Warner CEO says ITMS model pricing "unfair."


emw

macrumors G4
Aug 2, 2004
11,177
0
I love it:

We are selling our songs through iPod, but we don’t have a share of iPod’s revenue,' he said. 'We want to share in those revenue streams. We have to get out of the mindset that our content has promotional value only. We have to keep thinking how we are going to monetize our product for our shareholders,' added Mr. Bronfman. 'We are the arms supplier in the device wars between Samsung, Sony, Apple, and others.
Let me get this straight. Not only do they want to increase the price of song downloads, they want Apple to pay them $$ for every iPod they sell? Ha!
 

Bunzi2k4

macrumors 6502
Feb 4, 2003
489
0
San Diego, California
Mr. Bronfman at the Goldman Sachs Communacopia investor conference. 'Not all songs are created equal—not all time periods are created equal. We want, and will insist upon having, variable pricing.'"
So true. Classical and Big Band Jazz is waaay better than today's junk.
 

nagromme

macrumors G5
May 2, 2002
12,551
1,186
It's easy to say these are "just corporations" and we shouldn't get emotionally involved. But I have to say, Warner's words really moved me. Poor Warner! I shed real tears for those poor, mistreated music labels.

:rolleyes:

No variable pricing he says? iTunes already has variable pricing for albums--and for songs too, in a SIMPLE way: some songs (like really long pieces) must be bought as part of the album. Having one price for singles is part of the simplicity that makes this work.

Songs currently have only promotional value, he says? So the record labels make no money from the sales? Yeah, right. Apple barely breaks even on iTMS, but the labels make real money on each song.
 

Sun Baked

macrumors G5
May 19, 2002
14,874
57
emw said:
I love it:


Let me get this straight. Not only do they want to increase the price of song downloads, they want Apple to pay them $$ for every iPod they sell? Ha!
Yes, Ford/Chrysler/GM should pay all the gas companies a share of the revenue for their hot and popular cars.

Sort of sad that Chevron isn't getting money for every Mustang/Hemi/Vette sold.
 

mrsebastian

macrumors 6502a
Nov 26, 2002
744
0
sunny san diego
what an [bleep]! i'll tell you what you greedy bastard, go ahead and raise prices/stop selling through itunes... people would be more than happy to go back to stealing music and then you get nothing... NOTHING!
 

Bob Knob

macrumors 6502
Mar 20, 2003
271
0
"added Mr. Bronfman. 'We are the arms supplier in the device wars between Samsung, Sony, Apple, and others."

No,
Using the "Arms" analogy you (the music companies) are the supplier of bullets, Apple and others make the arms/weapons. Name one bullet manufacture that gets a cut from Smith and Wesson every time a handgun is sold.
 

paulypants

macrumors 6502a
Jun 17, 2003
519
0
Buffalo, NY
Hopefully if they get variable pricing only the J-Lo crap will be the most expensive because that "music" is what they consider to be the most "popular" -- probably because that's what they decide people should listen to, and a lot of people blindly follow.
 

Counter

macrumors 6502
Jun 4, 2005
332
0
Oh if only Warner could get a share of the iPod sales, then they would have fancier cars in their parking lot.

All the troubled music label stories keep me awake at night.
 

kirk5

macrumors newbie
Mar 14, 2005
17
0
It is amazing how these guys think. Apple has given the music industry millions on revenue and profit that it just wouldn't get otherwise. OK some of the songs bought through iTMS would have been bought via traditional CD sales. But many of the single songs I buy @ 99 cents, I wouldn't have bought a CD of -- or even a CD single -- if it wasn't for iTunes. I would have p2p'd it or done without.

The flat 99 cent/song model does account for variability in pricing. All of the old stuff that you seen in cut-out bins for 99 cents a CD are on sale on iTMS for 99 cents a song. The Madonna back catalog is a great example and is Warner music. More people will buy some of those songs for nostalgic purposes from iTMS than will in a CD store.

If Warner music wants to make more money it should do it by finding and promoting artists that people will want to buy versus whine about how unfair iTMS is.
 

Photorun

macrumors 65816
Sep 1, 2003
1,216
0
NYC
His comments reminded me why whenever I heard people stick up for big record companies during the whole Napster era were clueless to the one fact, aside from the whole moral thing (which, c'mon, the record execs/RIAA are highly devoid of all morals) record companies don't care about music anymore, or artists, or art, they care about being filthy rich and shlepping a lot of bad "music" (blech, it's not even that) on tasteless teenage buyers who eat it up like saccharin. It's a soulless industry that needs an enema, it needs to be taken down so something of merit can go up in it's place. Musicians wont go anywhere if WarnersonyBMGetal go bankrupt, only these rich fat do nothing types would have to sell one of their five homes. So I say steal music, steal as much as you can, make the record labels go belly up so like a phoenix something of merit, for the music, made by musicians, can rise from those ashes and the medium will mean something again. As it stands, with the evil in control, it won't.
 

Lacero

macrumors 604
Jan 20, 2005
6,639
2
I agree with the labels. I want variable pricing. ie. 99¢ 79¢ 49¢ and 29¢.
 

iMeowbot

macrumors G3
Aug 30, 2003
8,643
0
emw said:
Let me get this straight. Not only do they want to increase the price of song downloads, they want Apple to pay them $$ for every iPod they sell? Ha!
Not quite :) He's saying that he wants more from Apple in the form of a bigger cut from iTMS, because his content is helping to bring iPod sales to Apple.

The Big 4 are very much divided over this whole issue. While Sony/BMG and WMG are pushing for big changes, UMG are so far reasonably okay with the status quo, and EMI are doing the wait and see thing.

The companies pushing for higher prices are also the ones having the worst financial problems (WMG have been bleeding red ink since they were spun off from Time Warner, and Sony are in the middle of their own rounds of downsizing). EMI are more or less OK, UMG are on the rebound.
 

Loge

macrumors 68030
Jun 24, 2004
2,678
1,147
England
iMeowbot said:
Not quite :) He's saying that he wants more from Apple in the form of a bigger cut from iTMS, because his content is helping to bring iPod sales to Apple.
No, according to the article he said -

'We are selling our songs through iPod, but we don’t have a share of iPod’s revenue. We want to share in those revenue streams.'

That suggests he wants a cut of iPod revenue. Why on earth? Does he get a cut of CD player revenue? He benefits indirectly anyway if people buy more iPods they will probably buy more music, not just iTMS but CDs as well.
 

clayj

macrumors 604
Jan 14, 2005
7,473
180
visiting from downstream
Good grief.

If he thinks he's not getting a "fair share" of money from Warner songs sold on iTMS, there's a simple solution: Stop selling music through iTMS. If I ran Apple or any other music-selling entity and someone tried to dictate my pricing structure to me, I'd tell them to kiss my ass.

Bronfman is a big crybaby. Perhaps he should be a better negotiator next time he's dealing with another company.
 

wordmunger

macrumors 603
Sep 3, 2003
5,125
2
North Carolina
Apple doesn't have a monopoly. What they're doing to the record companies is very similar to what Wal-Mart does to its suppliers. Basically, they say, "you will sell to us at our price or you can go try to sell it somewhere else." The suppliers moan and whine, but in the end, they need Wal-Mart more than Wal-Mart needs them. Apple's in just about the same position. After all, anyone can still buy a CD and put it on their iPod (or just pirate their music). Apple doesn't NEED anyone on the ITMS -- it's only the music companies that lose out when they don't sign on.

So basically the music companies are screwed, and there's not a thing they can do about it.
 

iMeowbot

macrumors G3
Aug 30, 2003
8,643
0
Loge said:
No, according to the article he said -

'We are selling our songs through iPod, but we don’t have a share of iPod’s revenue. We want to share in those revenue streams.'
Thanks, I have seen the interview. No, that doesn't what you think it means, because you quoted out of context: "We have to get out of the mindset that our content has promotional value only." Apple have been quite open that they are deliberately keeping iTMS as a marginal break-even operation. Apple are being greedy, applying a higher markup to their devices so they don't have to share revenues across the iTunes product suite (but of course, it's okay for Apple to be greedy because they're Apple).
That suggests he wants a cut of iPod revenue. Why on earth? Does he get a cut of CD player revenue?
Not for old fashioned CD players, but yes on recorders and blank media.
 

balamw

Moderator
Staff member
Aug 16, 2005
19,075
963
New England
iMeowbot said:
While Sony/BMG and WMG are pushing for big changes
Here's what I don't get. Sony/BMG sells much of their catalog direct to the consumer at $5.99/CD including shipping at http://www.yourmusic.com. I presume this is a profitable venture for them.

If I assume 50% gross margin and allocate it equally between shipping and manufacturing: $1.25 of the cost is shipping and $1.25 of the cost is the actual CD, jewel box, inserts and shipping box. The numbers seem reasonable so it sounds like a good business model to me.

Why don't they just use this pricing model for iTMS as well, $5.99/album, and give Apple part of the $2.50 they don't need to spend on making the CDs or shipping product. My guess is they'd sell a lot more music than they do today, and thus have higher profits. I'm even OK with them charging $9.99 for new releases for maybe up to 6 months after release, or putting restrictions on it like yourmusic where you have to buy one album a month at this price, but anything more (cough $17.99 cough) just seems ludicrous.

I for one have started buying more music again thanks to iTMS and yourmusic.com. iTMS allows me to impulse buy singles again, while yourmusic is letting me replace LPs and fill gaps in my collection cheap(er). The rest of my purchases are used from Amazon, or loss-leaders from Best Buy and thus generate little or no profit for the companies involved.

I know for a fact that I buy a lot more albums at $5.99 than $9.99 or $17.99. If there's an album with 2 or more tracks on it that I want, I'll definitely look on yourmusic to see if I can pick up the album before buying the tracks indiviually.

B
 

clayj

macrumors 604
Jan 14, 2005
7,473
180
visiting from downstream
Savage Henry said:
I grant you it's high, but it's not what a monopoly is.
Well, I was just reminded of Microsoft's "monopoly"... they never really had a monopoly, either. The mere existence of the Mac eliminated such a possibility.

Just putting that out there.
 

Superdrive

macrumors 6502a
Oct 21, 2003
762
26
Dallas, Tx
wordmunger said:
Apple doesn't NEED anyone on the ITMS -- it's only the music companies that lose out when they don't sign on.
I feel the same way regarding this. Say the record companies decide to attempt to take over iTMS in the form of price hikes. What would it take for Apple to say, guess what, no more iTMS?

I doubt it would be tough for the iPod to play WMA. I also doubt it would be tough to get it authorized to play protected WMA if people had to buy music.

Steve, close down iTunes and bring back an old campaign in a new form- Rip. Mix. Sync.