labels have no pressing or distribution costs.

As for the price having to go up because of inflation, then what about computers. CDs are technology and easier to mass produce and cheaper. The only place that the money from CDs is going to is the label (read: execs only) and distributors.

If you want cheaper albums, go to emusic. 25 cents a song and it is legal. They have most of the major indie labels (Matador, Ryko, Merge, Sun).

OR go for the used CD market (even online auction sites) OR wait until the major chains have a fantastic sale (my favorite is the Tower day after Thanksgiving Sale—keep your list for year).

Posted by Amalea Fisher on August 28, 2005 at 8:22 AM (PDT)

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