Hot on the heels of Microsoft's deal with Universal Music (a unit of Vivendi) to pay a US$1 royalty on every Zune player sold in exchange for licensing its recordings for Microsoft's new digital music service, Hollywood now wants in on the action.
Why in the world would Microsoft agree to such a dangerous precedent? The obvious reason is that MS needed to get access to the Universal catalog. My favorite (and more dastardly) reason comes from Macalope who claims that Microsoft did it "to try to screw up Apple's business model."
It could have merit. MS knows full well about the iPod juggernaut and just might do something so devious to nip away at Apple. After all, we're talking about the same company that changed the name of the xBox 2 to "xBox 360" just to make it sound more like a third-generation console.
Anyway, now Hollywood is trying to wield some power against the almighty Infinite Loop.
The Financial Times is reporting that Hollywood bigwigs Universal, 20th Century Fox, Paramount and Warner Brothers are asking Apple to change their DRM policies and implement tougher restrictions on feature films sold from the iTunes Store.
After months of discussion, a sticking point has emerged over the studios’ demand that Apple limit the number of devices that can use a film downloaded from iTunes.
The studios want to avoid the experience of the music industry, which has yet to recover from years of illegal digital piracy. Apple must introduce a “new model” for feature film content delivery, said one studio executive involved in the talks.
I'm guessing that Apple still has the upper hand in the negotiations with labels and studios ("fine, don't sell your content to our 70 percent market share") but the negotiations have to be getting tough.
Apple should hold firm on their existing DRM structure and play hardball with the greedy labels and studios on fees. The labels and studios feel like they're owed something when they constantly hear about the success of the iPod, when in fact it was Apple who innovated and single-handedly saved the music industry from collapsing under the weight of illegal file sharing.
Is it me or is anyone getting tired of hearing about the labels whining about their commission from iTunes? iTunes revenue is found money for them. If they don't like it, they should build their own online distribution system and do it themselves. Which is probably what Apple is telling them.