King Of The iPods Calls Record Labels Greedy
Friday September 23, 2005 @ 04:00 PM
By: ChartAttack.com Staff
When it comes to the business world, Apple CEO Steve Jobs is no newcomer to the public bitch-slap. According to Associated Press, Jobs gave the record industry a stern talking to earlier this week, telling attendees at the Apple Expo in Paris that the major labels were angling to increase the cost of iTunes downloads when their current contracts with the online service ended.
The Applehead isn’t the only one baffled by this move. An across-the-board fee of 99 cents per song has been one of iTunes' biggest draws, convincing millions of online music pirates to live a more law-abiding life. Meanwhile, the labels aren't exactly losing money on the deal, since their chunk of that 99 cents is more than they would make selling a physical CD — what with no manufacturing, storage or shipping costs and less marketing needed.
Realistically, raising the price (which some users already say is too high) can only push customers away, hurting their revenue — the same effect labels saw when CD prices were on a perpetual rise up until the last couple of years. Jobs said the request for a hike "just means they're getting a little greedy." Contracts nearing expiration include those with Sony BMG and Warner.
"Customers think the price is really good where it is," he told the audience. "We're trying to compete with piracy — we're trying to pull people away from piracy and say, 'You can buy these songs legally for a fair price.' But if the price goes up a lot, they'll go back to piracy. Then everybody loses."
Unfortunately, while Jobs may totally be in the right about the record labels' wrong, he also has a business interest in keeping the download price under a buck, catapulting him from the moral high ground. See, its Jobs' job to sell these little things called iPods, about 22 million of them so far, to be exact. It made him about $6-billion U.S., not counting any iTunes profits. You know, iTunes? Which now owns the American legal download market, taking up 82 per cent of it and selling over 500 million songs since its 2003 debut.
An anonymous record label exec told MTV News that the standard price allowed Jobs to "become the Wal-Mart of the internet and he wants to retain that monopoly." The source said the labels simply want the option of variable pricing — an industry norm that basically means charging more money for currently popular music.
The source praised Jobs for spurring a legitimate download market, but said the Apple boss sold his hardware "on the back of our content," and pointed out that Jobs himself has the right and opportunity to adjust the prices of his iPod hardware.
—David McDougall
Friday September 23, 2005 @ 04:00 PM
By: ChartAttack.com Staff
When it comes to the business world, Apple CEO Steve Jobs is no newcomer to the public bitch-slap. According to Associated Press, Jobs gave the record industry a stern talking to earlier this week, telling attendees at the Apple Expo in Paris that the major labels were angling to increase the cost of iTunes downloads when their current contracts with the online service ended.
The Applehead isn’t the only one baffled by this move. An across-the-board fee of 99 cents per song has been one of iTunes' biggest draws, convincing millions of online music pirates to live a more law-abiding life. Meanwhile, the labels aren't exactly losing money on the deal, since their chunk of that 99 cents is more than they would make selling a physical CD — what with no manufacturing, storage or shipping costs and less marketing needed.
Realistically, raising the price (which some users already say is too high) can only push customers away, hurting their revenue — the same effect labels saw when CD prices were on a perpetual rise up until the last couple of years. Jobs said the request for a hike "just means they're getting a little greedy." Contracts nearing expiration include those with Sony BMG and Warner.
"Customers think the price is really good where it is," he told the audience. "We're trying to compete with piracy — we're trying to pull people away from piracy and say, 'You can buy these songs legally for a fair price.' But if the price goes up a lot, they'll go back to piracy. Then everybody loses."
Unfortunately, while Jobs may totally be in the right about the record labels' wrong, he also has a business interest in keeping the download price under a buck, catapulting him from the moral high ground. See, its Jobs' job to sell these little things called iPods, about 22 million of them so far, to be exact. It made him about $6-billion U.S., not counting any iTunes profits. You know, iTunes? Which now owns the American legal download market, taking up 82 per cent of it and selling over 500 million songs since its 2003 debut.
An anonymous record label exec told MTV News that the standard price allowed Jobs to "become the Wal-Mart of the internet and he wants to retain that monopoly." The source said the labels simply want the option of variable pricing — an industry norm that basically means charging more money for currently popular music.
The source praised Jobs for spurring a legitimate download market, but said the Apple boss sold his hardware "on the back of our content," and pointed out that Jobs himself has the right and opportunity to adjust the prices of his iPod hardware.
—David McDougall
posted by Jaedyn at 9:20 PM
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