Disney Investing in iTunes IPO?

[dguisinger]

Just a note, if Apple spun off iTunes but kept a majority share, it could possibly remove the limitations that they are currently being sued over by Apple Records..... once they start doing business under a different name the lawsuit for ongoing practices is moot and only has an effect on previous activities.

 

[mkrishnan]

This sounds like a bad idea...it'll be like the stupid Palm split between PDA hardware and the OS.

Heh...I was kind of thinking the same thing. So then iTunes spins off, founders, and then eventually, Apple marries their hardware to a WMA store, and... oh, wait. Oh, god. 🙁

 

[sPAULj]

Heh...I was kind of thinking the same thing. So then iTunes spins off, founders, and then eventually, Apple marries their hardware to a WMA store, and... oh, wait. Oh, god. 🙁

RIGHT, because apple's totally going to run their store with WMA. 🙄

Everyone needs to calm down. With a IPO, Apple would still be in control of the company while still being able to expand iTunes beyond it's current arena. That means, iTunes could have it's own record label and expand to greater things, and will keep "Apple Inc." from coming "iPod inc." Then again, if iTunes didn't do this, well things would go on as normal wouldn't they?

I'd like to mention also that the reason why PALM did so ****** when it spun of it's OS is because it's developers didn't develop and things stayed the same, not to mention the companies lost a lot of connection when that happened.

 

[Gasu E.]

Frst of all, if there is any truth to the rumor, the spin-off would include both ITMS and iTunes. You can't have an iTunes-only spinoff as it would have zero revenue.

Secondly, although I realize people here are obsessed with the stupid Beatles lawsuit, a much more likely reason for the spinoff would be as a prelude to opening up ITMS and ITunes to non-Apple MP3 players. Of course that would represent a big change in Apple's business model, but they may feel the need to switch to a Windows-like strategy in the long run in order to avoid eventual marginalization, a la Mac. Apple would be remiss if they were not considering opening up ITMS/iTunes as a possible future strategy.

 

[mkrishnan]

RIGHT, because apple's totally going to run their store with WMA. 🙄

I was being FACETIOUS. 😉

Still though, I think the fact that no one believes iTMS is particularly profitable, even while Apple owns it, is a relevant issue. I don't know if the transition to video is helping. But in the past, the consensus opinion was that iTMS was a close-to-loss-leader for the iPod.

 

[slu]

I doubt Apple would spin-off iTunes (the software) as a company. Since they don't charge for the software, the company would have no revenue stream.

Uhhh, Content?

 

[512ke]

If they spin off iTunes, would current stockholders (like me) get shares in the new company?

512ke

 

[zeppiecr]

If I-tunes is spun off I think you would see Apple hold most of the shares so they could retain voting rights and still run the company in the right direction. Also maybe they spin it off to give company's like Disney and Warner access to more revenue then their 99 cents a song and give them shares at the IPO.

The ITMS is highly profitable as there really isn't any overhead. This would effect their current shares in a positive way as well. In a true spinoff existing Apple share owners would aquire some shares to the new company. But some spin offs like chipotle original share owners don't aquire any shares in the new company (McDonalds->Chipotle). Spinoffs are almost always good.

 

[mkrishnan]

The ITMS is highly profitable as there really isn't any overhead.

Well... depends on how you look at it. Profitable for whom? Apple hasn't released the numbers, but the consensus is that they pay almost as much for licensing of the content they distribute to us as we do for our downstream license. That is, almost all of their revenue gets paid back to the labels. At least, they've essentially admitted this in the past.

Forbes hinted that iTunes might get profitable in the future. But it's a hockey-stick graph at present.

Especially considering the constant rumor that the record labels want to re-negotiate for even higher prices. And Forbes doesn't really explain why or how Apple achieves lower operating costs, when almost all of the operating costs are speculated to exist in the form of buying licenses.

And even on top of all of that, Forbes' predictions of iTMS' profit capability come in at a margin that's lower than Apple's overall margin. Nice.

I don't see how any of that would be different if another entity owned iTunes or if iTunes was publicly traded.

But more power to them. As long as the store gets better, and the iPod gets better, and Macs get better, I have no complaints. 😉

 

[zeppiecr]

Good points, I agree

 

[d.perel]

Seems like wild speculation. An iTunes spin off; what about the iPod? Were Apple to do that, their stock would take a severe beating.

And then we could spin off the whole Mac business also! I'd hope to see our profitability increase by focusing on the core business of mighty mouse production.

 

[adk]

So wait, I'm confused.... if Apple were to spin off itunes into its own IPO, apple could still control it? I don't know that much about business (yet) but wouldn't two publicly traded companies doing that equal collusion? I mean, limiting music purchased from ITMS to only be put AAPL's ipod doesn't sound too free market.

 

[ShavenYak]

Without even having seen this page 2 rumor, I was pondering something this morning. If Apple divested itself of the actual store, the RIAA/MPAA/etc. would no longer have any direct influence over Apple's hardware and software decisions. Apple could let iTunes sharing go across routers, let iTunes be able to copy music from shared libraries or from iPods, and so forth, with less interference. Fairplay would still protect the labels' copyrights, and the decision to sell or not to sell on iTMS would be between them and iTMS. Apple could license Fairplay to other music stores (imagine if Rhapsody or Napster became iPod friendly 😱 ), iTMS could sell PlaysForSure tracks (but why 🙄 ).

Apple would also be off the hook on the Apple Records lawsuit - I didn't think about that aspect of it. Apple and iTMS separately might just be worth more than they are together. I'm sure Apple and Disney would both own some shares in the new iTMS company, and who knows, Jobs might function as CEO of both iTMS and Apple, at least for a while. I can't really think of anything negative about this arrangement.

It might even make sense for .mac and the iPhoto book and print ordering functions to be taken over by the new company, making it sort of a 'digital lifestyle enabler' web services company that supports Apple's hardware and software.