Universal Refuses To Renew On iTunes 287
UnknowingFool writes "It appears for the moment that Universal will not renew its long term contract with Apple for content on the iTunes store. While the details are not known about the exact nature of the dispute, many speculate that it has to do with Apple's stance on fixed pricing and Apple's refusal to license their DRM. The worse case scenario may include Universal pulling its entire catalog from iTunes. Both sides stand to lose out with 1/3 of of new releases coming from Universal and an estimated 15% of Universal's sales coming from digital downloads. Apple's market share is about 75% of digital downloads, and digital downloads are growing while CD sales are shrinking."
Re:Worst case? (Score:5, Insightful)
HAH. don't hold your breath... and it _will_ be more expensive than iTunes, and it _will_ be more DRM-crippling than iTunes.
Yeah, competition's great.
Universal? (Score:3, Insightful)
This is nothing more than (Score:5, Insightful)
My long-term prediction? More of the status quo. Both sides are winning, and there is no external stimulus that seems like it might upset the equilibrium that has developed. Apple doesn't want to lose a third of its collection, and Universal doesn't want to be tied to the misfits and rejects that compose the rest of the playing field.
Most likely negotiation tactics or... (Score:5, Insightful)
The other possibility is that Bill Gates, in utter desperation because the Zune is such a piece of crap, has offered to pay Universal for exclusive content for the Zune. I would seriously not put it past Bill G and Steve B to do something like this. It would be a really bad day for Apple if this did happen, because it would make the Zune more popular and the iPod less popular.
Of course, it could backfire heavily against both Microsoft and Universal if Zune sales don't grow significantly.
That'll sure help the A/R folks out... (Score:5, Insightful)
Universal A/R dude/dudette: "Yep, that's right."
Unsigned Band with break-out potential: "So any unit sales revenue we see from you will be from Wal-Mart and Best Buy sales, nothing else?"
Universal A/R dude/dudette: "Uh huh."
Unsigned Band with break-out potential: "Losers. Next!"
Re:Worst case? (Score:5, Insightful)
Universal shoots itself in the foot. Film at 11. (Score:3, Insightful)
They think this is good for them HOW?
Re:Uh... what are you thinking? (Score:3, Insightful)
Universal wants to be able to up prices where it thinks it can get more money. Apple isn't letting them do that. How do you see it as a positive that they're going to go to someone who does?
Re:Worst case? (Score:2, Insightful)
I see this as definitely a good thing.
BTW, Magnatune with Amarok is far better deal then iTunes. Just in case somebody is interested.
But do not let me spoil the party - let Apple whoring begin.
Re:Most likely negotiation tactics or... (Score:5, Insightful)
1) Oh, Universal's music is no longer available on iTunes. I'll buy this piece of crap Zune instead of the cool new iPod Femto
or
2) Oh, Universal's music is no longer available on iTunes. I'll have to <strike>pirate it like there's no tommorrow</strike> rip it from CD onto my iPod
Re:Universal shoots itself in the foot. Film at 11 (Score:5, Insightful)
Re:That'll sure help the A/R folks out... (Score:5, Insightful)
You're assuming major labels are still out there trolling nightclubs for "unsigned bands with break-out potential".
More often what they're doing is hitting up their local malls and "recruiting" teenage girls (or in the case of boy bands, teenage boys) to actively "break" as the next pop star. These girls and guys had nothing going for them (except cheerleader looks) before, so why would they turn down the promise of riches just because the songs some producer wrote for them to lay their heavily processed vocals over won't be on iTunes? If they do, hey, there's plenty more at the mall they came from.
Load of Hooey (Score:5, Insightful)
And yet you sell all your CD's at $16.99 regardless of that fact now, don't you?
At the same time, Mr. Jobs has refused the industry's calls for Apple to license its proprietary copy restriction software to other manufacturers. Music executives want the software to be shared so that services other than iTunes can sell music that can be played on the iPod, and so that other devices can play songs bought from iTunes.
Another load of crap. iPods can play music from any other DRM-free music seller. This joker wants you to believe iPods only play iTMS music, which is a lie. And iPod owners would likely buy music from other sources if: 1) It didn't have yet another, incompatible, version of DRM; 2) It was priced right; 3) It was the music they wanted to hear; 4) It had a nice interface to easily purchase and load said music onto their iPod. The record companies themselves are the ones to blame here.
You know, It's the DRM, stupid!
Re:That'll sure help the A/R folks out... (Score:3, Insightful)
Re:Worst case? (Score:3, Insightful)
If Universal thinks that people will buy from another online source than iTunes, let them try. That's competition. EMI felt differently, and will win and grab a larger market share. Honestly I've never paid any attention to which labels musicians signed with before. But now it'll becoming blindingly obvious who's in what camp.
Comment removed (Score:4, Insightful)
Nose, meet spite (Score:2, Insightful)
Truly hilarious.
Re:Worst case? (Score:4, Insightful)
There IS the issue of just how large their respective inventories are: I believe iTunes wins there.
Hey, there are many sources of cheap, independent music. I use them. I like them. But to say that 500 albums at 5 bucks each represents "a far better deal" requires some suspension of reality.
Re:Most likely negotiation tactics or... (Score:2, Insightful)
Minor correction(s) (Score:5, Insightful)
Universal A/R dude/dudette: "No, of course not. You will never see sales revenue because we will cook the books so that you never see a penny. But you are othewise correct - the unit sales revenue you will never see will only come from Wal-Mart and Best Buy."
Unsigned Band with break-out potential: "Where do we sign?"
Re:Uh... what are you thinking? (Score:5, Insightful)
Not to mention, Universal wants money from each iPod sold [slashdot.org], just like they get from the Zune [slashdot.org], (and they've been asking for that since before the Zune deal was announced). For some reason, they think that they deserve that, even though they didn't design the electronics, or the UI, and iPods are not sold with any Universal Music on them, and don't in any way require Universal Music to function correctly.
Record industry is dying (Score:3, Insightful)
Middlemen (Score:4, Insightful)
Re:Worst case? (Score:2, Insightful)
iTunes have established a download market. They've served their purpose and are now surplus to Universal's requirements.
Re:That'll sure help the A/R folks out... (Score:3, Insightful)
To your point...the recruiting/packaging you mention does take place, as you describe. And it won't change. And it's a sad addition all the way around. {grin} But a quick scan of the iTunes storefront shows a lot more than just the boy/girl band du jour. Plenty of other acts and genres and reducing them down to one level 98 Degrees of Boys to 'Sync isn't going to happen.
Re:This is nothing more than (Score:4, Insightful)
It isn't enough to show Apple that they're serious, they want the rest of the industry to see that these steps can be taken without ruining their business. The ultimate goal is to restructure Apple's relationship with the entire music industry, not just with Universal.
If you see this as just an empty threat, then you aren't looking very far down the road.
Re:Uh... what are you thinking? (Score:5, Insightful)
Re:Worst case? (Score:5, Insightful)
If they want to keep the DRM, good look trying to sell it on anything other than iTunes with Fairplay. They'd be excluding themselves from the biggest market.
If they're prepared to sell DRM-free, and want more than Apple's $1.29, they're screwed too, cause customers don't like being fucked by price hikes.
The fact is that by breaking their relations with the biggest distributor of downloadable music, they're only screwing themselves.
Re:Which DRM to use? (Score:3, Insightful)
If anything, music companies benefit revenue-wise from digital sales. Unlike physical medium like CDs, the distribution and manufacturing costs are minimal. And any infrastructure costs are borne by these player vendors not by the music company. The only costs that music distributor has are costs that they always have had like marketing and promotion. For iTunes $0.70 of every $0.99 goes to the music company. The other $0.29 goes to Apple which has to pay for the distribution system. So the music companies have made like $1.4 billion on iTunes alone, and all they had to do was provide Apple with the digital masters. I do not think is reasonable for Universal to want more.
Re:Doomed? (Score:3, Insightful)
Secondly, who the hell buys porn on hard media anymore? Far far far more people download porn than get it any other way. The internet is, indeed, for porn.
The whole "Porn decides all format wars" line would be a lot more useful and relevant if we had a pool of results that was larger than, you know, one. Just because adoption followed porn once, doesn't mean it will ever do so again.
Re:Worst case? (Score:5, Insightful)
Well, remember back when CD's came out...there really was no way to rip them...hell, not many people had a harddrive big enough to hold all a CD's data. At that time, a CD was a safe, one use medium...you could record off it to cassette, but, that was lossy and they didn't care that much about it.
Then...came larger harddrives, cd burners and cd drives on computers...and compression techs (mp3, etc). Well, what was once 'secure' to do consumer's hardware limitations, wasn't any more.
The music companies hate that...and with digital music and DRM, are trying to close that hole. They'd fix the CD's to be read only if there were only some way they could...trust me. They're gonna be happy to get rid of CD's if ONLY they can lock the users down in a way they screwed up on and didn't do with CD's.
They do not want to repeat the non-DRM mistakes they made with CD's.
Re:Uh, this is what I'm thinking. (Score:2, Insightful)
Not offering the music in the format I want is exactly a reason to obtain it through other means.
I don't need to justify my actions or the way I choose to support the musicians I listen to. I believe the current system of intellectual property law regarding music and cinema are faulty to immoral, and I choose to ignore them, accepting the risk. I want to hasten the collapse of the entire system to the extent that one person can do so.
In case you are interested, for the most part I purchase music directly from the musicians that create it, and believe me, by far most of the music in my collection today is purchased legally, direct from the artist. But I also want to do my part to bring down the labels and publishing companies and the legal serfs who serve them, so I make liberal use of the trackers.
Re:Worst case? (Score:2, Insightful)
For the record, I purchase all of my music. That hasn't always been the case prior to iTunes. I like the iTunes business model.
Re:Whoda thunk? (Score:5, Insightful)
Re:Doomed? (Score:3, Insightful)
Porn was the bulk of what drove the penny arcades, which in turn promoted the old silent movies (themselves started mostly as a vehicle for porn). Most of the visual entertainment media used throughout history either started out, or was heavily fininanced at the start by porn.
And they've decided today as well. You youself made the point without realizing it.
BOTH formats have lost, it's not about hard media anymore. People are drifting more and more to downloading what they want, and only using hard media as a saftey blanket/backup option.
DVD's will always be around in some form or another, but eventually (sooner in other countries where their telco industry hasn't shamelessly refused to upgrade their infrastructure to handle it) what you want, what you see, and how you get it will be online.
Re:Uh, this is what I'm thinking. (Score:3, Insightful)
Re:Universal shoots itself in the foot. Film at 11 (Score:2, Insightful)
the iPod.
Now Windows is a different thing. MS used its market share to force OEMs to include Windows on every piece of HW they sold. MS writes applications that use features of the OS that only MS is aware and MS does everything in its power to keep the format of every file or packet closed and obscured so that no other player on the market could come up with an application that could access MS application related data.
The iPod was not the first MP3 player and became a market leader because people like it better than the others. If you can come up with a player which is actually more user friendly than the iPod, Apple can't stop you to gain market share. As long as people can convert their iTunes downloads to a vanilla MP3 (as far as I know, you can), you can also use the iTunes service for any player you can come up with. It seems that as of now, people like the iPod more than any of the other ~50-100 models on the market. So iPod is a natural monopoly.
Now if you come up with a new OS + office package + browser + whatnot you can not make it read MS documents for the document formats are MS secrets, you can't just plug it onto an MS network for some packet formats are MS secrets and if you reverse engineer everything and you can do it all, then MS will blow the crap out of you with IP lawsuits and threaten the OEMs to not getting the MS licence any more if they sell your stuff. That is where the monopoly becomes unnatural and where the DoJ finds the defendent guilty of illegal business paractices, coersion etc. and when some higher powers kick the backside of the DoJ for harassing such a fine American businesses...
Microsoft has been taking active (and often illegal) steps to enforce its dominant position, Apple simply made a product that people like.
short term vs long term (Score:5, Insightful)
As ATi learned, he has absolutely no problem with damaging his company in the short term if he thinks it will strengthen its position in the long term.
Though I don't have an opinion on whether Steve Jobs is doing this, I do prefer a company executive that looks, years down the road, to the future instead of to this or the next quarter. That's a shortsightedness it seems too many corporations have now.
Falcon