Prince McLeanThe record industry may be on the verge of surrendering to Apple boss Steve Jobs and abandoning its demand for iTunes to charge different prices for different songs.
The comments mark a change of tune for the record industry, which late last year drove headlines with its push for a variable pricing structure that would allow them to charge more than 99 cents for some popular tunes and less for others. All four of the labels — Universal, Warner Music, SonyBMG and EMI North America — have deals with iTunes that will expire in the next two months.
"But Jobs has dug in his heels on the issue, creating the potential for a showdown between the mercurial Apple boss and the record industry should the labels continue to push for variable pricing," The Post reported. "Some executives even mentioned to The Post the possibility that some labels may end up pulling their music from the service, which is by far the most popular of the digital download services."
However, the report notes that a more likely scenario is that contracts will expire and some labels will operate without a deal as they seek to reach new terms.
Up until this point, the labels have charged Apple wholesale prices of between 60 cents and 80 cents per music track, which the iPod maker then turns around sells to customers 99 cents a piece.
During a conference call last week covering its second quarter financial results, Apple said its iTunes music store continues to operate at "above cost," generating a small profit.
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37 Comments
I don't know Steve, I think eventually you'll have to allow variable pricing if that is what record companies want. Even if you get them to agree to keep 99¢ pricing this time, I don't think it can possibly last forever. Personally, I see it both ways, but If they are wanting to drive the price up as high as physical CDs, it would be a big mistake on their part.
If I heard this correctly the basic price of physical CDs the labels put out is the same. All music, all labels, same price. When they hit the store shelves that's when you see this record at $12 and another at $20.
I don't know Steve, I think eventually you'll have to allow variable pricing if that is what record companies want. Even if you get them to agree to keep 99¢ pricing this time, I don't think it can possibly last forever. Personally, I see it both ways, but If they are wanting to drive the price up as high as physical CDs, it would be a big mistake on their part.
The record companies have made a key mistake here: they let Jobs have control, making iTunes the Walmart of music, if wallMart wants a product at a lesser wholesale cost and to sell it for less than recomended markup, they get it because of sheer volume. Apple also has tons of pop-culture karma, giving Jobs something that WalMart doesnt have; a bully-pulpit, allJobs has to do is air the dispute in public, with the "these greedy bastards want to screw you and I want to stop them" spin (which is actually less spin and more about truth).
They have a right to ask for variable pricing. Album prices already vary from the $9.99.
I think Jobs is right in that it's still a bit too early for variable pricing. Give it another year or year and a half and let the catalog rise to 3+ million tracks.
I'm not overly worried because what they will do is take the classics and the new top 20 stuff (which you hear enough on the radio) and raise the prices there. I would like some back catalog stuff for say .50 or so that would be interesting to do some iTunes "crate digging" but the download market is still a bit nascent compared to CD sales to risk upsetting purchasers.
I'd like to see Apple increase the bitrate to 160Mbps for more expensive tracks.
Let them charge extra for the newest mass pop crap, if it means better stuff is cheaper. Consider it a crappy music tax.