Apple pressures music labels to abandon Amazon MP3 Daily Deal
According to an executive who spoke with Billboard, the Daily Deal has been around since mid-2008, but it was in 2009, when Amazon asked labels to provide a one-day exclusive before an album's street date in order to be featured in the promotion, that Apple became unhappy. Granting 24-hour exclusivity gave the album promotion across the Web, on various Web sites and social networking feeds.
The labels reportedly paid nothing for the promotion, but simply exchanged the temporary exclusivity for increased exposure. With the deal potentially taking customers away from Apple's own iTunes Music Store, the report said that the iPod maker decided to intervene.
"Sources say that iTunes representatives have been urging labels to rethink their participation in the Amazon promotion and that they have backed up those warnings by withdrawing marketing support for certain releases featured as Daily Deals," the report said.
Apple's alleged approach has apparently worked: Major labels decided not to include high-profile releases such as "Need You Now" by Lady Antebellum and "Animal" by Ke$ha in Amazon's Daily Deal.
The first participant in the Amazon promotion, which started Apple's displeasure, was reportedly Mariah Carey's "Memoirs of an Imperfect Angel," which sold for $5.99 a day before its Sept. 29 street date last year.
Amazon, however, has not been idle as Apple has allegedly become more aggressive with publishers. Bloomberg reported that Amazon has been "fine-tuning its Daily Deal pitch" for new titles, "agreeing, for instance, to forgo the one-day exclusive window on certain ones." Apple, however, allegedly remains upset with the Daily Deal promotion.
A week ago, Apple's iTunes sold its 10 billionth song, achieving the milestone nearly seven years after the online download destination was introduced. Recent figures have found iTunes to represent a quarter of all U.S. music sales, making the service the largest single music retailer in the nation. Digital downloads make up an estimated 35 percent of total music sales, and iTunes accounts for 69 percent of those.
Apple, in the past, has had heated negotiations with music labels over content on iTunes. In early 2009, Apple convinced record labels to remove digital rights management from its music downloads, but in the process it conceded price flexibility. Starting last April, some popular tracks saw a 30 percent increase in price, from 99 cents to $1.29.
As prices were increased in the midst of a recession, annual growth of digital music sales has slowed, but remains a net positive for the major labels. However, one label executive recently conceded that a 30 percent price increase during an economic slump was not the best move.