Apple In Strong Position For iTunes Store Contract Extensions?

[MacRumors]

Apple is in a strong negotiating position to seek further concessions from record companies when it comes time to re-negotiate iTunes Store contracts, according to Reuters.

Last year, record companies tried unsuccessfully to introduce tiered pricing of individual tracks into iTunes. Instead, an extension was signed with no real perceivable difference in terms.

This year, Reuters reports that Apple is in an even stronger position after having signed up EMI to offer "premium" tracks without DRM for an additional fee.

"EMI struck a deal that puts all of us at a disadvantage," said a music executive who spoke on condition of anonymity. He said EMI had agreed to let Apple sell its music without anti-piracy protection to please shareholders concerned that the record company was behind in the digital music race.

Despite this, the record companies will most likely still try to gain concessions such as a higher wholesale price or the addition of a subscription model.

"The record companies like the idea of the recurring revenue," said Gartner analyst Mike McGuire. "The challenge will be to convince Apple that it's worth the extra costs involved in setting it up."

[Salasm]

i like the fact steve has the music execs by the balls.

werd.

[4God]

Hmmmmmm.....seems like Apple is at the top of the mountain now (or at least very close).

[jesteraver]

i just want itunes canada to let me buy movies and tv shows already christ!

[zoltamatron]

I kinda doubt that apple is going to go towards a subscription model....regardless of what the music execs want. Seems like with the EMI deal that apple wants to go towards less DRM.....the subscription model would go for even more of it since you would basically not own any of the music.....just simply renting it.

[Doctor Q]

Individual tunes don't have tiered pricing, but albums already do, with some less than $10 and some more than $10. I wonder how much negotiation is involved in album pricing.

[siurpeeman]

i actually wouldn't mind a subscription model in addition to the current pricing scheme. it would allow me to sample more songs, especially whole albums where i would otherwise be interested in only the singles. i don't think it would stop me from buying music. i actually think it would encourage me to buy more, especially whole albums. but i'm guessing i'm in the minority here. oh well.

[Lixivial]

Originally Posted by Doctor Q

I wonder how much negotiation is involved in album pricing.

I was always under the impression that album pricing was, for the most part, left up to the labels themselves to decide. They're kinda in a bind, of course, due to the 99 cent individual tracks, but could get around it by implementing "Album only" songs.

And I could have sworn I pulled that from one of Apple's conference calls, but this one from 2004 is the closest I could find.

Steve Jobs: Well, let me tell you how we...first of all, that the USA article was inaccurate. There clearly are some albums on iTunes, there's a few of them, that are priced a little higher, but the vast majority of albums are $9.99 or below and, you know, believe me, they're, you know, they're aggressively priced. But the way we do it is that every song on iTunes is 99 cents, but the album prices do float around a little bit based on what the labels want to charge for them, and we encourage the labels to price them aggressively because, as you may know, over 40 percent of the songs sold on iTunes are sold as albums. I think it actually approaches 50 percent. And so, the more, you know, the more reasonably priced the albums are, the more it encourages users to buy the full album rather than their three favorite songs and everybody wins that way.

[Telp]

Originally Posted by Salasm

i like the fact steve has the music execs by the balls.

werd.

ooooh yeahhhhhh

[CJD2112]

Originally Posted by Salasm

i like the fact steve has the music execs by the balls.

werd.

lol seriously

wonder if Apple will go into the music recording biz

[Rocketman]

1. lo-res music one price, albums a higher price
2. hi-res music one price, albums a higher price
3. lo-res TV shows one price, seasons a higher price
4. hi-res TV shows one price, seasons a higher price
5. lo-res movies one price, series a higher price
6. hi-res movies one price, series a higher price

[PlaceofDis]

good news for apple. and they surely are in a pretty good position with the EMI deal. hope the other labels follow suit.

[j33pd0g]

The record companies like the idea of the recurring revenue... I don't care what they like. It's my money, and I will spend it on the songs I like. I don't want to rent my music or juggle my playlist using some subscription system.

[ijak]

We have to keep our eye on what the music industry is trying to do with subscriptions. They are trying to behave like a cable company, and charge us a monthly fee forever to listen to any music.

With digital media and good backups, once we buy a song, we never need to buy it again. The music moguls want to treat it like heroin. They want to get you hooked on the subscription, and coming back for more.

[PlaceofDis]

subscriptions are more likely for movies than music imo. but thats just my speculation and opinion on the matter.

[pgwalsh]

Apple will give them tier pricing. $0.99 for DRM music and $1.29 for DRM free music. There's your tier pricing, enjoy.

[twoodcc]

well i guess this is good news for apple. we will see

[zim]

Originally Posted by ijak

We have to keep our eye on what the music industry is trying to do with subscriptions. They are trying to behave like a cable company, and charge us a monthly fee forever to listen to any music.

With digital media and good backups, once we buy a song, we never need to buy it again. The music moguls want to treat it like heroin. They want to get you hooked on the subscription, and coming back for more.

You said it. Subscriptions = greed.

[Cult Follower]

I wish the record companies would stop being soo greedy, and focus on the customer.

[Bonte]

Originally Posted by zoltamatron

I kinda doubt that apple is going to go towards a subscription model....regardless of what the music execs want. Seems like with the EMI deal that apple wants to go towards less DRM.....the subscription model would go for even more of it since you would basically not own any of the music.....just simply renting it.

And quadruple the server load, or more. I don't think the internet is ready for a mass use of "all you can eat" music and video, still some years away.

[robPOD]

sweet cheaper music.

[cannonball]

I never liked the idea of subscriptions when it was just music, but think about it; now there is so much more content. My wife and I are considering a netflix-type subscription and I can't decide whether or not to buy a season pass for our favorite TV show. If Apple offered a subscription service that included their video content, I would do it in a heartbeat... and I would consider paying more than $25/mo. for it.

We could still buy the programming we wanted to keep, and finding good programming would be SO much easier (read: "less expensive").

I vote yes.

-Chris

[surferfromuk]

Hold out your hands, here come the 'soft-cuffs'. This is nothing less than corporate communism - You own nothing - the corps own everything.

Next stop 'Zune-like' count based restricted playback.

The $9.95 subscription package offers you unlimted playback on an incredible 100 tracks and 5 plays per month on a further 1000!. You have the freedom to pick and choose from an incredible 100,000 artists.

Upgrade to the $19.95 package and have unlimited playback on a further 1000 tracks!

and people will cry 'You've never had it so good!!..yeeahhaa!!Hooray for the Zune!!'

Thank God for Steve Jobs and his hacker revolutionary roots!!

Accept this and 50 years from now Nabisco will own the gas from your farts...

I firmly believe in capitalism - a good product for a good price but this *could be* something else...

[Counter]

Coming in 2009, the ability to own real hard copies of music with real artwork in real boxes at the best possible audio quality delivered directly to your door for the same price as a lossy drm'ed download! Amazing advances in production and logistics have made this leap in music purchasing possible! Now you can really touch your music! Also, as your collection grows, it doubles as the coolest feature of any room! You heard it here first! Bring on 2009!

[reallynotnick]

I personally would love to see this for TV shows and movies, because I only want to see them once and I am done with them. With music I want to keep it all and listen to it over and over again.

I am still sort of pissed at the higher pricing for the unDRM'ed music, I mean sure it is higher quality but we are paying for the song right? Not the way it is made in like 10 seconds.