Vivendi Calls iTunes Contract Terms "Indecent" 288
Posted
by
ScuttleMonkey
from the better-business-through-greed dept.
from the better-business-through-greed dept.
Bemopolis writes "Brace yourselves for a shocking revelation: The CEO of Vivendi, parent company of UMG, is not happy with the current deal with the iTunes Store. 'The split between Apple and (music) producers is indecent [...] Our contracts give too good a share to Apple.' The usual argument about older music priced at the same rate as new music is trotted out. No doubt UMG would prefer to make the former cheaper, while maintaining the current pricing for the latter. At least he had the decency not to claim that they were trying to defend their artists against predatory iTunes pricing. Or maybe he just misplaced the index card with that boilerplate on it."
Not quite right, I think (Score:3, Insightful)
(Where former = older music, latter = new music)
No doubt UMG would prefer to keep the current price for the former, while increasing the price for the latter.
There, fixed that sentence for you.
Boilerplate (Score:2, Insightful)
I'm not quite sure what the story is here though. The CEO of a company wants his company to make more money? What a shocker.
Re:Not quite right, I think (Score:3, Insightful)
Actions speak louder than words (Score:4, Insightful)
Waa, waa.... (Score:2, Insightful)
Incompetance or greed? (Score:5, Insightful)
Re:Not quite right, I think (Score:2, Insightful)
So, how's the view from that sarchasm?
Re:Waa, waa.... (Score:5, Insightful)
So they get 70 Euro cents for every song for zero marginal cost. They get over 70% of the sale price, leaving the remaining <30% to cover costs plus a profit for Apple.
At least on a physical CD, they had the excuse of printing, transit, etc, etc to cover, but with this they just get a cheque every month for sitting on their backsides and doing sod all.
Sounds familiar... (Score:5, Insightful)
Substitute "producers" for Apple and "artists" (musicians) for "producers".
I agree with them... (Score:3, Insightful)
I agree. Music PRODUCERS (this is, the artists, and not the greedy intermediaries) should get more share
Strange curiosity: Today's captcha is "authors"
71/29 split indecent? (Score:5, Insightful)
I'm split on this one:
(1) If you think of it in terms of traditional retail, Apple is applying a 41% (.29 retail/.70 wholesale) markup. That sounds like a hefty markup at first, until you figure in Apple's cost of storage and delivery. While there is no "storage" and "delivery" in the traditional brick and mortar store sense, there is still server storage and bandwidth costs. I wonder what Apple's true costs (costs to music producers and IT costs to run iTMS) are on a per-track basis. Know that, and you can get a better grasp on the actual profit margin.
(2) If the deal is so bad for the producers, why did they go in on the deal in the first place?
The second point is more rhetorical, but the first one I think bears further study before deciding if the markup is excessive. Of course, getting Apple's per-track expenses will be damn near impossible so we'll have to settle for speculation and conjecture.
Re:Boilerplate (Score:5, Insightful)
Then they are free to pay for the hosting, bandwidth and UI design themselves and not have to outsource it to anyone else in the future. I'm sure that they will quickly realize that the initial investment and then continued operating costs would be more than they are paying to Apple.
In my opinion... (Score:5, Insightful)
Re:whats that i hear? (Score:3, Insightful)
I can tell you what it is...
Old SJ quote: (Score:1, Insightful)
-Q&A: Jobs on iPod's Cultural Impact [msn.com]
The most interesting jobs to me, are ones where people have nothing better to do than "add value" to a product that already works. Typically, they end up screwing up a good thing.
Let's say that all the music companies do leave iTunes, what then?
1. Multiple services, which would be as annoying to consumers as having to go to different stores to buy different label's music. In reality the majority of consumers would probably rather to pay a little more and go to the "Music store" that carries all music as opposed to the "Vivendi store", "Universal store".
2. They unite and create a new iTunes, without Apple, under a different name. Then, as a side effect, they will also create a new Steve Jobs, who'll probably favor one of them over the others, as opposed to favoring the iPod (and total sales). This establishment will slip away even easier than iTunes.
In either event, consumer cynicism goes through the roof. And piracy will be the largest benefactor. I bet you could figure out more accurate scenarios (I only spent about 5 minutes of thought on this), but I can't imagine something better coming to pass when you are talking about so many assertive people working together without an obvious "boss".
Re:Actions speak louder than words (Score:3, Insightful)
Luckily, looking at the Apple-NBC ordeal, we know Apple doesn't play those games.
Re:71/29 split indecent? (Score:3, Insightful)
Indecent (Score:5, Insightful)
Re:Waa, waa.... (Score:5, Insightful)
The idea that people couldn't produce their own records or with the help of a company that doesn't rip them off is getting more absurd by the day. What they really can't do is get those CDs into the hands of major distributors (owned by the record companies again) or get radio airplay (owned by the record companies) on anything outside of AM or college radio. For all of this what is the primary service of the record labels? To front some money to the band (not a salary, a loan) for the rights to everything they make and to get first cut on any money coming to the band. It sounds like you'd have to be crazy to take an offer like that, but really your choice is to wallow in obscurity for eternity or bend over and spread your cheeks for the big record company.
This is also why record companies find the internet to be so scary. Piracy is an issue, but the loss of control is a much more fundamental one. Even if it doesn't catch on directly, it gives bands more leverage at the bargaining table and that is the last thing the record companies want.
Re:71/29 split indecent? (Score:1, Insightful)
If you pay $20 for a book, the bookseller purchased it for $10 from the distributor. The bookseller marks it up 100% from what they paid for it.
The distributor, who sold the book for $10 to the bookseller, purchased it from the publisher for $5. The distriubtor marks it up 100% from what they paid for it.
The $5 that goes to the publisher has to pay for (1) printing and (2) talent (editor, writer, artists, etc.). The publisher - who did the work of putting the thing together, owns the copyright on the work, etc. - gets roughly 25% of retail price.
Itunes, in this case, is roughly analagous to the distributor/bookseller rolled into one. UMG is roughly equivalent to the publisher - they did the mixing, they own copyright (or at least some of the distribution rights).
To compare:
Traditional Publishing: The publisher gets 25% of retail.
Music Industry: Gets 70+% of retail. That's triple what an analagous industry gets in the physical world. Better yet, once the artists are compensated (i.e., the copyrights bought), costs of production per unit are 0 (compare to physical publishing, where merely paying your artists does not yet pay for the physical books themselves)!
Conclusion: The music industry is correct.. the split *IS* indecent... but not in the way they would like to believe. The MUSIC INDUSTRY, and not iTunes, is the one getting an indecent amount of money in the deal.
Re:Waa, waa.... (Score:5, Insightful)
Differential pricing... (Score:3, Insightful)
I doubt UMG/Vivendi shares my pricing philosophy, however. Differential pricing to them is just a lever they want to use to rationalize higher prices.
70-30 Split (Score:3, Insightful)
So UMG gets the fat side of a 70/30 split, and all they have to do is sit on their asses and cash the checks -- and they don't think this is good enough!
And why don't I see them running their own music stores? Because they don't know how to do it profitably. All they know how to do is whine, complain, and demand more money for things they are incapable of ever accomplishing on their own. If there was ever a reason for Big Music to crash and burn, this is it!
Music existed before the music companies, and it will exist after they're gone. With the Internet, artists -- especially the vast hoard of unsigned artists -- don't need Big Music to get their music out. For every big name you've heard of that was signed by the record companies, a thousand others were passed over, and it wasn't because they weren't good enough too. If you want fairness and a level playing field for music, that's what's happening now, and Big Music is terrified. As for those precious recording contracts, you'll have a better chance of hitting it big buying lottery tickets!
Re:Not quite right, I think (Score:3, Insightful)
Re:Not quite right, I think (Score:5, Insightful)
Maybe because now they know how the artist's feel when the middle man gouges you.
How Apple Should Respond (Score:3, Insightful)
Alternately, tell them they get an amount exactly equal to what the artists receive, with auditing of the music industry books to verify the money is actually paid. Hell, offer them twice the amount the artist gets. They still won't go for it because they wouldn't want their books audited.
Re:Not quite right, I think (Score:4, Insightful)
Re:Incompetance or greed? (Score:1, Insightful)
You're kidding, right? They want something more like $1.29 for old ones, $1.99 for new ones, and $2.49 for 'hot' ones.
Re:I don't understand why (Score:4, Insightful)
OH WAIT! NO! That would make too much SENSE! Nevermind. I'll shut up now.
Re:Not quite right, I think-WRONG SIG WISDOM (Score:3, Insightful)
Re:Not quite right, I think (Score:5, Insightful)
Sure it does. Now that I've heard the Red Hot Chili Peppers "Dani California" on the radio 24/7 for the last 18 months I can't stand to hear it any more.
Re:Boilerplate (Score:3, Insightful)
Re:Not quite right, I think (Score:4, Insightful)
Re:Why doesn't Apple just buy a producer (Score:3, Insightful)
Re:Boilerplate (Score:3, Insightful)
Might be easier than it was the first time, but it's still darn tough. Most online music stores lose money. The reason that iTMS is profitable is the scale and the strategic benefits.