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UMG decides to vent its frustrations in public.

In August, Apple Inc. publicly denounced NBC Universal's request for a "dramatic price increase" in its TV content which it attributed to the company's split from iTunes.

Now Vivendi's Universal Music Group (UMG), which holds a 20 percent interest in NBC Universal, has some harsh words of its own for Apple.

Vivendi Chief Executive Jean-Bernard Levy spoke to reporters at a gathering of French media journalists. "The split between Apple and (music) producers is indecent ... Our contracts give too good a share to Apple," said Levy.

UMG, the world's largest record company, gets approximately 70 cents out of iTunes 99 cent download price, or €0.70 of the €0.99 download price in Europe.

Vivendi's Levy also stated that he would like to see a differentiated pricing system, which would give record companies flexibility to make hot releases have a higher premium in costs, with older classic content being available at lower prices.

Vivendi currently has a month-to-month contract with iTunes, after it declined to renew its former year-long contract. Vivendi has not publicly stated whether it will ditch iTunes entirely, but it is in talks with other distributors.

The company has moved a large amount of its music library onto the ad-sponsored free download service, SpiralFrog, however.  SpiralFrog, which just officially launched this month, offers DRM protected tracks at no price, possibly undercutting the sales of iTunes tracks which carry Apple's proprietary DRM format.

Apple has not publicly responded to Vivendi UMG's comments.  UMG's content is currently still available for download at iTunes.

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Love this article.
By gochichi on 9/25/2007 8:43:17 AM , Rating: 4
I love it when a huge company makes a jerk-arse move like this and I get to read about it. They've fully earned the negative publicity. How the heck is .70 for a copy of a massively popular song not enough?

I like that Apple has the dollar-song idea. If a song is really popular, they'll make more money b/c they'll sell it more times. If a song is obscure, I can still afford it because it's a flat rate.

Thugging Apple around is not a good move at all here. I have no interest for new music, but iTunes has is down just right... it's so simple and easy to blow a little bit of cash and compliment and fill in the gaps in your music collection with them. It's entirely too expensive as it is, but at least it's super simple. Vivendi needs to go fry monkeys.

It's magic 70 cents (many many times over)... you give me nothing, I give you 70 cents... who other than corporate brats would complain about this?

It would be damn cool for Apple to start producing some of its own records... 50 cents to Apple, 50 cents to the artists. Just cut the money grubbing middle man right out of the equation. It's not like there's not room for a different kind of record label... would actually be nice to listen to something new that doesn't blow.




RE: Love this article.
By TomZ on 9/25/2007 9:03:12 AM , Rating: 4
The problem with flat-rate pricing is that it nowhere optimizes revenue and profit. The fact of the matter is that many consumers will pay more for certain songs than others. With flat-rate pricing, not as much money is made from popular songs as there should be since they are underpriced, and not as many downloads of less popular songs are sold because they are overpriced.

Think about other industries. Should books be flat-rate priced? How about cars? Movies? CDs? Businesses in those industries understand the benefits, and consumers have no problems with it either.

Flat-rate pricing is only beneficial for companies like Apple who want to keep their store software simple and not have to deal with complex pricing.


RE: Love this article.
By Proteusza on 9/25/2007 9:06:43 AM , Rating: 3
The problem is that less popular songs wont drop in price.

More popular songs will simply raise in price, creating the tiered system you so badly want.


RE: Love this article.
By TomZ on 9/25/2007 9:37:37 AM , Rating: 2
How do you know that? If less-popular song prices are not reduced, the situation would just be like today - fewer people will purchase them than otherwise would if the price was dropped. Why would a record company do that?

Look, in the end, record companies are going to find the sweet spot on the price-vs-quantity curve where total profits are maximized. iTunes doesn't allow them to optimize pricing in this way, and is thus needlessly restrictive.

Jobs presents himself as a folk hero bravely fighting record company attempts to raise prices. But that is pure PR spin. Jobs is optimizing Apple's profit at the expense of the record companies. The consumer is no more important to him as they are to other companies.


RE: Love this article.
By mdogs444 on 9/25/2007 9:39:15 AM , Rating: 1
They wouldnt need to drop the prices.

The point is that when they release non popular cd's, there is a production and shipping cost with them. Therefore they need to sell to recoup their losses on that product.

In the digital world, they are losing nothing if someone doesnt purchase it because there are no costs associated with producing the single mp3 file that is just being copied.


RE: Love this article.
By TomZ on 9/25/2007 9:43:15 AM , Rating: 2
But the record company makes zero on a non-purchase, right? Therefore, if they lower the price to the point where people will start purchasing it, then they make more money than they would have if they didn't lower the price, right?


RE: Love this article.
By mdogs444 on 9/25/2007 9:47:39 AM , Rating: 3
Whether the song was .99 or .50, would you really pay for it if it was something that you didnt really like that much?

Same goes for...

If it was something you really really wanted, are you going to seriously complain that you have to pay $2 instead of $1.

After all, its only music for god sake...a form of entertainment. Its not like were in a depression and they are doubling the price of a gallon of milk.


RE: Love this article.
By TomZ on 9/25/2007 10:01:53 AM , Rating: 2
There is no doubt in my mind that standard price-vs-quantity applies to music downloads, like it does to nearly everything else sold in our economy. More people will buy a song if it were priced at $0.50 compared to $1.00 compared to $2.00.


RE: Love this article.
By mdogs444 on 9/25/2007 10:05:28 AM , Rating: 2
In some cases yes - but when you go into a best buy, do you browse through the budget CD items in hopes that you may find what you want? I dont because chances are there is nothing.

I guess to me its a glass half full/half empty deal.

I would rather use the old method of $.99/song because most things i would download would be on the more expensive side.


RE: Love this article.
By acer905 on 9/25/2007 10:28:50 AM , Rating: 2
The bargain bin is the only place i look. But then thats usually the bargain movie bin, unless i am getting a cd for someone else. But the point is, i won't buy some things when they are new because i feel that they aren't worth the "new" item price, however once they get marked down i would get it because the price fits the value i feel it has. Thus, the bargain bin is the place to shop.


RE: Love this article.
By mdogs444 on 9/25/2007 10:34:22 AM , Rating: 1
I can appreciate a person who values looking for bargains before paying full retail.

However, not everyone is like that - me for example. I pay $200 - $350 for a single pair of designer jeans because those are what i like, and what i feel i want to spend money on. So when comparing an $8 cd to a $13 cd just doesnt make a difference to me.


RE: Love this article.
By TomZ on 9/25/2007 10:42:47 AM , Rating: 1
quote:
I pay $200 - $350 for a single pair of designer jeans because those are what i like

Please tell us you are kidding about that... :o)


RE: Love this article.
By mdogs444 on 9/25/2007 10:48:04 AM , Rating: 1
Nope. Love my True Religions, Diesels, Rock & Republics, William Rast.

Sorry, Im a fashion freak i guess.


RE: Love this article.
By Vanilla Thunder on 9/25/2007 11:11:40 AM , Rating: 4
quote:
Nope. Love my True Religions, Diesels, Rock & Republics, William Rast.

Sorry, Im a fashion freak i guess.


Is it because these ridiculously priced jeans successfully accentuate your thunder?

Vanilla


RE: Love this article.
By acer905 on 9/25/2007 10:45:54 AM , Rating: 2
... not to sound mean but... What the hell? Now that i got that exclamation out, i can actually speak rationally. I honestly can't understand how someone can actually allow themselves to spend that much on pants... May i ask what is special about them? (i don't know if i've ever seen any so this is pure curiousity) Is it a special fabric? color? or what?

But back to your point, if you are the type who is spending that much on pants then i will agree that the difference in cost between different cd's obviously isn't a big deal.

Oh, can i ask what type of car you drive? again just curious.


RE: Love this article.
By mdogs444 on 9/25/2007 10:49:58 AM , Rating: 2
I drive an 02 Audi A4 for winter and a bmw 328i coupe in summer.

I 27, dont come from alot of money, but did well in college and worked my way into a directors role in IT for a large non profit hospital system.


RE: Love this article.
By acer905 on 9/25/2007 11:04:22 AM , Rating: 2
Okay, well you can spend your money however ya want, but if i had the ability to spend that much on pants i'd be wearin em in the cadillac xlr i'd be driving


RE: Love this article.
By mdogs444 on 9/25/2007 11:09:06 AM , Rating: 4
I dont like american cars - bad experiences with them. besides, spending $300 here and there isnt like spending $80k on a car.

But heres what