Vivendi Calls iTunes Contract Terms "Indecent"

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."

Probably covetousness.

[Trillan]

They probably prediced the store to do about 10% of the sales they're actually doing, and thought Apple's profits seemed fair at that level. But the bigger pie only made them want a relatively larger piece.

Only Fair

[pete-classic]

It would only be fair for Vivendi to give Apple the same percentage cut that they accept from the recording artists. Presumably that's less than the 30% that Apple is taking.

-Peter

PS: Please read twice before moderating. There may be lurking sarcasm.

Re:Not quite right, I think

[Hatta]

You know, the best thing to do would increase the price on old music and decrease the price of new music. Give people the new untested stuff for cheap. That will make it easier for new bands to grow and gain mindshare. People are more likely to take risks if it doesn't cost as much.

Then you charge more for the classics. The market quite simply, will bear a higher price for great classic albums than some new no-name act. People who expect old music to be cheaper are confused. Music doesn't depreciate, it's not electronics.

Re:What's next: CDs?

[sl3xd]

Are you prepared to pay $30 for a music CD?

I'm much more willing to pay $30 for an 'uncompressed' DRM-free CD than I am to pay $30 for a compressed DRM-laden CD. That's a moot point, since I wouldn't pay that much for either.

I don't think these geniuses realize that music doesn't have the entertainment monopoly they enjoyed a century ago. People like to enjoy recordings of TV, and we have DVD's. We also have these newfangled 'video games'. There's a lot more competition than the local theater troupe and the girl (or guy) next door.

YouTube pretty much proves that we don't need 'content providers' to create and enjoy entertainment.

Basically, the ability to cheaply record music & video - using consumer recording equipment, is starting to break the monopoly of content providers. Artists don't have to go to these companies to get a quality recording made and published anymore.

This doesn't diminish the need for talented non-artists (recording engineers, for example), but it does make most of what a recording company has traditionally done obsolete. So why fight to maintain infrastructure (replication, printing, and distribution) that isn't a competitive advantage anymore? It just costs money they don't need to spend. They're wanting to jack up prices so they can maintain infrastructure they don't even need anymore.

Instead of doing what most businesses do, and cut costs, they're increasing the prices to levels consumers won't tolerate. (Blindly believing there aren't other entertainment options for the consumer's dollar).

I wish media companies would realize what their business is: Record artists, and distribute content at a modest profit. They don't need to spend billions on trying to force tastes on its consumers; just cater to what they want.

It's honestly not difficult (or expensive) to start a recording company anymore. If the 'big' labels don't want to play, Apple can just promote the independent labels (which it is already doing). Then the "big" labels will have to explain to their stockholders why they threw away 30+% of their sales - and in free money, no less.

Actually...

[Newer Guy]

The artist gets 7 cents of every song sold-it comes out of Apple's 'cut'.

The credit card companies get 7 cents out of every song sold-it comes out of Apple's 'cut'.

Apple gets 15 cents out of every song sold and out of that they have to pay for bandwidth, web design and 1001 other things. Apple gets the smallest 'cut' of all. They claim they only break even on iTunes; that it exists to benefit the iPod-which is their big cash cow. Of course the record companies are ALSO botching abiut that-they want a 'cut' on every iPod sold!

Greedy bastards!

Re:Not quite right, I think

[Technician]

No doubt UMG would prefer to make the former cheaper, while maintaining the current pricing for the latter.

(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.

Wistful thinking.. but I was hoping more in the line of "drop DRM, offer multiple formats such as MP3, FLAC, Ogg and WMA
  at high quality for about half the price or less.

They could clean up the market with increased volume, better quality and elimination of almost all incompatibles.

I know it will never happen as long as they are trying to "Protect" their established traditional markets and the average selling price.

As long as they continue protecting the haystack from the cows, they have lost the sales entirely.

Obscure parable refrence is one of dogs guarding a haystack. The dogs can't eat the hay, but they guard it anyway. In this case, UMG can't use the music they are protecting (internal consumption) but must let others use it to be of any value. They could make a bundle if they backed down and sold from their huge haystack.

AmieStreet.com has it right

[Anonymous Coward]

Amiestreet.com has a model that I love... Songs start at free or a few cents. Users take a listen and if they like it, download it and recommend. The more people download, the price goes up (not sure what the ceiling is, but I think it's .99). If you recommend a song that gains in popularity you get a fraction of the sales. I've got .34 credit from a song I recommended a week ago.

Universal is out for Apple

[plazman30]

For years the record labels controlled the music business. They even had a firm grip on the record stores. And now, the tables are turned slightly. Apple is able to call at least some of the shots, and Universal hates it!

And Universal is very scared also. People hop on iTunes and buy music. iTunes tells them what the top sellers are. Heck, they grab podcasts instead of listening to radios. For a lot of people, iTunes is becoming their only interface to music. Soon the record label will be forgotten and iTunes will be remembered.

That's what Apple is hoping for. I really think they're planning to remake the record industry. I guarantee you that software is already done that goes directly from GarageBand or Logic Studio straight to the iTMS. No record label needed anymore.

The future of music doesn't involve record label. Record Labels were f*cked as soon as the CD-R came out.

Andy

Re:Waa, waa....

[timeOday]

You're looking at it the wrong way : the labels are like venture capital for musicians.

If publishing music is such a competitive, high risk, low-profit business, why do the same old companies and individuals run it year after year? When I see an industry where nobody ever goes out of business, I get a little worried. Being a band, for instance, is clearly hugely competitive and risky, they come and go almost week to week. Jack Valenti made more than any of them, what risks did he take and what unique talent did he possess?

Apple probably makes no money at all

[LKM]

Well, iTunes seems to pay the most of all online stores (as per macjournals). Let's do the maths: The labels get 70%, the credit card companies get 20-25%, and Apple gets 5%. How is that gouging the labels? I doubt Apple makes much money on iTunes at all; most of the money is probably spent on R&D, bandwidth and similar stuff.