Apple strong-arms artists, labels for iTunes placement

Exposing a frequently mysterious side of the iTunes Store, the Wall Street Journal has revealed the sheer influence Apple's online music store wields over artists.

Many musicians now consider the front pages of iTunes the key to success and consider the "splashes," "swooshes," and "bricks" — the graphics and album panels that showcase music on Apple's store — just as important as airplay on radio or TV, according to the financial paper. In some cases, groups such as Gnarls Barkley and The Shins have seen large portions of their music sales come solely through the site.

"MTV used to be the place where you had to have a video playing as one of the key legs of the stool [for success success]," says KCRW DJ and former iTunes consultant Chris Douridas. "iTunes is now one of the key legs of the stool."

Many are finding, however, that the cost of reaching the coveted position can be high. In contrast with many large retailers and online shops (including Real's Rhapsody), Apple typically avoids paid placement in an attempt to provide unbiased recommendations. In theory, this stymies major labels and others that would hope to buy their way to the top of the sales charts.

Shoppers used to believe that the recommendation from a store "was coming from someone who really liked it versus someone who was paid to say they liked it," observes Apple's iTunes VP, Eddy Cue.

In practice, artists are discovering that Apple is less than altruistic. Although often determined by staffers' tastes, promos are also granted to those who cut prices or provide exclusive tracks. Typically, the Journal notes, this comes under severe pressure from iTunes managers. Prince recently saw Purple Rain and other albums from his back catalog surge in popularity after a top spot on the iTunes Store during the Super Bowl — but only after four albums were temporarily cut to $7.99.

Young pop star Lily Allen has even gone so far as to accuse Apple of "bullying" tactics. "[Apple] won't advertise your album unless you give them extra material," she complained during a radio interview. The California firm reportedly muscled Allen into producing a bonus song to attach to her latest album, spurring her to produce a "rubbish" alternate take on an existing track just to get to iTunes' center stage.

This aggressiveness has some of its roots in Apple's independence from music store sales, according to the report. While iTunes makes less than 40 cents on every 99 cent song, its bread-and-butter music player sales more than compensate. The iPod creator can afford to discount albums when it encourages more buyers, regardless of the actual revenue those buyers bring in.

The end result sets up Apple as a pressure valve for the music industry, strictly controlling the flow of music. This causes grief for many and ultimately gives Apple control over an artist's fortunes. This can be a potential benefit for those who draw the media giant's attention.

"When they [at Apple] do step out on a new artist, it's that much more meaningful," says Josh Deutsch, head of the independent label Downtown Records.