Apple Pressuring Music Labels Over Participation in Amazon's 'Daily Deal' Program

[jaw04005]

So the brands sold at Walmart are "price discriminating" against my grocery store? What an abortion of a post.

Actually, yeah they are. Do you even know what price discrimination means?

Price discrimination exists when sales of identical goods or services are transacted at different prices from the same provider. In general, the practice of charging different customers different prices is called price discrimination.[1] In a theoretical market with perfect information, perfect substitutes, and no transaction costs or prohibition on secondary exchange (or re-selling) to prevent arbitrage, price discrimination can only be a feature of monopolistic and oligopolistic markets[2]

Guess what? That's exactly what the music labels are --- an oligopoly.

Oh my.

One outlet does not have to offer the same deals as another. This is competition and business folks.

Oh my. No they don't, but then again they can't expect the same marketing machine from iTunes if they don't which is the key point of this article. Up until now, they've had the full backing of iTunes marketing machine.

 

[guzhogi]

While price discrimination sucks, Apple shouldn't be so tight. Suing anyone & everyone (ok, maybe not everyone) who competes with them, IMO, will only make people turned off to Apple & move somewhere else.

 

[SteveSparks]

Sounds like blackmail to me...

But that's what they've got to do to have another insanely great day at Apple, Inc.!

I think the point from Apple's prospective it we won't spend our marketing dollars to support your album is you don't give us the same dael as you give Amazon.

 

[aucl]

No kidding...

Is it just me or is Apple's strong arm tactics starting to bother other people as well?

na, i think it should stop that labels ask for higher prices on itunes, and on the other hand sell the albums for half the money at amazon.

go apple, get us the same lower prices!

 

[Eraserhead]

Sounds like APple is trying to strong arm competors out of the market. Same stunts intel pull with its CPU to keep AMD from gaining ground.
Some of the same stunts MS pulled to gain market share. I kind of hope apple gets nailed hard for this one.

Quite, its exactly the same as that.

Maybe the EU and other governments need to increase their fines.

 

[JayMan8081]

This seems like a lot of whining and crying by Apple. Instead of stopping them from offering better deals to Amazon they should be pushing them to give them the same opportunities that they give Amazon to offer the deals. Then let the consumer voice their opinion with their dollar. For now I'm glad that at least someone found a way to be cheaper than Apple.

 

[Gasu E.]

So the brands sold at Walmart are "price discriminating" against my grocery store? What an abortion of a post.

You should try googling "Walmart price discrimination" , then read one or two of the 53,000 links that come up.

 

[Number 41]

Sad, Apple don't like competition.

What makes you say that?

They ARE competing with Amazon -- they're leveraging their position to obtain better deals for themselves and poorer deals for their opposition.

On what planet is that anything OTHER than competition?

Too many people on message boards have this misguided notion about business. What everyone complaining is suggesting that Apple do is COEXIST with Amazon. That's a fair shake different than COMPETITION, which is where Apple does everything possible to make more money than Amazon.

This is one of those competitive practices where the consumer doesn't win. Deal with it, but don't make some out-of-touch claim that Apple is anti-competitive.

 

[flyfish29]

If I read it correctly- There is NO legal action described in the OP.

There is a description of marketing pressure or leverage which is perfectly legal, legitimate and done by almost all companies in one way or another. It is no different than if Coke gave one chain of stores a cheaper price than another chain. So the other chain gets upset so they don't give Coke the better shelf space and take down the special Coke displays...and instead put Coke at the back of the store up high on the shelf.

Basically Apple is mad that Amazon is getting a deal from record companies and pricing the songs cheaply- so Apple has taken away the prominent "shelf space" on Itunes Music Store. (I assume the companies are reducing their prices for Amazon only and it isn't just Amazon selling a loss leader)

There seems to be no price discrimination- it is just one company trying to leverage a supplier- again- something done in almost all business areas.

That being said, I agree with those that have said Apple is using too many legal strong arm tactics. Apple is getting a little too much like MS- the only exception being that Apple doesn't just buy the company they are unsuccessfully trying to compete against.

 

[ShiftyPig]

Actually, yeah they are. Do you even know what price discrimination means?

Price discrimination exists when sales of identical goods or services are transacted at different prices from the same provider. In general, the practice of charging different customers different prices is called price discrimination.[1] In a theoretical market with perfect information, perfect substitutes, and no transaction costs or prohibition on secondary exchange (or re-selling) to prevent arbitrage, price discrimination can only be a feature of monopolistic and oligopolistic markets[2]

Guess what? That's exactly what the music labels are --- an oligopoly.

Oh dear.... well, I didn't get into one of the best law schools in the Southeast by citing Wikipedia, but I'll roll with it.

Consider the following: Apple takes its 30% cut, therefore a label is willing to sell the song at 99¢. Amazon cuts a sweet deal with same label, allows label to take 100% of revenue on sale items (in an effort, on Amazon's part, to drive traffic). That isn't price discrimination. That's the label having a target of per song revenue, and Amazon offering a structure that meets that target while Apple's offer to lower consumer cost does not.

Congratulations on outing yourself as one who knows nothing about business.

The fact that you are searching for some nefarious act on Amazon's part or the label's part shows that you might, no, you do have a fanboy problem.

 

[Jphillippe]

When I saw Mariah's album for 5 bucks I immediately bought it. It was 14 dollars on iTunes same day...no wonder it wasn't so popular. Amazon offers songs for .99 and drm free. I don't know of it's iTunes imposing these rules on the song but if it's the labels, then they are taking apples popularity as an advantage to raise their prices and that's wrong.

 

[Nordwolf]

Sounds like blackmail to me...

Google should respond by threatening to bury every Apple Computer link so deep that when you search for "Mac", even "Joe's apple orchard" in the middle of no where in Nebraska comes up first because of the HTC lawsuit.

hey, two can play at the blackmail game.

 

[flyfish29]

You should try googling "Walmart price discrimination" , then read one or two of the 53,000 links that come up.

Yeah, don't even get me started on the UNETHICAL pricing stuff done by Wal-unsMart corporation. They are responsible for killing many many good brands of products!!

 

[Island Dog]

Oh my. No they don't, but then again they can't expect the same marketing machine from iTunes if they don't which is the key point of this article. Up until now, they've had the full backing of iTunes marketing machine.

Obviously the "marketing machine" is working out much better with Amazon. Apple is notoriously difficult to work with, and it seems more like Apple is once again being pushy about a competitor offering better deals.

 

[Cubert]

Steve Jobs meet the Justice Department.
Justice Department meet Steve Jobs.

 

[Erwin-Br]

They ARE competing with Amazon -- they're leveraging their position to obtain better deals for themselves and poorer deals for their opposition..

That's exactly what Microsoft did. And guess what? It's called unfair competition, and they got fined big time.

 

[CommodityFetish]

Ugh...

No kidding...

Is it just me or is Apple's strong arm tactics starting to bother other people as well?

+1 They are acting like a monopoly. Rather than competing on a level playing field in a way that benefits consumers, they use their market dominance to strong arm the other players. In this case trying to manipulate the labels' relationships with other sellers.

It's like the return of the repressed, from all those years of being in the shadow of the Microsoft monopoly.

(I'm no fan of the labels either, but in this case their actions are in the consumer's interests -- by helping Amazon and other sellers to gain a larger segment of the market. Maybe someday we'll really cut out the middleman and just buy directly from the artists...)

 

[elhungarian]

Wirelessly posted (Opera/9.80 (J2ME/MIDP; Opera Mini/5.0.17405/922; U; en) Presto/2.4.15)

Haha competition is good.

 

[Eraserhead]

+1 They are acting like a monopoly. Rather than competing on a level playing field in a way that benefits consumers, they use their market dominance to strong arm the other players. In this case trying to manipulate the labels' relationships with other sellers.

Exactly right. Apple is behaving appallingly in this case by abusing their monopoly.

 

[northernbaldy]

its quite sad and pathetic! apple are huge, iTunes is huge, but they don't rule the world









yet

 

[Lazerlike42]

Exactly right. Apple is behaving appallingly in this case by abusing their monopoly.

I agree. One of the reasons I ended up on this site is because I was considering buying a Macbook Pro (to dual boot). Now, I am getting more and more unlikely to give money to Apple each time they do one of these things (the HTC thing, now this...)

 

[Nebrie]

While price discrimination sucks, Apple shouldn't be so tight. Suing anyone & everyone (ok, maybe not everyone) who competes with them, IMO, will only make people turned off to Apple & move somewhere else.

Exactly who is being sued here?

 

[RidleyGriff]

So let's see if we can get this timeline straight....

1) Music industry is dying due to piracy.

2) Apple steps forward with iPod/iTMS and makes downloadable music a legitimate business.

3) Record labels are upset that the net result of their screw-ups is the Apple brand being emphasized over their own.

4) Record labels support Amazon as rival over iTunes in order to combat this.

5) Apple gets annoyed at record label's tactics and undercutting of Apple's position; pushes back.

6) Amazon/Labels leak info to press.

7) Tech community jumps up and down about how evil and anti-competitive Apple is, when what Apple is doing is actually the very definition of competition. Complainers also are unable to comprehend they are doing exactly what the record labels want them to do.

Did I leave anything out?

 

[steve-p]

That's exactly what Microsoft did. And guess what? It's called unfair competition, and they got fined big time.

The fanboys will tell you that Microsoft are a monopoly so it's different (even though they aren't) and that Apple are not a monopoly so don't need to be punished for anti-competitive behaviour (even though they would like to be a monopoly, and will continue to try to get there until they get taken down a peg or two).

 

[zweigand]

First off, I want to say I absolutely love Amazon's daily deals. I've bought several albums that I never would have considered otherwise. It's great!

On the other hand, I realize Amazon is probably only getting these deals because the music industry wants more people to find an alternative to the iTunes Music Store. They don't like Apple having so much power. If I were Apple I'd be pissed too …while Amazon is getting to sell full albums for $3, the labels have made Apple raise the price of most INDIVIDUAL TRACKS to almost half that.

Don't mistake this for Apple being greedy and wanting consumers to pay $11 an album …they are just trying to get the rights to similar deals. They would LOVE to be able to sell you albums for $3-$5. Unfortunately I don't think the labels are going to allow that to happen.

You can bet your butt if Amazon starts selling a large percentage of downloadable music these great deals will stop. You get people hooked, then you start charging.