Just when Apple CEO Steve Jobs is languishing in all the favorable publicity surrounding the debut of his revolutionary iPhone, he gets word that Universal Music is not going to renew its iTunes deal with Apple.
So let's think this thing through.
Who needs whom here?
Does Apple need Universal's music to sell on its iTunes online web store?
Of course.
Does Universal need iTunes to turn its year around?
No, nothing could do that.
Do young consumers need to buy music on iTunes?
Are you kidding?
So what's it all about, Alfie?
Can you say more money.
It appears Universal is using the occasion of its renegotiation with Apple to get Steve Jobs to pay the company more for its music. After all, Apple pays EMI more for its DRM-free music. And, hell, DRM is as big a goner as the record labels are. Microsoft's Zune media player -- the competitor to iPod -- cuts the record labels in on a piece of the action for each Zune sold. So there is precedent.
Unfortunately, Apple by far sells the most players and the majority of the legal online music. Record stores have come and gone and iTunes gets bigger.
So the question is -- does Steve Jobs want to cut any record label in on his iPod sales?
You're kidding, aren't you?
Okay, would Jobs cut Universal a better break on the songs it sells online taking it out of Apple's already slim profit margin?
You are kidding.
Sooner or later, someone had to step up and challenge the 800 ton elephant in the music industry. I guess Universal is performing this public service.
There is always the risk that one or more of the other big three labels could join Universal. But when has a record label ever made such a huge strategic mistake?
Now I'm kidding, aren't I?
You see, Universal has the right idea. It's the American way to cut the best deal that you can. I watch Entourage. I know these things.
Unfortunately, again, for them, Universal is holding no cards. It has next to no leverage over Jobs -- a bigger than life figure that has become even more important thanks to the missteps of the major record labels.
So, what are the options?
Universal folds and says "never mind". Not a good one.
Apple folds and says, "Okay Universal, we'll give you more money and we'll wait by the phone while the other three labels demand the same deal". Not a chance.
Universal finds another online music store or combination of stores to pick up the digital sales slack that would be caused by abandoning iTunes. Lots of luck. Apple is Clear Channel here -- so to speak.
Here's the theory I think is most likely.
Consumers steal more music.
That way Apple doesn't have to share the profits any further and record labels don't have to unwittingly help Apple make all those profits.
It's just another zany day in the record business.
For those of you who would prefer to get my daily posts by email for free, please click here.
Blog Archive
Popular Posts
-
At long last we seem to be getting to the bottom of just why Graham Davis seems to think that he is an "independent journalist." I...
-
I propose to coin a term today – propagandicide. It refers to a propagandist who just doesn’t know when to back off and in making his advoca...
-
In her latest column against sustainable energy, Margaret Wente writes that, “Big Wind is among the biggest lobbyists in Washi...
-
Having once stepped over the line and commented on Fiji politics in the context of the abrogation of the Ghai Commission’s draft constituti...
-
A counterpropagandist's work is never done. . . . Dear Editor, The next time you publish a letter from Graham Davis of Suva, Fiji ("...
-
Correction to the media: Jodie Foster was never "in the closet". All her friends, family, co-workers and many in her industry kne...
-
Last night Frameline hosted one of the funnest trans music parties ever called "Trans Party" at the chic hot spot " Supperc...
-
All too often lately the major broadcast groups have been firing able and talented people to save money. Last week CBS pulled off a double f...
-
The U.S. Supreme Court has agreed to hear a case concerning vulgarity on the airwaves -- you know, Bono using the F-word in an unscripted br...
-
As an economist, Wadan Narsey has a good grasp on the centrality of journalism in a mediated society, if not on the exact processes by which...