Universal Confirms iTunes Contract Change

[gehrbox]

It's all about the money

Universal is positioning itself to gain control of it's products sale price. It's a strategic move. CD sales are down and continue to decline year after year. The writing is on the wall. Digital is the future for music and video.

Currently 15% (give or take a couple % depending on where you look) of their music sales are through Apple. If the trend keeps up a larger and larger share of their revenue will have to funnel through Apple. Digital music sales are not as lucrative as CD sales. Piracy is and will continue to eat into their pockets. As a result their revenue will fall. If a publicly traded company fails to grow it ceases to attract investment and will eventually fail. Apples price fixing is going to put a bigger and bigger dent in their revenue. They are rolling the dice in hopes that they can either force Apple to be more negotiable over the sale prices or generate more competition in the digital distribution channel to regain control over the sales of their product.

Apple may be king of the hill in the digital distribution, but they had a revenue in 2006 of only $4.37B. Universal was a little higher at $5.7B (2005). However the french company that owns Universal raked in $27.2B (2006). Deep pockets and the desire to stop the bleeding will win the day for Universal.

That is if the buyers don't revolt and refuse to buy they're products from anywhere except iTunes. If you can't get the music you want at one location you will be awfully tempted to buy it elsewhere. Piracy will have to be kept in check, so expect a lot more lawsuits to stem the tide if the buyers turn to illegal means to get their music.

 

[Ugg]

What part of "monopoly" don't you understand?

Anytime that any single company gets 50% or more of the market means that choice/price/freedom are lessened.

Whether it's Apple in music, Microsoft in desktop operating systems, or Google in online search/apps/advertising - it's bad for the end user.

Choice is good for the consumer, an overwhelming presence in any market limits choice.

You've got a good point. One of the reasons for the success of iTMS is the fact that the music is locked down to the iPod.

Hmmm, who insisted on the monopoly status I wonder? I'm sure that Apple wanted it that way in the beginning but in all reality, it's the musicos that forced it. Now, they've found themselves a victim of their own icdiocy. The real pirates out there are the idiots at Universal who will probably lock down their music even more and create impossibly complex user agreeements for each second of music that is sold by them.

The only hope for a revival in music sales is to lessen restrictions and make all music playable on all machines. Apple's reluctant to license its technology to all the fly by nighters out there and that's understandable. Charge more for drm free music at a higher bit rate and realize that the world has changed dramatically.

The day of the mega album or mega tour is mostly over. Ticketmaster, musician greed, record company greed, etc, etc, have mostly made music a regrettable experience.

It's not Apple's monopoly that's the problem, it's the record companies' refusal to see the writing on the wall.

 

[pieman02]

It never ceases to amaze me how many people think they know what they're talking about when they clearly don't.

This is about preventing another monopoly, which is never good for business. If things stay the way they are Apple will end up with too much power. Regardless of who it is, a monopoly is a bad thing.

Just because it's Apple everybody here seems to think it'd be OK!

This is not true...as someone else said, it does all depend on who has the monopoly - look at the way M$ would be running this:

1) Low prices initially
2) Competeitors cant afford to compete and give up
3) Jack up prices now that they are the only option

Look at Apple:

1) All songs one low price
2) Competition is still out there (healthy for business)
3) Now they are dominating to a certain extent, and still can't be forced, let alone make the decision to raise prices...

Not only will Apple never have a true monopoly (cause there will always be Wal-Mart etc etc, no matter how much less they sell), but look at city utilities as an example of monopoly - does your neighbor get his trash picked up by a different company? No, because it is the cheapest, most efficient way to do things...

And why is everyone saying that Universal is terminating their contract or something? The old contract is up, and not they want to sell other special things at other music stores...its not gonna help Apple's competition any probably so oh well its just greed longpost.com/universal_sucks

 

[MikeTheC]

This thread is proof you just can't please everybody, no matter what you do or how you do it.

 

[calculus]

This could mean that music from key artists may not be made available through Apple's service...

Let's hope so - anything to get rid of dreadful rubbish like U2.

 

[LoganT]

Let's hope so - anything to get rid of dreadful rubbish like U2.

I wonder what Bono thinks of this.

 

[csimmons]

The statement said that Universal titles won't be EXCLUSIVELY available on iTunes. Exclusive = iTunes only. That does not mean they won't be available eventually.

Could it be that Universal wants to help prop up those online stores where they stand to theoretically gain the most (Zune Marketplace)? If so, that would be indeed the dumbest thing Universal could do, especially considering the effect that the iPhone will have on music downloads. Any sane music boss would do everything they could to stay in Apple's good graces.

 

[Schtumple]

Universal (and most record labels tbh) are like bloody screaming toddlers, someone needs to kick them in the face

It seems that all the record labels can do atm is get everything wrong, the day when these massive companies finally admit defeat and integrate themselves with the current technology (100%) is a day when i might buy music from them.

 

[fjguerra]

Bad move...

Bad move from Universal! They are just punishing themselves. Let's just show them, that customers have the power and not they. Let's not buy Universal music for a couple of months and let's see if they don't change their mind! It's unbelievable, that they do whatever they want with costumers, when we are those who give them money. iTunes is just the best and if they are leading the market it's because of their own merits.

 

[gnasher729]

Edgar Bronfman hates/envies SJ!

Steve Jobs became a multi-millionaire by starting a successful computer company from a garage (by now he is actually past the multi-millionaire stage). Edgar Bronfman is approaching the problem from the other side: He is on the way to becoming a multi-millionaire by starting with a huge inheritance and wasting most of it.

 

[Papajohn56]

I don't get why Universal even cares about the market share of digital download as long as they're making money.

 

[surferfromuk]

The simple truth of the matter is that they're all terrified of Steve Jobs.

He is the one thing they're not and that they can never be - an idealist, a visionary, a benevolent dictator, a CEO throwback to the pot-smoking, acid dropping hippie idealism of the sixties. A Man whose single stated aim is to change the world...

...but worse, far worse than all that - he is a self-made man who started from nothing, with nothing and rose to become one of the greatest world changing men that has ever lived - and not in some creepy way - but in the most incredible life enhancing way. Where he walks, the paths he clears,are where others follow - even Gates followed Jobs, even IBM followed Jobs, even Wozniak followed Jobs. Just one man!

What has this got to do with Universal you ask ?

It is fair to say that Steve Jobs is still a very self-driven individual, perhaps more so than ever, and quite simply they, (and all tech companies across the world for that matter), are all terrified for one major reason ;

THEY DO NOT EVEN REMOTELY KNOW WHAT HE'S GOING TO DO NEXT...

They can guess, speculate but that's all. They can't actually prepare for the SJ factor. They can only counter after Jobs has revealed his play...

And that is incredible...

Let's face it - it's taken Universal 5 years to figure out that 'one day all music will be bought online - if not only for eco-friendly reasons!'....

They're probably sat looking at Disney thinking - 'we're next'...

 

[gnasher729]

Apple may be king of the hill in the digital distribution, but they had a revenue in 2006 of only $4.37B. Universal was a little higher at $5.7B (2005). However the french company that owns Universal raked in $27.2B (2006). Deep pockets and the desire to stop the bleeding will win the day for Universal.

finance.yahoo.com says Apple had $21.5bn in the last year. Slightly more than $4.37bn that you claimed. By the way, type "Vivendi debt" into Google. Vivendi has more debt than Apple has cash.

 

[Vinnie_vw]

Prepare your flames…

Well, I'm all for it. I hope that Universal leads other studios to do the same. Why? Because they still let the market decide where they sell their music. Right now, there isn't much of a choice, especially on the OSX-platform.

They have given Apple a lot of power right now, which has lead to the iTunes dominance, but also crazy iPod-sales…which in turn allowed them to develop the intel-Macs and the iPhone, both also cash-cows in the future. And these things, as long as Apple keeps innovating will continue to sell. iTunes has little to do with iPod sales, except make it convenient. Most people, I know, and who own an iPod, don't even shop there…because of a lack of DRM-free options.

But I would also like convenient subscription-services like Rapsody on my Mac. Where are they? I would also like cheaper tariffs for some of the classics, just like in record-stores. Where are they? And, of course, I want DRM-free music and I realise iTunes is one of the champions there.

The point is that iTunes seems to reign the market-space and drive out smaller alternatives, especially on the Mac-platform. And after letting it come to this "in-balance," a counter-pressure from content-providers is a good thing.

Taking out my aluminium umbrella now…

 

[surferfromuk]

. Right now, there isn't much of a choice, especially on the OSX-platform.

They have given Apple a lot of power right now,

But I would also like convenient subscription-services like Rapsody on my Mac.

1) Your getting a Porsche 911 for budget car money - why do you need second rate alternatives?
2) Apple created the market and therefore it's own power - it 'took' nothing and created a great complimentary eco-system and wonderful products. Apple just made it 'work'...
3) Hook me up to the drip...I want my music intravenously...I want to check 'in' every month to affirm my 30 day rights...
Let's not all rally around Universal for a 'worse deal' please...

I'm no big fan of monopolies but if it's not an Apple one you can be sure it'd be a Microsoft one - and we all know what that means...

 

[rockosmodurnlif]

The simple truth of the matter is that they're all terrified of Steve Jobs.

He is the one thing they're not and that they can never be - an idealist, a visionary, a benevolent dictator, a CEO throwback to the pot-smoking, acid dropping hippie idealism of the sixties. A Man whose single stated aim is to change the world...

...but worse, far worse than all that - he is a self-made man who started from nothing, with nothing and rose to become one of the greatest world changing men that has ever lived - and not in some creepy way - but in the most incredible life enhancing way. Where he walks, the paths he clears,are where others follow - even Gates followed Jobs, even IBM followed Jobs, even Wozniak followed Jobs. Just one man!

What has this got to do with Universal you ask ?

It is fair to say that Steve Jobs is still a very self-driven individual, perhaps more so than ever, and quite simply they, (and all tech companies across the world for that matter), are all terrified for one major reason ;

THEY DO NOT EVEN REMOTELY KNOW WHAT HE'S GOING TO DO NEXT...

They can guess, speculate but that's all. They can't actually prepare for the SJ factor. They can only counter after Jobs has revealed his play...

And that is incredible...

Let's face it - it's taken Universal 5 years to figure out that 'one day all music will be bought online - if not only for eco-friendly reasons!'....

They're probably sat looking at Disney thinking - 'we're next'...

1) Your getting a Porsche 911 for budget car money - why do you need second rate alternatives?
2) Apple created the market and therefore it's own power - it 'took' nothing and created a great complimentary eco-system and wonderful products. Apple just made it 'work'...
3) Hook me up to the drip...I want my music intravenously...I want to check 'in' every month to affirm my 30 day rights...
Let's not all rally around Universal for a 'worse deal' please...

I'm no big fan of monopolies but if it's not an Apple one you can be sure it'd be a Microsoft one - and we all know what that means...

Someone walked into the Steve RDF and never walked out ...

Then again, maybe he likes it there.

 

[Much Ado]

Let's hope so - anything to get rid of dreadful rubbish like U2.

That was a pointless post.

 

[eenu]

Honestly, the is a DAMN good question. Serious. Anyone know the answer?

Yes, the UK governments online petitions section against road charging 6 months back.

 

[Yankees 4 Life]

Steve Jobs became a multi-millionaire by starting a successful computer company from a garage (by now he is actually past the multi-millionaire stage). Edgar Bronfman is approaching the problem from the other side: He is on the way to becoming a multi-millionaire by starting with a huge inheritance and wasting most of it.

hey man, steve is a multi billionaire

 

[surferfromuk]

Someone walked into the Steve RDF and never walked out ...

Then again, maybe he likes it there.

In this day and age, in these times of uncertainty, confusion, change and anger and, dare I say it, in an age where we are bombarded by 'endless streams of empty, vacuous modern trash' all in eager pursuit of our minds and our wallets, it is a very pleasant, decent, noble and tranquil place to reside.

 

[a cat *miaow*]

It never ceases to amaze me how many people think they know what they're talking about when they clearly don't.

This is about preventing another monopoly, which is never good for business. If things stay the way they are Apple will end up with too much power. Regardless of who it is, a monopoly is a bad thing.

Just because it's Apple everybody here seems to think it'd be OK!

.. ahh good, i don't have to type that now I like my Apple but I sure wouldn't want them to have a monopoly in ANYTHING.. I think it's a wise decision not to sign away all your power wholesale to another company

 

[rockosmodurnlif]

minor correction

In this day and age, in these times of uncertainty, confusion, change and anger and, dare I say it, in an age where we are bombarded by 'endless streams of empty, vacuous modern trash' all in eager pursuit of our minds and our wallets, it is a very pleasant, decent, noble and tranquil place to reside.

You got that backwards, its our wallets and our minds.

 

[whatever]

What part of "monopoly" don't you understand?

Anytime that any single company gets 50% or more of the market means that choice/price/freedom are lessened.

Whether it's Apple in music, Microsoft in desktop operating systems, or Google in online search/apps/advertising - it's bad for the end user.

Choice is good for the consumer, an overwhelming presence in any market limits choice.

What you don't understand is that controlling one channel of distribution does not make a monopoly.

If iTunes was the only way to buy music, then yes they would be a monopoly, but as long as there are other methods they can not be considered on.

Do you consider Amazon.com a monopoly too?

 

[MacBram]

Prepare your flames…

Well, I'm all for it. I hope that Universal leads other studios to do the same. Why? Because they still let the market decide where they sell their music. Right now, there isn't much of a choice, especially on the OSX-platform.

They have given Apple a lot of power right now, which has lead to the iTunes dominance, but also crazy iPod-sales…which in turn allowed them to develop the intel-Macs and the iPhone, both also cash-cows in the future. And these things, as long as Apple keeps innovating will continue to sell. iTunes has little to do with iPod sales, except make it convenient. Most people, I know, and who own an iPod, don't even shop there…because of a lack of DRM-free options.

But I would also like convenient subscription-services like Rapsody on my Mac. Where are they? I would also like cheaper tariffs for some of the classics, just like in record-stores. Where are they? And, of course, I want DRM-free music and I realise iTunes is one of the champions there.

The point is that iTunes seems to reign the market-space and drive out smaller alternatives, especially on the Mac-platform. And after letting it come to this "in-balance," a counter-pressure from content-providers is a good thing.

Taking out my aluminium umbrella now…

Actually, your post (although you prepare for flaming) is a bit of breath of fresh air in one way, : "as long as Apple keeps innovating". Wow, I wonder if that has anything to do with Apple's position and the popularity of its products? And the "iTunes having little to do with iPod sales?" Maybe there is something about the iPod that people like; maybe it's not because the only way people can listen to Universal's music is to buy one. You think? I do see your point about wanting to see more choice on the Mac platfor - but I think this has less to do with Apple "locking" anyone out than with the fact that no-one is innovating and making a simple, user-friendly system like Apple that is catching on and being successful.

So, no flame on you, just trying to figure out the logic of all the detractors in general...

One day it's "Apple is a big bad monopoly because of the iTunes-iPod 'lock down'" (I just read that again a few posts back).
I understand from some reading and common sense that:
1) iTunes is not required to use your iPod (apparently very few iPod users "fill" their iPods to any significant degree with music bought on iTunes.
2) an iPod isn't required to buy and listen to music on iTunes (I have bought on iTunes but do not own an iPod though I wish I did). Where's the lock-down? This is covered in one of the latest posts on RoughlyDrafted.

Next day: "Apple is deceptive and has pulled a fast-one on the Record Labels à la MS with IBM"; and "Apple isn't interested in the consumer and it's messages and intentions about DRM-free music is something sinister."

However, again, I am still trying to follow the logic, because along with a third criticism many try to make you say 3) "they [Universal] still let the market decide where they sell their music." As though, again, Apple customers and the music-listening public is somehow trapped by Apple. Most music on iPods comes from CD's.

But, as far as digital sales go, problem is, as has been said countless times: sure, buy it from someone else, anyone else, and be restricted as to HOW you can listen to it - because at the moment, it seems there is either Apple, or MS/Record Label DRM and formats that have been shown to be proprietary in every way, every way you look at it, every day of the week. All these other happily competing companies (if it weren't for Apple) might as well be one vendor, too (guess who?).

Somehow Apple + iTunes + iPod + AAC + MP3/4 + WAV + AIFF + free podcasts + your CD's = proprietary and locked down; while Record Labels + MS + excessive DRM + WindowsMedia + PlaysForSure + plus MS victim companies + crap players that nobody wants to buy = Open and Free and liberating.

 

[JMax1]

???

I don't get it- whats the point of a "long term contract" if they are goint to back out of it?