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Music Media The Almighty Buck Businesses The Internet Apple

Jobs Resists Music Industry Pressure 634

Drew writes "Steve Jobs is opposed to raising the price of online music sales, calling the music industry greedy, and implying that price increases will bring about more piracy." From the article: "It may not seem like it, but it has been more than two years since the launch of the iTunes Music Store, and that alone has the music industry brimming with hopes for price-adjustments. They also don't buy Jobs' argument that a price increase will result in more piracy, but probably not for the reasons we might assume. I've long been of the conviction that piracy is not nearly as large of a problem as the RIAA makes it out to be." Also covered at Macworld.
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Jobs Resists Music Industry Pressure

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  • What? (Score:5, Insightful)

    by trevordactyl ( 908770 ) on Tuesday September 20, 2005 @01:57PM (#13606233)
    Am I missing something? They're going increase the price of songs so you're paying pretty much the same price as a cd to have it in a proprietary, non-portable format with no artwork and nothing tangible? What benefit would people be getting from the iTunes music store at that point, exactly?
    • Re:What? (Score:3, Informative)

      by RoadDoggFL ( 876257 )
      No, they're not going to raise prices so you're not "paying pretty much the same price as a cd to have it in a proprietary, non-portable format with no artwork and nothing tangible."
      • Who else misses real honest to god albums? Yes, of the vinyl record variety. You get some incredible artwork (sometimes the best [], sometimes the worst []), plus a full listing of lyrics, and often a story or two about the meaning of a track or how it was created. Moreover, you got analog sound at its best. Don't get me wrong, digital is fantastic, and I surely cant tell the difference between good analog and good digital any longer. But try this today. Crank up that old turntable, grab a your favorite vinyl o
        • Why, I bought some the other day! I have a record player right beside my monitor here, and I have records released in the oh-so-distant year of 2005 . . . in other words, don't lament the death of vinyl yet! For exactly some of the same reasons parent notes, vinyl is enjoying a bit of a comeback. Two of my newer ones (Sloan's 2003 "Action Pact" [] and ...Trail of Dead's 2005 "Worlds Apart" [] have some nicely on-par-with-oldskool artwork throughout, and at least, they're far beyond what I would have gotten wit
    • Re:What? (Score:5, Insightful)

      by American AC in Paris ( 230456 ) on Tuesday September 20, 2005 @02:28PM (#13606569) Homepage
      Yes, you are missing something. Several somethings, in fact.

      Many people see a benefit in being able to just push a button and have their music right freakin' now. They don't particularly relish the idea of getting up, driving down to the mega mart or strip mall, digging through the racks in the hopes that the album they want is there, waiting in line to pay, and driving back home just to get a stupid song. Why jump through hoops when you can get it now for the same price?

      What if all you want is one song? Heck, what if all you want is five songs off a single ten-track CD? Is it still of great value to you if you're spending twice as much for something you're only half interested in?

      Many people don't give a rat's ass about album art, four-color glossy lyrics inserts, a video of the band brushing their teeth before bed, special offers from RecordClubInternational and all that. Many people don't even care about having the physical CD; in fact, many people would rather just not have another piece of plastic cluttering up their space. If all you want is music, there isn't much value in yet another jewelcase loaded with features you'll never use.

      Finally, CDs aren't exactly portable formats anymore--go take a look at some of the caveats listed along the bottom of the CDs at the store, especially pertaining to playing audio CDs on a computer, especially pertaining to non-Windows computers. At least with iTMS, you can burn your music onto a completely unprotected audio CD. Yes, this is suboptimal for the gold-plated audiojack crowd, but it works just fine for those of us who are listening on car stereos, $30 earbuds and computer speakers.

      iTMS ain't perfect, but to be perfectly frank, it's miles ahead of pretty much any other mass distribution model out there today, CDs included. For the typical music listener, there's little reason to get a CD instead of getting a song off iTMS.

    • Re:What? (Score:3, Insightful)

      by nine-times ( 778537 )
      For one thing, as good a deal as iTMS is for the big record companies (supposedly, despite having fewer costs and charging nearly the same prices, they give the artists an even smaller cut), it's also a big threat. They record companies have long justified their large piece of the pie by the fact that the cost of distribution was too high for an individual to fund.

      Online distribution changes that; distribution costs are rock-bottom. Many of those in the record industry probably felt bullied into the iTMS

    • Re:What? (Score:3, Interesting)

      You gain granularity in that you can buy only the songs you want. You gain instant gratification in that you can get the song immediately without going to a store. You gain selection since many songs available in the iTunes store are not available in most record stores. Also, your comment about album art is no longer correct. Most albums sold there come with the artwork, and some with music videos. I'm also not sure about price. In some cases the iTunes store costs more and in some less than buying the phy

  • Paradigm Shift (Score:2, Insightful)

    by ballsmccoy ( 304705 )
    There needs to be a shift in paradigm. The simple fact of the matter is that older people have paid time and time again for the same music. They bought it on LP, Cassette, CD, DTS Disc, DVD Audio etc.

    Sure, something fundamentally needs to change with the record companies and their formulaic approach to building bands, instead of finding real talent out there, but that is a different argument.

    The fact of the matter is, I should be able to rip my CDs, and purchase music online for whatever price, then I am on
    • Re:Paradigm Shift (Score:4, Interesting)

      by jagilbertvt ( 447707 ) on Tuesday September 20, 2005 @02:04PM (#13606302)
      And exactly what would be the incentive for them to release newly remastered recordings if they can't recoup the costs (let alone make any profit).
    • Re:Paradigm Shift (Score:4, Insightful)

      by soft_guy ( 534437 ) on Tuesday September 20, 2005 @02:10PM (#13606348)
      I remember reading an interview with one of my very favorite artists where she said something along the lines that digital music is theft.

      And I thought to myself, that if she saw me listening to her music on my iPod she's probably be angry with me, but how many times did I buy the same album by her? I could actually count 4 times: LP, Cassette, CD, remastered "special edition" CD. The only records of hers I haven't bought more than once are out of print.
    • Re:Paradigm Shift (Score:4, Insightful)

      by ericdano ( 113424 ) on Tuesday September 20, 2005 @02:16PM (#13606416) Homepage
      You could always buy into the subscription model of music. That is what it sounds like you want.

      I find I like the original recordings better mostly. It's like Black and White movies. The artists work with whatever medium they had at the time, and got it to sound (or in the case of B&W movies, look) the way they wanted, and that was that.

      I'm sure that the Beatles could have done some funky ass stuff with Dolby Surround. Lucy in the Sky with Diamonds could have been tripped out big time. But they didn't have access to it. So....why would I want a DTS5 channel version of it? Did John help remix it? No.

      I do like my classic jazz remastered. But anything past like 1965 or so should be left alone.

    • Re:Paradigm Shift (Score:5, Insightful)

      by Zemplar ( 764598 ) on Tuesday September 20, 2005 @02:22PM (#13606513) Journal
      "I SHOULD BE ABLE TO FREELY DOWNLOAD THE NEW VERSIONS as they represent a more accurate representation of the recording I purchased the rights to hear."

      Just like you should have the rights to download OS or applicaiton updates forever? If you weren't happy with your music choice at the time you should not have purchased it, simply because it's improved later does NOT give you the right to receive a free upgrade.

      "How come no one has ever brought this up?"
      Because it is a stupid idea.
    • Re:Paradigm Shift (Score:4, Interesting)

      by OS24Ever ( 245667 ) * <> on Tuesday September 20, 2005 @02:48PM (#13606781) Homepage Journal
      I SHOULD BE ABLE TO FREELY DOWNLOAD THE NEW VERSIONS as they represent a more accurate representation of the recording I purchased the rights to hear.

      yes because we all know bandwidth costs are free, and no one would try to download their same song every morning because they want to make sure they have the latest 'version'
  • by squison ( 546401 ) on Tuesday September 20, 2005 @01:57PM (#13606238)
    Maybe they could cut costs..but, oh, I don't know.. hiring less lawyers to sue their customers.
    • by ericdano ( 113424 ) on Tuesday September 20, 2005 @02:20PM (#13606476) Homepage
      What Apple should do is start it's own label. They should buy Apple (the Beatles UK company), or partner with them, and have artists who would produce music on CD through Apple (UK) and via iTunes (Apple).

      I think the whole music industry needs a shaking up, and a Apple + Apple thing could be the key. Music, done right. Supporting the artists who make the music.

      • They are... (Score:3, Insightful)

        by ciroknight ( 601098 )
        ..kinda. iTunes lets anyone who makes music submit their music to iTunes database now. This really cuts out any kind of middleman, and the people who want to hear music, get the music they want.

        Of course, becoming an actual record label might not be a good idea. First of all you have legal issues with Apple (I doubt Apple could afford to buy Apple Records), then you have the "expected" crap that artists get; the cars and the image and all of that junk. Then you have to fight with MTV and the RIAA to get
    • by Smidge204 ( 605297 ) on Tuesday September 20, 2005 @02:22PM (#13606515) Journal
      Don't be silly! Their legal department probably has a better cost/earning ratio than the rest of their operation!

  • Apple team w/ Google (Score:5, Interesting)

    by Ingolfke ( 515826 ) on Tuesday September 20, 2005 @01:58PM (#13606246) Journal
    Apple should partner w/ Google and the recently announced Google Wi-Fi service []. Two power houses, major distribution and mind share, not to mention the pile of cash they're both sitting on. Oh and they'd be getting free advertisements w/ 2-3 combined posts per day here on /.
  • by bgfay ( 5362 ) on Tuesday September 20, 2005 @01:58PM (#13606247) Homepage
    In fact, let's really show those greedy bastards and set the per song price of an iTunes download to twenty-five cents! That way, downloading an album would actually be cheaper than buying the jewel box.

    You go, Steve!

    Um, he is talking about lowering the prices, isn't he?


    Never mind.
    • The music industry can save millions by not marketing any artist mainstream. Let's just put every artist's name out there in plain ascii. Not even album covers. And let the world decide what's good music.

    • Uh, last I checked, Apple wasn't registered as a 501c non-profit. He pays most of the 99c right back to the record companies - he could only lower the price a few cents before Apple was taking a direct loss on every song (even without figuring in development costs, etc). Unless, of course, the record companies agreed to reduce the price they charge Apple.
  • SONY Walkman (Score:3, Interesting)

    by 2.7182 ( 819680 ) on Tuesday September 20, 2005 @01:58PM (#13606251)
    There actually was an issue that wasn't totally different with the SONY walkman. Back then the record industry was concerned about people taping albums and there is a story about it in the NY TIMES magazine around 1981, but it never mattered.
  • I couldn't agree more, and I'm sure most of the /. users agree as well. They are just plain greedy and there is nothing that will ever change that. Money makes every person on the planet greedy, it can make anyone evil. I hope Jobs succeeds at rejecting their pressure.
  • by screevo ( 701820 ) <screevo&screevo,com> on Tuesday September 20, 2005 @01:59PM (#13606260) Homepage Journal
    The idea that the prices of music should go up is ludicrous. There is a site out there called AllOfMP3 [] that charges a nominal fee based on the file size, and it allows you to change the format and bitrate of files you download. It is, quite possibly, the most sophisticated online music store out there. I can get a full album for 1.10$. Since the site operates out of Russia, Russian copyright applies.

    It's revolutionary, and it's a model that iTunes could stand to look at. Never will I pay 99 cents a song again.
    • by Rude Turnip ( 49495 ) <valuation&gmail,com> on Tuesday September 20, 2005 @02:04PM (#13606297)
      Allofmp3 is *legal* in Russia, but if you look above the law, are the right people getting their due compensation? And no, I don't mean the "right people" in the legal sense.
    • by squiggleslash ( 241428 ) on Tuesday September 20, 2005 @02:16PM (#13606411) Homepage Journal
      Well, yeah. The Russian Mafia certainly have fewer start-up costs involved in the production of music, and they can always supplement their income from protection rackets, "borrowing" the appropriate equipment, etc. Essentially, for them, it's a matter of buying (or borrowing) a $10 CD, and ripping it, and then running the web servers.

      iTunes on the other hand has to pay record producers rather than buy a one-off $10 CD. Those record producers have to spend large amounts of money on studios, recording equipment, engineers, and, well, artists too. And Steve Jobs can't just "borrow" money from the local convenience store if he runs into problems.

      I'm sure there's stuff to learn from AllOfMP3 as there is any music service. Sources of funding, and hence pricing decisions, however, are not one of them.

      • by DennisZeMenace ( 131127 ) on Tuesday September 20, 2005 @03:21PM (#13607232) Homepage
        Those record producers have to spend large amounts of money on studios, recording equipment, engineers, and, well, artists too.

        I'm appalled there are still people who believe in that myth. I know bands who recorded their albums in near-pro quality for a few thousands dollars. Studios, equipment and engineers are only expensive if you want them to be. For example, if you need to use computers to pitch-correct your vocals because your fake so-called "artist" can't sing (that's 90% of the shit you hear on radio). Record producers and other middlemen get way too much control and too much credit for the work of artists.

    • Why don't you just pirate the music? The artists would get the same amount of money that way, and you wouldn't have to worry about who in Russia is getting your money.
    • Since the site operates out of Russia, Russian copyright applies.

      But if you're in America, then American copyright applies. So if a song is owned by a copyright holder in America, and they don't give permission for Allofmp3 to distribute a song, and you download it in America, then don't complain when a court summons appears through your letterbox.

      Is Russia part of the Berne convention?
  • by MarkEst1973 ( 769601 ) on Tuesday September 20, 2005 @01:59PM (#13606263)
    and if what Jobs says is accurate -- that the record companies make more profit from an iTunes song than physical media -- then yeah, I'd tend to agree that they're being greedy.

    As the price of reproduction drops, the price of the item should drop correspondingly. At least that's how the economic theory goes. Profit margins drop but profits are made through bulk sales, much like today's commodity ethernet cards and memory chips. It allows for many companies (or artists) to create a product, spurring competition, providing choice. All of this is good for the consumer.

    Yeah, the RIAA is still trying to stick it to us.

    • The problem is that you're a few steps behind the logic curve on this issue*. I shall try and illustrate it for you:

      In the beginning, music was tied to a chunk of plastic. Then, the plastic was made optional and you could buy it online (with negligible distribution costs)... but to avoid gutting the existing plastic sales, the prices were fixed similarly.

      There was an initial resistance to bits vs plastic because everyone thought the real cost was in the pressing and printing and cover art... but that's fa
    • by Znork ( 31774 ) on Tuesday September 20, 2005 @02:38PM (#13606670)
      "As the price of reproduction drops, the price of the item should drop correspondingly. At least that's how the economic theory goes."

      That's how the economic theory goes in a free market. Do not confuse the intellectual monopoly industries with free markets.

      For a monopoly market, the price does not drop. It rises to follow slightly below the pricing point at which consumers can no longer afford the product. When production costs fall, great, more profit or money to spend on marketing. When people purchase more, for example, due to marketing or rising disposable incomes, raise prices until sales slow again. Use new money for profit or marketing. Rinse. Repeat.

      As long as intellectual monopoly laws interfere in the free market their prices will simply never drop. That's simply an unavoidable economic consequence of these legal constructs.
    • "As the price of reproduction drops, the price of the item should drop correspondingly. At least that's how the economic theory goes."

      What economic theory is that?

      Given infinite supply to a market (which is the case here, unless supply is artificially limited -- i.e., only the first 1000 people can download each day), the only pressure on price is demand. Recording companies spend tons of money on marketing to increase this demand. Cost of goods sold has absolutely nothing to do with price -- only wit
  • by kosibar ( 671097 ) <slashdot@tene[ ] ['blo' in gap]> on Tuesday September 20, 2005 @01:59PM (#13606264)
    I never bought a song on iTunes - I've gotten them all for free with Pepsi caps.

    I don't usually drink Pepsi, but when I see those yellow caps, I tip the bottles, find a winner, then get a Pepsi (instead of the Coke I would buy otherwise) and get my free song.

    So I think this is in response to pressure from Pepsi. If you pay more per song, you'll be more likely to buy a Pepsi for a chance to win a free download.

    It's a conspiracy, I tell you!
    • "I never bought a song on iTunes - I've gotten them all for free with Pepsi caps. I don't usually drink Pepsi, but when I see those yellow caps, I tip the bottles, find a winner, then get a Pepsi (instead of the Coke I would buy otherwise) and get my free song."

      No kidding. I got my 200 song credits in this past Pepsi promo. It helped that there was also the chance to win an iPod with each point as well throughout the duration of the promotion.

      However, with these Pepsi promotions, I found myself having to
  • Fake Piracy (Score:2, Insightful)

    Everytime I hear of music piracy, I always think of the quote that I believe Justin Frankel said in relationship between Napster and iTunes. The basic philosophy was that the music industry really screwed up by not catching Napster soon enough. By the time they offered the pay for download services, people already knew they could download free music. This meant that every time someone bought a song from iTunes, in the back of their head they were saying "I can definitely get this song for free somewhere.
  • I remember when... (Score:2, Insightful)

    by viewtouch ( 1479 )
    I remember when it didn't used to be a crime to listen to music.
  • WTF!?! (Score:5, Insightful)

    by Karma_fucker_sucker ( 898393 ) on Tuesday September 20, 2005 @02:03PM (#13606294)
    Job's original vision of 99 cents a song and $9.99 for an album didn't last long, with the price of albums spreading out to $11.99 and $14.99 in some instances

    Ok. First of all, I don't know exactly what they're talking about - online or Pressed CDS. But, selling a song for $.99 or $9.99 an album WITHOUT HAVING TO PRESS A CD, MAKE COVER ART, have a jewel case, and truck it to the stores, is pretty steep. I was part of a survey a couple of years ago asking "how much would you pay to download a song?" I answered, "$.25" Asked why, I answered, "Because the music publishers do not have any media costs other than bandwidth and royalties. Excluding the royalties (which are a constant), bandwidth is MUCH cheaper than jewel cases, CD, physical distribution costs (trucking of the CDs, etc...) and the artwork."

    In short, I think Jobs is right on the money here.

    • Re:WTF!?! (Score:5, Insightful)

      by soft_guy ( 534437 ) on Tuesday September 20, 2005 @02:14PM (#13606385)
      The music companies aren't even paying for the bandwidth! Or paying to administer ITMS! The biggest problem they have is signing all the checks Apple sends them.
    • Re:WTF!?! (Score:3, Interesting)

      by spadefoot ( 908522 )
      I agree wholeheartedly. That's why I use []. The albums are all indie label, the songs cost a little over $.25 each (if you buy the higher sub)and are in high-bit-rate, non-DRM'd .mp3 format. I've complained to my friends and co-workers for years that $.99 a song is a rip-off, not a "Good Deal". I buy all my music from Emusic now, and couldn't be happier with it.
  • Maybe naive (Score:5, Insightful)

    by 1nhuman ( 597328 ) on Tuesday September 20, 2005 @02:04PM (#13606301)
    But why not cut out the middle-man? We don't need "the music industrie" for on-line music do we?

    Artist -> Online shop -> Customer makes more sense to me.

    The online shop (iTunes for instance) could take care of the marketing as well.
  • It's clear that the RIAA doesn't want Apple/iTMS to be dominant... and to be able to squeeze every last penny from their victims^Wcustomers. How best to get both of these to happen? Glad you asked:
    1. Reduce popularity of iTunes w/r/t the othery crufty online music stores
    2. Make licensing complex so that profits can be maximized (ie, now you can pay $X for a limited-license piece of music, or $X+Y for the same song, "full rights enabled")... note these are the same tricks used by software industry giants (MSFT,
  • by Cr0w T. Trollbot ( 848674 ) on Tuesday September 20, 2005 @02:09PM (#13606332)
    "What does it do?"

    "It lays golden eggs."

    "Do we own the goose?"

    "No, but we get half the eggs as long as the goose uses our nest."

    "We ain't got to do nuthin' and we still get half the eggs?"


    "But we don't own the goose."


    "I say we kill it!"

    - Crow T. Trollbot

  • While I disagree with any price-raising for iTunes tracks, if they do proceed to to raise the price, they should at least upgrade the file encoding from 128kbps to 192kbps or more.
  • by teutonic_leech ( 596265 ) on Tuesday September 20, 2005 @02:10PM (#13606344)
    Just look at the current spike in oil prices! Yes, I know that we are approaching peak production and such and that the days of cheap oil are over, but the current spike in gasoline prices is just a matter of pure greed...
    The seller of a product will usually set the price of a product to a level that he thinks the market is able bear without turning to alternatives (theft, competition, abstinence, etc.). If the good ole' boys over at the RIAA think that $9.99 for a downloadable album is not enough (and trust me - they do!) then they'll explore every nook and cranny if they can get away with charging a few bucks more! Businesses have no sense of 'fair', 'good', or 'evil' - they produce a product and will try to squeeze as much profit out of their customers as possible. If the profits are less than expected than they will try to 'instill demand' (think advertising and other types of brainstorming) to somehow part Joe Shmoe with part of his earnings.

    At the end of the day, it's a voting game - they rise the prices, we go back to piracy. Trust me, economic consequence is the only language they understand. Companies are by default pathological entities that have no compassion, vision (in most cases at least), remorse, or concience. It will squeeze you for all you got - that's why it is a commercial entity! The democratic mediator is the consumer and obviously most of the responses on this thread (it just started and I'm an early poster, but let me just guess ;-) will be against a price hike. If nothing else the RIAA is looking in the wrong direction - as competition brews I believe that these prices should come down, not go up. After all, there is no physical media involved and selling bags of bites is a great business to be in...

  • The problem I have is that all songs are the same price, which is fixed. Why not allow more variable pricing? I'm sure they can hire a few pricing gurus to figure out the price for each song to maximize profits, based upon numbers of units sold -- this will make them happy.

    What's the advantage to consumers? Lower prices for less popular tracks -- although legacy or hard-to-find tracks might be more expensive.

    If they set the pricing too high, the black market grabs a larger share.

    Price-fixing is n
  • by DrXym ( 126579 ) on Tuesday September 20, 2005 @02:12PM (#13606366)
    99 cents for a track is hardly a bargain when to purchase a full CD costs you 75% - but without any of the rights that go along with owning a physical CD such as being to sell it on.

    And of course for non-chart music, you could probably pick up the actual CD for less just by scouring eBay, zShops or even a sale in a regular bricks & mortar store.

  • He left out (Score:4, Funny)

    by MECC ( 8478 ) * on Tuesday September 20, 2005 @02:13PM (#13606380)
    "calling the music industry greedy"
    Shitheads from the end of that sentence...
  • this is bad (Score:5, Insightful)

    by humina ( 603463 ) on Tuesday September 20, 2005 @02:15PM (#13606403)
    I am going to argue that this is a bad thing. An industry that is controlled mostly by the RIAA will constantly try to control your music with DRM and increased prices. Apple didn't deal the RIAA a blow here. Apple merely bought some time until the RIAA will put pressure on them again. Since alternative distribution and licensing will only come when the music is priced at the levels that the RIAA likes, I think this is a blow to better music, better licensing, and better distribution systems. I said it and I meant it. I think music should be released under the creative commons []. With the itms, all music will be licensed with the most restrictive terms possible.

    I'll probably get modded as a troll for not saying "apple R0X0RZ", but whatever.

  • A friend of mine had a book on producing movies from the library. When visiting her place, I cracked the book open and found an eye opening fact.

    Industry associations like the MPAA (and, I presume the RIAA), take a cut off the top from producers. About half of that cut goes, supposedly, to anti-piracy efforts.

    So, they need to make it look like they're fighting piracy. What better way to get headlines proving you're fighing piracy then to go off suing a bunch of 13 year-olds??/

    Then, of course, there's the fact that, if they can legally squash fair use, then they can ultimately charge and track people for each time they listen to a song. More money for less work. It's almost like printing the stuff.

  • by dougman ( 908 ) on Tuesday September 20, 2005 @02:18PM (#13606447)
    I've long been of the conviction that piracy is not nearly as large of a problem as the RIAA makes it out to be.
    I assume that when you wrote this you were thinking "kids downloading songs" == piracy. I agree that it isn't a huge problem and furthermore believe that it could be proven to increase sales due to the additional exposure to new music, the desire for clean copies and so forth.

    However, organized crime (particularly in Asia, former Soviet Union and now offshore on boats in international waters [read: no law], there is a very large problem. Anything that exists on disc (music, games, software, movies) is subject to theft and distribution. Traditional Organized Crime via physical goods is still more profitable than electronic business.

    I believe the RIAA could make a great deal of headway in its piracy campaign if they would focus attention on the real problem. They would "pick up" the little guys they claim to be the problem and would sway public opinion (who dispise organized crime other than the Soprano's).

    I'm hardly advocating for the RIAA here or suggesting that increasing levels of encryption is the way to go (this will never will work with any media that can be heard or seen imho) but don't ignore the fact that you can find any movie (including ones that have never been released to DVD) on the street in NYC. That guy with the blanket full of discs isn't a small businessman - he's working for organized crime.
  • No worries. (Score:5, Insightful)

    by ryantate ( 97606 ) <> on Tuesday September 20, 2005 @02:20PM (#13606473) Homepage
    I am sure this is a casual comment by Jobs, because he is in the catbird seat and has no reason to worry. He has the power here.

    What are the labels going to do if they don't like the terms of iTunes music store? Go to another store? No.

    1. No other store has near the volume or reach of Apple's. No one else has the brand recognition or ease of use.

    2. By far the number one music player is the iPod, and only the Apple music store can sell protected music files that work on that player. The labels could try and sell unprotected MP3 files but this seems unlikely.

    So going above 99 cents per track means either convinving Jobs (not likely) or moving music off the Apple music store -- which means lost sales and possibly more piracy. Not going to happen. Jobs is in a great position.
    • Jobs is in a great position.

      Actually, he has the RIAA in a great position. Namely, over a barrel.

    • Re:No worries. (Score:3, Insightful)

      by ultramk ( 470198 )
      So I guess that would make iTMS the Wal-Mart of the online music industry: so far ahead that it not only sets the tends, it makes the rules.

      OK, I can live with that.

    • Re:No worries. (Score:4, Interesting)

      by n8_f ( 85799 ) on Tuesday September 20, 2005 @03:28PM (#13607321) Homepage
      And this is exactly why Apple can't open up their DRM scheme. As soon as they do, all leverage over rights, pricing, etc. goes to the RIAA. If Apple won't raise prices, then the RIAA can switch to someone who will. The RIAA wants the distributors to be the commodity, racing to the bottom, like it has always been. Apple's system turns that model on its head and even forces the publishers to start to compete. Yes, it isn't an ideal system (competition at both levels would be nice), but at least Apple is a benevolent dictator instead of the "let them eat cake" RIAA.
    • Re: Who owns? (Score:3, Interesting)

      by dantheman82 ( 765429 )
      Obviously, there is a battle going on for digital content ownership, involving artists and record labels. Some artists (like mentioned previously []) take the side of consumers while others do not. As some have mentioned, iTunes can allow artists to quite possibly bypass record labels in the long term. For example, on Apple's New Music Tuesday [] (loads in iTunes), Switchfoot was featured with an exclusive track only to be found in iTunes. If they do it right, this could be used to drive sales
  • Wait a second. (Score:3, Interesting)

    by skyman8081 ( 681052 ) <<skyman8081> <at> <>> on Tuesday September 20, 2005 @02:25PM (#13606543) Homepage
    You're telling me that Jobs knows what a Demand Curve is?

    Holy crap. Somebody who actually understands Basic Economics. Never thought I would see that.
  • by Anita Coney ( 648748 ) on Tuesday September 20, 2005 @02:29PM (#13606572) Homepage
    First, iTunes exists purely at the discretion of the music industry. Without "hit" and popular songs from the RIAA dervived companies iTunes would essentially be worthless. The music industry could pull out anytime it wanted and could destroy iTunes.

    Second, the music industry does NOT want iTunes to succeed. Let's assume that iTunes took 50% or greater of the total market of music sold. Why would an established artist re-sign to a label when he or she could simply hire a marketer and sell directly via iTunes and keep more of the money?! iTunes would BECOME the new music industry and the RIAA and its bosses would go the way of the buggy whip manufacturers.

    Jobs and Apple is in a very lopsided relationship with the music industry, and I'm not sure whether either side knows it.
    • The music industry could pull out anytime it wanted and could destroy iTunes.

      Maybe, maybe not. The RIAA has already been convicted of price fixing. Taking all their songs and going home from the number one online music seller might result in some serious legal problems. Forcing price hikes might result in the same for that matter. You might think, "so what the legal system is corrupt anyway" and you'd be right, up to a point. But unlike operating systems people understand increased music prices and

  • Well, it is - but not really. The issue is about control.

    Right now, the RIAA can pretty much dictate terms to a new artist. You want to get into Wherehouse Music stores, Borders and the rest? Then you're going to have to sign a label with us. Sure, you won't get much money, but we're providing this big service for you, right? So you have to take the terms we give you!

    Now along comes the music stores, and the RIAA is hoping for the same thing. Between Napster and WalMart Music and MSN Music (whenever that opens) and Rhapsody and iTunes, if you want your music on their, you're going to have to go through the RIAA who will do the cheerleading, spend the money on advertising, and make you a star!

    Except there's a problem; only iTunes is being used. Oh, sure, there's *some* people using Napster like my Dad (until he got a free Shuffle at a CIO conference and switched to Apple, then all of his music to MP3 format from WMV by reripping the CDs and now he's just buying music from the iTunes store) - but far and away, iTunes is the #1 player, not with monopoly power, but certainly with a huge level of influence.

    Which means that, as more people have portable MP3 players and less have CD players, the shift of power goes from "If you want your music in 5000 stores across the United States and worldwide markets, you have to talk to a big record label", to "Want your music on the iTunes store? Sure - it costs this much, and we get X amount of every CD sold". Apple, for example, could charge people $100 - $200 to get a new band onto the iTunes store (currently, I'm not sure how their deals with Indie bands are), and give them 50% of the profit per song sold after that point. A new band could pretty cheaply get their music distributed across the nation without having a single major publisher help them out - and if they get popular, they can, like the Lascivious Biddies, do their own thing and be profitable, and if they get famous, then even better.

    Which scares the RIAA major publishers to death. As with any major shift in technology (sheet music to player pianos, player pianos to radio, radio to cassette, cassette to CD), sometimes the old winners vanish and are replaced with the new winners. In this case, the RIAA members are hoping to have the same situation as they have now in the future: several online stores that carry their music, with the RIAA as the gatekeepers for getting new artists in.

    But if iTunes is practically the only game in town - a situation that Jobs is helping along with the DRM only working with iPods, and there's nothing on the horizon that's going to replace iPods for the next 2 - 4 years (barring some incredible technological advancement), that puts Apple in a huge position in power. RIAA members can huff and puff about taking their ball and going home and not being on the iTunes store anymore if Jobs doesn't do what they want.

    Except they don't dare. Remember when the iTunes Music Store finally opened up in Japan just a few months ago? You had artists who's publishers weren't putting them onto the iTunes store doing an end-around and doing it themselves. Granted, most artists aren't technologically savvy, but how long would it take for Artist X to hear his label is pulling him off the iTunes store (and all of those iPod potential sales) before they get pissed and threaten to change labels or some such? Maybe one or two isn't a problem - but it could add up.

    So the RIAA is hoping by jacking up the price they can make online music unpopular enough that CD's will be more popular for awhile, until a good iPod competitor can kick Jobs off the top of the heap and make the market more even and they can keep playing the game.

    Granted, this is all my opinion, so I could be wrong. Either way, I'll probably work to listen to Podcasts (which is where I'm hearing new music from thanks to shows like "Coverville" (which got me turned onto a new Tori Amos CD I didn't know I wanted, a Will Shatner singing "Common People" that kicks ass, and a few other tracks), "Insomnia Radio", and a few others), or just support artists directly (like buying songs from thier website instead of a store).

    John Hummel
  • Price fixing? (Score:3, Interesting)

    by Hamster Lover ( 558288 ) * on Tuesday September 20, 2005 @02:44PM (#13606730) Journal
    How can the record companies tell Apple how much to sell their songs for without being guilty of price fixing? The FTC investigated and fined record companies in the past for imposing a minimim pricing system on CDs on such retailers as HMV, I believe.

    Am I wrong?
  • I've long been of the conviction that piracy is not nearly as large of a problem as the RIAA makes it out to be.

    Piracy isn't the big problem. Educated music listeners are the problem now. The music industry can no longer sell 10+ million copies of Britney Spears/N'Sync type garbage, because people have access to many more types of music. Music buying appetities are now fragmented and specialized, which means instead of a label selling a gazillion records of one artist, chart topping artists many not even sell a half-million. The labels have to do more research and advertising than ever and as a result, profit margins are smaller.

    Besides, albums with only one or two good tracks won't sell like before. The music buying public samples the music beforehand and the RIAA hates that!

"How many teamsters does it take to screw in a light bulb?" "FIFTEEN!! YOU GOT A PROBLEM WITH THAT?"