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Apple seen having upper hand in music negotiations

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By LC Angell

Contributing Editor
Published: Friday, April 20, 2007
News Categories: iTunes

Following its anti-DRM deal with EMI earlier this month, Apple is entering talks with the other major record labels from a position of strength, according to industry executives. During this month’s contract renegotiations, Apple is expected to focus mainly on getting the labels to follow EMI’s lead and drop copy-protection on their digital music offerings. The labels, however, will try hard to push their own agenda, including variable song pricing, an iTunes subscription plan, and possibly trying to get their hands on a cut of iPod or iPhone sales.

“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,” reports Reuters. “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.”

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Comments

1

Good, maybe in the future iTunes will totally DRM-free. Doesn’t make a huge difference for me, but I think a lot of people will appreciate it!

I doubt if Apple will do variable pricing though…

Posted by Graeme Smith on April 20, 2007 at 9:34 AM (PDT)

2

“The music companies also want to improve their margins on the wholesale pricing of digital songs.”

Uh, given that their incremental cost of goods is exactly $0.00, how do they expect to get more than the current 100% margin?

Posted by m.s. on April 20, 2007 at 10:05 AM (PDT)

3

So let me see if I get this:
(1)Apple rips the music;(2)Apple uploads the music to their servers;(3)Apple pays for server maintenance and bandwidth; (4) Apple pays for advertising and distribution; and (5)Apple then pays music companies their due royalties.
So Apple does pretty much all the work, makes millions for the record industry (all the while selling their own music players) and still these greedy execs want more money/per songs AND a cut of iPod sales? Wow…....., just wow!

Posted by lvidal91 on April 20, 2007 at 10:43 AM (PDT)

4

“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…”

Proof that dealers shouldn’t smoke their own dope.

Posted by david on April 20, 2007 at 11:16 AM (PDT)

5

Remember, the record companies blame digital downloads for killing their golden goose business model of selling 1 or 2 good songs for the price of a $16-20 CD. They see it as recooping some of those “lost” profits”.

Posted by Scott on April 20, 2007 at 2:12 PM (PDT)

6

Apple needs to CRUSH the record labels and become a distributor, which is basically what the recording industry became in the late 1990s.

Posted by flashframe on April 22, 2007 at 10:48 AM (PDT)

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