Poll: Should Apple buy Universal Music?

[MacRumors]

Vote: Poll: Should Apple buy Universal Music? (http://www.macpolls.com/?poll_id=162&ref=forums.macrumors.com)

[Le Big Mac]

What a mistake. Apple is a computer company, and shouldn't be in the business of running a media company. I can't believe Universal wouldn't license its music portfolio at a cheaper price than Apple would pay by buying the co. What a distraction. Don't they see how well the AOL/TimeWarner merger worked?

[PaisleyMF]

If Apple want's to buy Universal, Disney, whatever company they pleased, they should. Apple is a Company that needs to move cash, and what a better way to diversify in other places like music. Of course with the mumojumbo about piracy over the net, "record companies are no longer making money so why Apple should buy. Simple when you have a catalog as Universal's music wow, what a bunch of money in Sampling, commercials, reissues...

[notech]

When I saw this, I didn't really know what Apple would do with Universal... because Apple IS a computer company and should emphasize on that more than music itself. The music industry is in a slump, however, if Apple keeps up with what they're known for, originality, then they'll do fine... I'm split in the middle, but I don't really want to see the whole AOL thing all over again.

[ratspg]

Everyone on the forums have some kind of clouded vision. Of course Apple should buy UMG. The amount of cash running through the business is incredible, and Apple is great at marketing and will know how to pair such a catalog of music and commercial rights with the iPod and .Mac, and stir up interest in new users, and also it's current user base. If people do not think Apple should buy UMG because of a Music Industry slump, it's not just that, EVERYTHING is in a slump pretty much, so does that mean that they will never bounce back? No Way, it's all temporary and Apple can take care of it, they obviously know what they want to do with UMG if they are going to put 5+ billion on the table.

-dk

[wdlove]

I voted undecided because I'm ambivalent. To purchase or not has advantages. Seems though that Apple would be better off purchasing a computer related company. To go out on a limb why not purchase IBM?

[celaurie]

I'm undecided on this one.

I can see where Jobs might be coming from, in that the music industry is a big cash-spinner and Apple has the money to invest. He's pretty much guaranteed a good return on any investment.

Now, add to that the whole copyright issue that currently plagues the industry... Effectively you have a solution to a problem by just suggesting Apple and Universal in the same sentence. This could essentially be where this whole online music service fits in... or not. Who's to say Apple isn't looking for longer term returns from a market outside of the computing spectrum?

Aside from the LA Times report there doesn't seem to be any other ratification (at this time) on this one, so it might be a good time to remind yourselves that is essentially no more than a rumour and the press have been known to get it wrong.

Chris, the don't believe it 'til you see it Guy

[noht*]

i voted yes.

just because apple could finally give the finger to apple records :D

'sosumi'

[mc68k]

ppl in general don't buy enough music to make the venture profitable.

[Hemingray]

In my uneducated opinion, this seems like a very questionable move for a computer company. $6,000,000,000 ain't exactly chump change... I'd rather see Apple perfect their existing stuff before taking on even more. But hey... if they can handle it and still stay afloat, more power to 'em.

[jkojima]

I think Apple's shareholders will need a lot more information about the proposed deal than "we want to sell downloadable music" or "why shouldn't we buy them", which seems to be the general opinion of this discussion board. Apple is not really in a position to tender such a large offer, so I'm either skeptical about the validity of this rumor, or Apple must know something we the public don't.

Either way, this represents a potentially huge shift in Apple's strategy. I'm interested to see how it plays out, but I reserve judgement until more is revealed. It could be a huge opportunity: depressed retail music market + depressed economy could = tremendous opportunity to shift some paradigms and gobble up companies at a bargain. Or, we could have another AOL Time Warner on our hands. For Apple's sake I hope it wont be the latter.

[On a personal note I fear the death of the album as we know it. I'd hate for all music to go single-serving top 40 pop styles.]

[KLFloyd]

I don't know, I voted undecided too...

On one hand, if there is anyone who could make this work, it's Steve Jobs. But on the other hand it's a HUGE risk. This will eat a lot of Apple's cash and it's really a gamble. If it works, Apple gets reenergized. If it doesn't, they'll have blown just about all their cash reserves and I fear to think they may never get out of the slump.

All I know is they need to be careful. I don't think .mac was a success, though I am a subscriber for the sheer fact that I like to support my company. I would hate to see this music service go down that same road.

Apple has more and more been putting their money and innovation in software vs. hardware. The music service seems to follow that same trend. If they really can make it extremely affordable and with the ease of use of Amazon.com then I think it's golden. I'd much rather buy high quality tunes for a reasonable price over the net than take my chances on Limewire.

It's just a gutsy move. I think at this point in time, moreso than any other, Apple is at a cross roads. 10 years down the road they'll either be a subsidiary of Microsoft or they'll really have put a bite in the PC market.

All I can say is I hope Steve knows what he's doing...

[gottfrid]

No. Apple has to put their money on R&D and bringing great products within their business.

Get a nice co-operation-deal or something... owning stuff means responsibility and marketing and new R&D and stuff.

[truedat]

Originally posted by wdlove
I voted undecided because I'm ambivalent. To purchase or not has advantages. Seems though that Apple would be better off purchasing a computer related company. To go out on a limb why not purchase IBM?

That's hilarious. Please tell me you're joking. Apple's market cap is 5 billion. IBM's market cap is 140 billion. I think Apple would be just a little short on the cash required for such a purchase.

[mcrain]

If buying this company would give Apple standing to sue M$, I'd be all for it. Otherwise, I just can't see any version of online music pay services working.

[macktheknife]

I voted an emphatic "NO" (I pressed the button on my mouse real hard ;) ) on this one. Apple currently has enough problems, and the company should just concentrate on its core business. OS X is nice but it still needs more work. The G4 processors are lagging their Intel and AMD counterparts. The Apple's small market share makes it very vulnerable to market downturns. The personal computer business is already volatile enough; adding another volatile business division like music would simply compound problems.

In corporate mergers, it is not enough to simply have 1 + 1 = 2, it has to demonstrate that 1 + 1 > 2. Mergers have to have synergy, or else it is simply a waste of resources, money, and time (not to mention shareholder value). Also, reams of research has shown that in almost every merger, it is the seller, not the buyer, that reaps most of the benefits. Thus, sadly, many mergers end up with the situation of 1 + 1 < 2.

Steve is obviously placing a lot of faith on his ability to take the music industry to the next level via Internet distribution. Maybe he has something up his sleeve, maybe he has lots of great ideas. Unfortunately, I think the risks (not to mention price) are simply too great.

[kylos]

A big yes! The profits from such a venture if well executed would more than easily support their R&D in the computing market.

[maradong]

I think it is far to expensive.
If the service is not a brilliant success, apple might not be able to finance it, and thus might leed apple to a point where the only way out is to stop being apple. cancelling the enterprise and so on. Perhaps i am to pessimistic, butnone of the pay for the music you dl service on the internet has succeeded till now.

[MacFan25]

I am kind of still undecided, but I am leaning towards yes. It seems like a lot of profit could be made here.

[wdlove]

Originally posted by truedat
That's hilarious. Please tell me you're joking. Apple's market cap is 5 billion. IBM's market cap is 140 billion. I think Apple would be just a little short on the cash required for such a purchase.

I can always dream! :p I'm not sure if I remember correctly from "Pirates of Silicon Valley," but wasn't IBM originally looking at Apple for it's OS?

[yzedf]

Originally posted by Le Big Mac
What a mistake. Apple is a computer company, and shouldn't be in the business of running a media company. I can't believe Universal wouldn't license its music portfolio at a cheaper price than Apple would pay by buying the co. What a distraction. Don't they see how well the AOL/TimeWarner merger worked?
EXACTLY

[Le Big Mac]

Originally posted by MacFan25
I am kind of still undecided, but I am leaning towards yes. It seems like a lot of profit could be made here.

the right question isn't profit, it's maximizing the profit of the cash they have. If Apple simply wants to invest all that cash somewhere, of course it should, but it might be better off buying up a biotech co. or something. If there is some synergy with Universal, fine, but I don't see the purpose of buying content through buying an entire company in a different line of business. It's just too cumbersome.

[macktheknife]

Originally posted by Le Big Mac
the right question isn't profit, it's maximizing the profit of the cash they have. If Apple simply wants to invest all that cash somewhere, of course it should, but it might be better off buying up a biotech co. or something. If there is some synergy with Universal, fine, but I don't see the purpose of buying content through buying an entire company in a different line of business. It's just too cumbersome.

Exactly. The music industry is a feast or famine type of business: when it's good, it's real good and when it's bad, it's real bad. Apple does not need this type of volatility in cash flow and income to add to its already-volatile personal computer business. The record business will not do to Apple what Windows does to Microsoft: give the company a steady flow of money. Microsoft can afford to blow millions/billions on R&D because Windows and Office are virtual money spigots with relatively predictable revenue streams.

Now, Steve COULD make this merger work. He COULD create a new innovative music purchasing system that COULD encourage more people to go with a Mac. However, considering the problems Apple (and most of the PC industry) has, it would do better to concentrate on its core business. It should take a few pages from Dell's playbook: pursue greater efficiency in the manufacturing process, relentlessly drive down costs, make sure everything is running smoothly and strive to make it even better.

[scem0]

I'm undecided. I don't think it would be a bad idea, but I don't
think it is necessarily a good descision (if they do). But it COULD
be very good for apple, as well as very bad.

[springscansing]

Originally posted by scem0
I'm undecided. I don't think it would be a bad idea, but I don't
think it is necessarily a good descision (if they do). But it COULD
be very good for apple, as well as very bad.

Genius.

[koelling]

I'm pretty sure there was a ruling that Apple could never start a record lable because Apple Music tried to sue them. This rumor doesn't seem to hold much water aside from everyone picking it up.

[paulhorne]

Apple is an idea company, and it's alive today because of its visionary leader. The reason Apple for years hasn't mentioned megahertz and processors in its advertising is because it is selling the IDEA of the computer and what it can produce, which is the whole concept of the digital lifestyle and digital media. But with all the R&D and innovation coming from Apple in the last 3 years, it's still only got 3% of the worldwide market. So how does Apple grow and diversify? The retail stores are just digital lifestyle universities -- I think they are most valuable as ways to introduce Windows users to Apple, and to create and support the Apple community. I'm guessing in terms of revenue they're a wash -- I could be wrong. But when the iPod was ported to Windows it seemed like the biggest marketing coup to date because again, it's supporting the idea of the digital lifestyle and it's cross-platform. Thus, (I finally drive towards my point), I think buying Universal is a great way to diversify the company and leverage the huge load of digital media that comes with it. I'd bet that Apple's next move will be towards home entertainment -- touch-screen internet pads, MP3/Tivo units, smart home control, etc. All these units could use/share the music library, and generate revenue from both Apple users and non-Apple users. And remember, the $6 billion dollar price tag buys something that already generates a huge revenue stream -- it's not like they're buying groceries here.

[scem0]

I definitely agree - apple isn't just a computer company.

[w99]

This is an interesting issue. But I think an exciting development. The Record Industry is indeed in crisis- what better way to move into the future with mac solving the delivery of music issue properly and reshaping how we all buy and receive music. We do indeed need to refashion the music industry, we need to reinvest in artist development for the long term building of catalogue as well as bubblegum pop (they can both co-exist, contrary to popular opinion)

Hopefully the vision of mac and it's lateral thinking will benefit the music world and it's artists and create a means for all types of music to shine through and be exciting again. Instead of every Record Company executive being constantly in fear of their job they can concentrate on nurturing artists and musicians, and developing bands beyond the one-shot currently on offer. ie if your first record isn't a hit, good bye.

As an independent in the industry I welcome this move, as an avid mac fan I welcome this move and as a music fan I welcome this move.

[BackCheck]

Apple was "rescued" because it focussed its product line and solutions by doing what they do best - making computer solutions.

Becoming a content creator in my opinion is not what Apple does best.

My guess is that the transaction was discussed as an option to the music service agreement. I'd rather Apple make a little money from all of the labels in their music service.

Ask Ford (F) how their "diversification" program has been going?

Tom

[jg3]

Originally posted by w99
...what better way to move into the future with mac solving the delivery of music issue properly... ...Hopefully the vision of mac and it's lateral thinking

We are talking about a company called Apple. Apple makes computers known as Macs. "Mac" cannot actively solve issues in the music industry, or have a vision. Surely if you were an Apple fan or a Mac fan you would know this.

[GeneR]

No.

Yes.

No?

YES!

no?

NO!

Yes :D




yes:D

In all honesty, if Apple could simply buy UMG's library and nothing else then that would be a good thing. Asset management is important and even vital for entertainment companies. MGM/UA's Bond library is worth several hundred million (source LATimes) and they continue to generate money for the studio year after year with their Bond Marathons, video and DVD sales. So, it's a good thing.