Music Labels Charge Too Much For Microsoft 366
Bret540 writes "Yahoo is reporting that Microsoft has ended license talks with four major music labels. From the article: 'The paper [the Wall Street Journal] reported negotiations broke down Friday over what Microsoft considered high royalty rates.' How much more can the music labels demand when even Microsoft won't go to market? With other recent developments, one must wonder how long the music industry can keep pushing."
Music Industry? (Score:5, Insightful)
one must wonder how long the music industry can keep pushing.
The editors must mean the greedy recording companies - the music industry itself is not inherently evil, it will outlive the current system and be there for as long humans inhabit this planet.
Where'd that price come from? (Score:5, Insightful)
Seems rather high, considering you still have to pay $1 or more for each song you download, and the song is likely to be encumbered with DRM, and the quality is usually less than a rip from a CD. One would get the feeling the music labels don't really want to sell songs via the Internet...
Never thought I'd ever say this, but... (Score:5, Insightful)
This represents a stunning defeat for the music industry, and combined with Apple's iTMS success, could indicate the beginnings not only of a change in how music is priced, but also of a change in how music is produced, promoted, and distributed - i.e., without the RIAA and its members.
transition of power (Score:5, Insightful)
in a world of cable modems and fiber optics, who controls the music distribution?
the tech companies do
bill gates and steve jobs do
so if their handlers are smart, they will just start signing artists themselves
Too Much?? (Score:5, Insightful)
MS is a software company (Score:5, Insightful)
Of course, I wouldn't be surprised to see MS do everything at a total loss just for the sake of controlling the market.
This is an outrage. (Score:5, Insightful)
Re:Where'd that price come from? (Score:5, Insightful)
The RIAA catches on (Score:3, Insightful)
They're starting to catch on. I suspect that they demanded a share of MSWindows revenue (same as iPod with Apple). Which, IMHO, was the only thing they could do.
Remember, the RIAA is basically just a bunch of distributors. Apple and now Microsoft are taking that role away; with them holding the DRM key to the store the RIAA has little choice but to do business with (and through) them.
Just like the artists have little choice but to do business with (and through) the RIAA. Indentured servitude. "Work for hire." In other words, the Man owns you, suckah, and unless you give good head you're not singing anywhere for the rest of your life.
Karma is such a bitch -- especially on the "comes around" part.
and this means... (Score:4, Insightful)
Well, that is unless microsoft took advantage of that situation and dictated terrible terms, with the message that like it or not, a new distributor is in town.
That's the problem with admitting you are currently in a bad deal while negotiating for another. They come across, on some levels as appearing desperate.
What would it do to iPod sales if microsoft became the leader in music distribution software? Considering the iPod is a cash cow for apple, and microsoft would have to support the iPod to enter the market, would the two of them have to play nice? (I recall reading a theory that apple was hoping to break even on the iTunes music store, if so, then what would the fallout for an MS/music industry from apple's perspective?)
Be careful who you cheer for (Score:3, Insightful)
The basic questions have all been answered, now they're just arguing over price.
The Music Industry wants these services to fail! (Score:5, Insightful)
First, imagine if a service such as iTunes became very successful. For example, 50% or more of all music sold was sold via iTunes. Now imagine you're a successful musician and it's time to resign to a label. Do you sign or do you get a marketer and simply sell your tunes on iTunes and keep the vast majority of the profits for yourself? If any third party online service succeeded, the current music industry would be toast.
Second, the music industry has historically cooked the books, i.e., over reported sales of some artists to hype them or under-reported sales of successful artists to screw them out of royalties. With a third party keeping precise track of every song being sold the music industry loses control. Suddenly they can't "fix" the charts and artists are demanding their fair share. They don't want that.
The third reason is that they want ALL profits for themselves. Why should Apple or Microsoft get some of the profits when the music industry can get it all? Let's face it, they are a monopoly. E.g., you can only legally buy a System of a Down CD from Sony, and no one else.
This refusal to negotiation fair rates with third parties certainly shows that the music industry is doing pretty well. If they were as bad off as they claim they would more willing to open new markets and new models.
Re:Wrong question (Score:3, Insightful)
And pods break, wear out, get lost or stolen, and like phones, get replaced every few years by newer models with cooler features. In a way it's a symbiosis. Pods make people want songs, who need pods to play them, who buy more songs...
Expensive compared to iTMS (Score:3, Insightful)
Compare that with iTMS where it would be the equivalent of buying 72-96 songs per year, with a indefinite period of use, and the right to burn it to CD.
As far as proprietary systems (iTunes or WMA) is concerned it is a tie. No advantage unless you're an iPod fan. iPod market share tells that story.
Makes me wonder if M$ is going to reconsider embedding DRM technology in Vista or Windows Mobile.
Re:Where'd that price come from? (Score:5, Insightful)
New technology threatens the RIAA's control in all three of these areas. Home music studios are becoming more viable. The internet provides a fresh avenue of promotion. The internet is providing a cheap means of distribution.
Now, the RIAA still has quite a foothold in each of these areas, and is looking to maintain control. Distribution is probably where they're most vulnerable. However, as long as "distribution" still means "physical media shipment", their likelihood of maintaining control is much better. It's expensive to produce all those CDs, and difficult to get them stocked at all the various music chains across the country.
If, on the other hand, people become so accustomed to buying music online that physical media distribution becomes semi-obsolete, then the RIAA will have lost 1/3 of their strangle hold on music right there. Musicians will be able to release directly online, and record companies, even if they maintain the production/marketing areas, will find it hard to claim all the profits from sales (which they pretty much do now).
Call me paranoid, but that's my theory as to why the RIAA seems dead-set on sabotaging online distribution.
Re:Where'd that price come from? (Score:3, Insightful)
Because it will destroy their distribution racket.
For a very long time, RIAA members were the only way to market your music to a global audience - this is now changing. Once most people start purchasing music online, they'll realize that they have access to a much larger catalogue than they did before, and that larger catalogue will consist of non-RIAA musicians.
Re:The Music Industry wants these services to fail (Score:2, Insightful)
It's not quite that simple, but I do expect it will happen eventually and the results will be interesting. The thing is that the music industry as it exists now is to some extent predicated on having a number of extremely high-profile artists; these artists get the benefit of the massive promotional push that the labels put behind them. The other artists toil beneath the spotlight until their time comes or the labels drop them. (Obviously indie artists are part of a different industry)
What's interesting is to imagine the online stores leading artists to leave the labels. If that happens, the results will be catastrophic for:
- Music magazines: no more sky-high ad prices paid by major labels
- MTV: no more $100k videos gracing their airwaves
- Record stores: no more high-priced endcap displays and, eventually, no more stores (some indies will likely survive, but Tower and Virgin?)
Because artists who are self-distributing and self-promoting obviously won't be paying for those things.In reality, I expect the labels will adapt and perhaps fall back to the strategy of yesteryear, promoting singles and not albums. It's the distribution chain that will collapse, obviously -- Warner Music Group, for example, not only distributes their major product themselves, but also operates the ironically-named Alternative Distribution Alliance (ADA), which distributes pseudo-indie labels like 4AD, Matador, and Epitaph. They make plenty of money from that, I'm sure, and would like to keep doing so...
Re:When.. (Score:3, Insightful)
This is going to sound harsh, but when you're trying to solve a problem with a compromise, your job is blow everyone at the same time.
Aero
Re:Music Industry? (Score:2, Insightful)
Good job letting your gripes with an organization get in the way of being courteous & civil!
Re:The Music Industry wants these services to fail (Score:2, Insightful)
No. they want CD sales to stop declining.
Artists will sign with whoever gives them the most money. Go to Apple and see how much of an upfront payment you'll get.
Perhaps Apple will spot aniche in the market and cut out the middle man if online music sales become the most popular means of buying music.
Download sales are already taking off and unless you've been asleep you can't miss the fact that more deals are being done every week. If they didn't want these services to survive why are they doing the deals?
Because they feel trapped. They realise their customers want downloaded music. If they don't sell it to them, their potential customers will simply download it anyway. They choose the best deal for themselves.
If they want all the profit themselves, why aren't they selling direct?
Are you suggesting they don't want all the profit for themselves? The problem is, they simply don't have the brand strength to do this. iTunes succeeds because it offers music from everyone. iTunes has market recongnition. Most people don't know who the publisher of their CDs are. Nor do they care. They're certainly not going to go to several different music download sites. And they've never sold direct. The industry isn't set up to do this. They've always sold through record stores.
Single source is not a monopoly (Score:2, Insightful)
A product is not a market.
A monopoly requires a market.
Sony does not have a monopoly on "System of a Down" CDs.
Apple does not have a monopoly on the Macintosh.
Microsoft does not have a monopoly on Windows.
BMW does not have a monopoly on BMWs.
Microsoft did establish a monopoly in PC operating systems, since they eliminated competing products within a market (the desktop PC industry), and prevented the introduction of new competition. Microsoft does not have a monopoly in video game consoles.
If Apple were to gain full control of online music sales, they'd have a monopoly; today there are still several competing products led by powerful interests.
There's also a difference between having a temporary monopoly position (which is common in emerging markets) and acting as a monopolist to destroy competition and create a long term dominating position in a market. Apple is not exercising monopoly control to prevent competitors from doing business.
If Apple began signing exclusive contracts with labels, or if they licensed iPod software to all hardware music player makers exclusive of other designs (excluding competition from WMP or Linux or Sony software, say), then yes, Apple would be a monopolist like Microsoft.
If Microsoft made their own PC, and it was so much better than other PC makers that it cleaned up the market, they would no longer have a monopoly, since they would be selling a product (the WinPC) , not selling within a market (the PC industry). They would, like Apple's iPod, have a very successful product, not a monopoly of a market, since there would not be a PC market.
There is simply no sense in declaring a "monopoly" when a company is the single source of a product. Monopoly means single control, so the word only makes sense in a context where there should be multiple parties sharing control, in a free market. There is no expectation of competition in the manufacture of Xbox, BMWs, iPods, or Rubic's Cubes.
Being successful or having a popular product does not make you a monopolist. Rubic didn't establish a monopoly on the Rubic's Cube, or in hand held puzzle games, despite the fact that it was a hot seller and there wasn't really any effective competing thing with similar sales.
Similarly, Google and Apple both offer popular services/products that don't have much effective competition. But competitors exist, and more effective marketers with better products could compete.
A Monopoly is usually a bad thing in a market, because it distorts the market pressures to innovate and prevents effective competition. Monopolies are useful when competition would hurt consumers. For example in healthcare, transportation or cable TV utilities, competition might end up in service disruption, or providers only choosing to do business in areas that made them money. Governments allow monopolies (or sell the right to be granted a monopoly) in some markets to ensure someone will provide the service.
They are not as greedy as you think (Score:3, Insightful)
IOW, labels are not being greedy. They are just trying to survive in a market where they are about to become worthless. Can you say BYE BYE sony music?