Interesting dynamics
NBC Universal tries to renegotiate its iTunes arrangement, while Universal declines to sign a long-term contract with iTunes.
That, combined with the interesting article about Columbia records' new co-ceo, shows that the music industry really is (1) running scared, and (2) lashing out at anyone in the business that's successful.
They're scared because their business is melting away, and they don't know what to do. The old way of doing business isn't working, and there is no new way of doing business.
In the article, the guy wants to believe that subscription services are the future. He says that the same way that a drowning man dreams of water in the desert. But a subscription service won't save the labels. Likewise, the music industry focuses their ire on the only successful player in the industry (iTunes). Instead of thinking about iTunes' success and why it's working, they focus on the simple, media (and competitor) driven talk about vendor-lock in.
That's a red herring - you can't get to market dominance by providing something that people don't want or like. You can break out of iTunes DRM so simply that it's silly - and not very many people bother.
So why does iTunes work? Because it's easy, it's convenient, and it has the content that people want. I's probably a combination of the network effect (content) and the fact that there is very little thinking required.
With Windows DRM-based stores, you never know exactly what you can do with the music. If you have a subscription, can you sync it to a device? Can you listen to it on another machine? If you get an album, do you get all the songs (sometimes not)? How much does it cost?
In a record store (oh, a CD store) you look at the price on the cover and you buy it at that price. That price allows you to do pretty much everything you want with the music. In iTunes, you look at the price, and that price allows you to do a lot of things with the music. In Windows DRM-based stores, there are multiple prices depending on what the label allows you to do. That's confusing.
iTunes does have variable pricing, but the variable pricing is off the base price: higher prices translates to more stuff for the consumer. In the EMI case higher prices = better quality, no DRM. That's easy, simple, and can be easily branded (iTunes plus).
So where does that leave the record companies? It leaves them trying to survive in a market they don't understand, with competitors that are smarter than them, selling a product that nobody wants, and behaving in ways that are irrational. Why would you alienate a supplier that provides you with millions of dollars of business? Why prosecute your customers for doing what radio stations have been doing for years (distributing content for free)*?
Before the rock & roll era, the music business wasn't such a big deal. Maybe it's going back to those days, where music is just background and singles. The same thing is happening to radio and TV - the audiences are leaving. The world is changing, and not in ways that help media creators.
Let's put it this way: how much of the industry revenue was people replacing their vinyl with CDs? How much of iTunes revenue is from people moving their collections to digital? That's not a growing business - that's a replacement business.
What should record companies do? Well, it's not my problem. If they want to pay people to think about it I'm available, but realistically speaking record companies aren't willing to change that much. They aren't businesses the way real businesses are - they have a veneer of artistic sensibility that corrupts the way they work and look at the world.
* Radio actually does pay for music via licensing, but that's invisible to the consumer. Everyone used to tape stuff of the radio, and it was free. That perception carried over to the digital realm. Even now, you can turn on your radio and get free music, at a decent audio quality. When I used to buy tapes, each tape had a payment to the music industry embedded in it - for copyright fees, the assumption being I'm buying tapes to record music off the radio. Can I use those payments and apply them to my digital music?
