The coup is over: Record labels knuckle under to Apple

The coup is over: Record labels knuckle under to Apple

Summary: eWeek: Apple Computer has renewed contracts with the world's four largest music companies to sell songs through its iTunes Music Store, after blocking their attempts to end iTunes' flat-rate pricing scheme, Apple said on Tuesday....in the end Apple had more negotiating power because of the dominance of its intertwined iPod player and iTunes service.

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TOPICS: Apple
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eWeek:

Apple Computer has renewed contracts with the world's four largest music companies to sell songs through its iTunes Music Store, after blocking their attempts to end iTunes' flat-rate pricing scheme, Apple said on Tuesday....in the end Apple had more negotiating power because of the dominance of its intertwined iPod player and iTunes service.

Make no mistake about it. That intertwining and the dominance that goes with it is solely rooted in the non-interoperable (with non-iPod devices) and the non-licensable proprietary digital rights management (DRM) technology that Apple uses.  It's called FairPlay, but it should be called UnFairPlay. No one else can participate in the FairPlay ecosystem unless Apple says so.  Apple calls the shots.  And now, that rule extends to the record labels.  The coupe is over.  The record labels knuckled under when they should have realized content is king and that without their content, the iTunes Music Service is nothing.  If some neutral scheme like Sun's Project DReaM had any chance of breaking Apple's grip before it tightens to the point of no return (thanks to the new contract), now was the time to walk away. Sure, it would have cost the labels dearly.  But that cost would have paled in comparison to the cost of long term enslavement to Apple. 

The movie industry could learn a lesson from this and act in hopes of not letting history repeat itself (in which case, you might end up needing two incompatible portable devices -- one for music, the other for video).  But with Jobs now wielding his influence at Disney, Hollywood could end up caving as well. 

News of these renewed contracts is far more significant than most people realize.

Topic: Apple

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30 comments
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  • When is it time for the sedan?

    [i][/i]
    Yagotta B. Kidding
    • Good catch

      "coupe" has been fixed. Thanks.
      dberlind
      • s/pattern1/pattern2/g -- don't forget the g

        [i]And now, that rule extends to the record labels. The coupe is over.[/i]

        Or not.
        Yagotta B. Kidding
    • ha ha

      i was wondering the same thing.
      when is the next big coupe??? hope it has a hemi!
      richvball44
  • Hoist by their own petard

    Dang, beaten to the punch on my "coupe" comment. But you missed another instance of it within the article text itself.

    The funny thing to consider here is that DRM is the reason the RIAA companies have no leverage here whatsoever. They demand DRM. Because of this, they give up all power. Apple owns the top music store, the most widely used DRM system, and the number one player. To break their hold and re-gain power, the RIAA can only do one thing--sell music without DRM. If they did this, there would be no reason for the iTunes store to dominate, and they would be back in control of their own fate. Instead, they're stuck being Apple's b!tch, and they have only themselves to blame.

    ---If some neutral scheme like Sun's Project DReaM had any chance of breaking Apple's grip before it tightens to the point of no return---

    Sun's system could never catch on if it didn't work on the iPod. That's the reason the iTunes store sells so well over other stores. You can use the purchased songs on an iPod. If Sun's DRM came out, no matter how they pitched it, I don't see any reason for Apple to add support for it to the iPod and harm their own business.

    The choices are clear for the RIAA, either sell without DRM, try to wait out the iPod's popularity, or bend over and take it from Apple.
    tic swayback
    • While I don't share David's pessimism ...

      ... I have to agree with your assessment. The RIAA had the opportunity to embrace the technology which makes the distribution of perfect copies of both high-quality (WAV) and medium quality (MP3) music files incredibly cheap while appearing to be innovative and consumer-conscious. Instead, they first lobbied for DRM legislation (DMCA) and then forced it upon it's customers -- who only want the flexibility to play their music in their format of choice. The recording industry is as short-sighted as the publishing industry -- and both will be displaced as the technology companies figure out how to give consumers what they really want.
      M Wagner
    • Your crazy

      I wanna be apples bitch!
      IceTheNet9
  • Song ownership

    Also of note on the online music store front is this article, on artists suing labels for royalties (I'll post it a couple of different ways as ZDNet is having problems with the long link):

    [url=http://news.yahoo.com/s/ap/20060428/ap_en_mu/music_downloads_royalties;_ylt=AowpM.my63biaeu.FU8A_rRxFb8C;_ylu=X3oDMTA5aHJvMDdwBHNlYwN5bmNhdA--]Article[/url]

    http://news.yahoo.com/s/ap/20060428/ap_en_mu/music_downloads_royalties;_ylt=AowpM.my63biaeu.FU8A_rRxFb8C;_ylu=X3oDMTA5aHJvMDdwBHNlYwN5bmNhdA--

    In it, we learn that artists (including Cheap Trick and the Allman Brothers) are suing their record labels. The labels owe different royalty rates for songs "sold" versus "licenses issued". The labels chose to pay the lower rate to artists, which means they consider every song sold through iTunes to be just that, a sale, and not a licensing. Which has major implications over ownership and fair use rights.

    Also of note, artists are still being charged for packaging, restocking and breakage, things which no longer exist for digital content. Nice to see the RIAA is being as fair and honest as ever.

    One more article of interest--it seems that Canadian artists are one step ahead of their American brethren in realizing that they need to take control of their own careers:

    [url=http://www.canada.com/nationalpost/news/issuesideas/story.html?id=3367a219-f395-4161-a9b9-95256c613824]Barenaked[/url]

    http://www.canada.com/nationalpost/news/issuesideas/story.html?id=3367a219-f395-4161-a9b9-95256c613824
    tic swayback
    • Wow, nice linkage zdnet

      Here, just cut and paste them yourself

      http://news.yahoo.com/s/ap/20060428/ap_en_mu/music_downloads_royalties;_ylt=AowpM.my63biaeu.FU8A_rRxFb8C;_ylu=X3oDMTA5aHJvMDdwBHNlYwN5bmNhdA--




      http://www.canada.com/nationalpost/news/issuesideas/story.html?id=3367a219-f395-4161-a9b9-95256c613824
      tic swayback
  • FairPlay is Fair

    A creative small company like Apple should have the right to protect there own ideas and should not be critisized at all.

    Let?s not forget Steve Jobs & Apple have always provided us with great products, and ofcourse this comes with a cost which consumers are willing to pay gladly it seems.

    Any company who have invested somuch in there own technology trying to provide consurmers with great products and services expect not only to make there money back but even more, using Fairplay, DRM or DreaM. Doesn?t really matter what matters is, does the consumer feel betrayed? In this case no, everybody is actually happy except for a few Grumpy tech people, who think they are doing the world a favor.

    While companies like Microsoft made it a daily habit to get away with bad products, services and infringing other people?s intelectual properties.

    ITunes & iPod are two products created with the consumer in mind by Apple; they have the right to control it, for "HE WHO HAS THE GOLD MAKES THE RULES".
    Ovaris
    • ever own an iPod?

      Wait... it breaks a week after the warranty expires... but its fair to consumers? You can't take music you buy elsewhere... but its fair to consumers... you can't import music you buy elsewhere... but its fair to consumers... and if you let your membership lapse... you lose all the music you bought if you're iPod dies... but its fair to consumers?

      ...Hey Ovarie...is your name Steve Jobs? LOL.
      kckn4fun
      • Have YOU ever owned an iPod?

        ...it doesnt sound like it. What music player are you talking about where you lose your all the music if the player dies..the music is on your computer and synced with the device. Thats true of almost every Mp3 player, not just apples.

        Consumers have their choice of players. If they don't like Apple they can buy a Zen or a Rio, etc. Apples DRM is more 'fair' than 'renting' the songs from a service like Napster..then you really do 'lose' your music, but not when the player dies, when your account expires or isnt paid.

        Is that 'fair'?

        Caveat Emptor. Its all fair if you bother to read the fine print.
        pir8matt
      • umm, what are you talking about?

        First of all, I put music from amany sources on my iPod. Next what membership? My music is in iTunes which resides on a computer. if my iPod dies, I can put the music on another iPod.

        I can also burn my music to a CD if I desire.

        You, sound like you've never actually owned (or used) an iPod.

        get your facts straight.
        CMKRNL
      • archive it

        you are allowed what, 5, "systems" for that music? and im sure not ALL music on a persons unit is from iTunes
        also, the acc can be recorded and put into mp3 format.
        if you can see it you can record it. if you can hear it you can record it
        richvball44
      • iTunes membership?

        What are you talking about? There is no iTunes membership. I've never paid a dime to iTunes except on the rare occasion when I purchase a single song from them. However, if I choose to uninstall iTunes from my computer, I can no longer play those songs on that computer. Even then, as long as I keep my iPod, I can continue to play those songs that way. (On another note, I can start playing them again on the computer - provided I haven't deleted the files - by reinstalling iTunes and providing my email address, aka iTunes ID, and iTunes password in the newly installed software.)

        You [i]can[/i] take your music elsewhere (i.e., import it into other MP3 players), though it's not as easy as copying or moving the file. iTunes allows you to copy your songs to a CD (in CD format), which can be then ripped back to a true, DRM-free MP3 format using another utility. Granted, it'd be nice if it was less painful, but it IS possible.

        As for your statement about the failure rate of iPods after warranty expiration, my father has had his 2nd generation iPod for several years, and it's still working fine. He hasn't even had to replace the battery - which, contrary to the opinion of a lot of less-informed people (*ahem*), CAN be changed by the consumer.

        Oh, and if your (as opposed to you're, which is usually understood as you are) iPod dies - or even your computer hard drive, for that matter - you [i]don't[/i] lose your music. By design, either serves as a backup device for the other. Also, you can do the smart thing and create regular backups of the personal files on your computer (including your iTunes music) to an external hard drive, providing yet another redundant system.

        Like others have said before me, you should know your facts before making a fool of yourself by spewing your overactive imagination through your fingertips.
        Zeppo9191
    • The betrayal is on the way. Trust me.

      You ask if the customer feels betrayed. It's relatively early in the game. Most customers are on their first iPod and just beginning to amass their music collections from the iTunes Music Store. Today, they don't feel betrayed because they've yet to experience the cost of buying into a proprietary system. But, when they decide that they want that new cool music phone from Palm, or those Oakley glasses that can play music, a central home audio system, or that Chevy Cobalt with the MP3 player in it, and they find out that their music purchases are useless there, they will feel betrayed. To buy an iPod, you have to be a bit of music enthusiast first. It stands to reason that your enthusiasm for music will lead to adoption of other playback products.
      dberlind
      • Chevy Cobalt

        The cobalt has a stereo minijack. A walkman from 1982 would be 'compatible' with it.

        No one who buys an iPod would ever buy a Chevy anyway. Ugh.
        pir8matt
      • I use a central home music system

        Works fine with iTunes. There are quite a few that work with iTunes. There are even a few that have an iPod dock built into them.

        you need to get out more and look into some of the systems - from Sonnance (good gear) to Roku (more good gear) and everythign in between.

        Won't comment on the cobalt thing. But there's enough choices out there and enough ways to work around any limitations, that consumers probably won't feel betrayed any time soon.
        CMKRNL
        • The catch

          Interesting point you make.... .quite a few that WORK WITH ITUNES or that have an IPOD dock built into them. Since when should I have to use ITUNES or an IPOD to play the music I've purchased? How about if my music simply plays anywhere without docks, jacks, or connections to computers that have to run iTunes?

          db
          dberlind
          • Your hitting the nail pretty squarly

            The way Apple is working things, the day will soon be forgotten where you purchased your music and it played anywhere anytime on any hardware that was the same format as the music was purchased in. One tape fits all tape decks; one CD fits all CD players. Sure, times move on, but as we take forward steps there are clearly more then a few who do not get the wake-up call that they are being cornered into a hardware/software combination that?s primarily to Apples benefit, not the consumer.

            And your right, its all cakes and ale right now for the person working with their ipod all happy and cool as its smooth sailing for most right now; check in again in about 5 years when you see a competing product that?s much better for less money, and its going to happen, then you might feel the Apple bite back.

            If Microsoft had of done this you would sure hear the crying and wailing about Bill Gates cooking up another monopoly. It makes no sense to complain about one 900 pound gorilla living in the neighborhood when your already feeding a 450 pound ape that?s trying to bulk up so it can take over its own corner of the neighborhood.
            Cayble