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Music Businesses Media The Almighty Buck Apple

Vivendi Calls iTunes Contract Terms "Indecent" 288

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."
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Vivendi Calls iTunes Contract Terms "Indecent"

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  • Print link (Score:4, Informative)

    by Seakip18 ( 1106315 ) on Monday September 24, 2007 @05:32PM (#20735063) Journal
    Print link [] for those wishing to skip the ads.

    This looks like a case where a company is calling foul on a distributor. In a way, I guess Itunes is like walmart. If you want your music to sell online, you do it thru itunes. If not, you find your own way. Perhaps by not killing online radio.
  • by Anonymous Coward on Monday September 24, 2007 @05:35PM (#20735121)

    There, fixed that sentence for you.
    Did you completely miss the sarcasm in the summary write-up? It was positively dripping, sir.

  • Re:Parent company? (Score:1, Informative)

    by Anonymous Coward on Monday September 24, 2007 @05:51PM (#20735357)
    Vivendi sold it's 80% stake in Universal Pictures, but kept Universal Music Group. UMG is still owned by Vivendi.
  • by Anonymous Coward on Monday September 24, 2007 @06:55PM (#20736143)
    You (as well as most comments) have forgotten to add in the .10 fee credit card companies apply to any (including .99) purchases.

    That leaves
    71% For RIAA
    10% Credit Card companies
    19% For Apple

    It would probably be safe to say that apple's itunes development / storage / bandwidth could be 5-9% leaving 10% for apple.
  • by dangitman ( 862676 ) on Monday September 24, 2007 @07:28PM (#20736487)
    What about all the marketing Apple does? What about the reviews they pay for from Software development? Legal contracts? Technical liason with content providers over encoding issues, etc? There are way more overheads than just bandwidth. It's a much more complex business.
  • by Emetophobe ( 878584 ) on Monday September 24, 2007 @09:32PM (#20737395)

    In the immortal words of Duke Nukem and John Carmack,

    "Suck it down."

    That was John Romero, not John Carmack. It's from the infamous Daikatana poster John Romero's about to make you his bitch. Suck it down. []

  • Re:The math?? (Score:3, Informative)

    by shark72 ( 702619 ) on Monday September 24, 2007 @09:33PM (#20737405)

    "According to Vivendi, they pull in ~$0.70 per song, while apple pulls in around $0.29 a song (well, TFA cites euros -- but I'd wager that the margins in USD sales are identical). I wonder how different that is from the model of physical distribution."

    That's Vivendi's point: they resent the fact that Apple charges a much higher markup than typical retailers. Target and Amazon (the #1 and #2 music retailers in the US; iTunes is #3) make about 15% margin -- half of the iTunes markup.

    "I'll bet that the IP owners make more on the CD. It probably costs less than $0.40 to press a polycarbonate CD (total guess w/ nothing to back my numbers up), presuming that you're doing more than 5000 at a time. Add in another buck for packaging, and another few bucks for distribution. You're up to maybe $3.50 (again, total guess) out of a $15 average album. That comes out to netting (before paying royalties, etc) around 78 cents on the dollar - about 8 percent better better than the iTunes model, and that is before you factor in the fact that we're comparing a per song cost to a per-disc cost."

    Sorry, I've lost you. CDs haven't averaged $15 for a while; the stuff on the Amazon top 100 tends to be $10 - $11 per CD, with the exception of the double discs, CD+DVD, etc. Amazon buys the CDs for $8 - $10. That $8 - $10 is all that the record company sees.

    As for the theory that the record company nets 78% -- well, keep in mind that after several quarters of having terrible net margins (sub-5%), Warner Music lost money last quarter. If Vivendi's financials are like Warner's (and it's a safe bet that they are), they're probably in the sub-5% business as well. This actually isn't too bad (Wal-Mart makes do with similar margins) but 78% net is off the beam.

    "To Vivendi, I say: cry me a river."

    Agreed. It's just as if they'd signed a deal with Amazon, and then Amazon found a way to sell CDs for $14 - $15 on average instead of the $10 - $11 that they do now. Digital distribution is set to take physical CD distribution, and Vivendi is facing the fact that the successful online distributors (which is just iTunes for now) are making a hell of a lot more margin than the retailers they're used to dealing with. If Vivendi wants more margin, they should sell direct to the consumer.

  • Re:Waa, waa.... (Score:3, Informative)

    by kamapuaa ( 555446 ) on Monday September 24, 2007 @10:26PM (#20737773) Homepage
    These points are demonstratively untrue and show a complete unfamiliarity with non-RIAA music. There's plenty of indie musicians who make a career out of it, plenty who become famous, and even the largest venues will book indie acts - take the 8,500 seat The Greek Theater in Berkeley [], which tonight is playing the Shins [], a well-known band on the non-affiliated indie label Sub-pop.

    The largest sellers of music are Amazon, Walmart, and iTunes. iTunes and Amazon will take indie music, and sell it on an equal footing with everything else. And while I'm not familiar with Walmart, I doubt they're in the pocket of the record labels.

    The RIAA doesn't have a monopoly on production. Any fool with a computer can do a professional-quality job. These people just can't consistently do it as well as the top names in production, it's quite naturally led to an economics of scarcity.

    Really what posts like yours show just how effective the RIAA is, and why it continues to exist even though every artist knows it's a Faustian deal, and every artist knows their alternatives. People like you may gripe about the RIAA, but really you're not interested in the large majority of music being created today that isn't RIAA, you just want the well-advertised, well-produced product that RIAA labels pump out. Nothing wrong with that, but blaming the RIAA for your not being willing to check out the many easily-available alternatives is ass-backwards.

  • Re:Waa, waa.... (Score:4, Informative)

    by Bemopolis ( 698691 ) on Monday September 24, 2007 @10:41PM (#20737867)

    ... well-known band on the non-affiliated indie label Sub-pop.
    You realize that Warner Music Group owns 49% Sub-Pop, don't you?

To be a kind of moral Unix, he touched the hem of Nature's shift. -- Shelley