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Print 25 comment(s) - last by Wizard Prang.. on Jul 4 at 9:59 AM

Experts say going up against Steve Jobs isn't a wise move

With the release of the iPhone on June 29th, Apple took a bold step into an industry it has never before been in. Facing stiff competition is something that Apple's been use to doing for a long time now. This week however, Apple faces a surprise turnaround from one of its partners in the online music industry, an area where Apple is the dominant force.

Universal Music Group of Vivendi last week sent notification to Apple indicating that it would not renew its contract to sell music on Apple's iTunes store.  The move comes after much negotiation between UMG and Apple. Unfortunately, music industry experts say that the grip that Apple holds on online music sales is what's discouraging UMG.

UMG has a long list of artists including notable names such as Akon, Rhinna and U2. However, Apple itself packs a punch in the amount of revenue that it brings to UMG. In the first quarter of 2007, Apple's sales on the iTunes store brought in more than 15-percent of UMG's worldwide revenue -- that's more than $200 million USD.

According to unnamed executives, UMG is looking into other sources for revenue, either through other channels or possibly a store of its own. Apple's long time control over what devices can play its music has troubled a lot of music lovers as well as publishers. Just recently however, the iTunes store began selling DRM-free music.

Ken Hertz, an entertainment lawyer representing such artists as Beyonce and Black Eyed Peas warned against going up against Apple directly.

"When your customers are iPod addicts, who are you striking back against? The record companies now have to figure out how to stimulate competition without alienating Steve Jobs, and they to do that while Steve Jobs still has an incentive to keep them at the table," said Hertz.

Since the launch of iTunes, Apple has controlled prices of music on its store. This is one area of concerns for music publishers who either want more revenue or are looking into other areas for revenue. The iTunes model has proven itself to be a success formula for music sales however. Before the advent of online music stores, consumers were forced to buy whole CDs and often times received only one to two favorable tracks while the rest were throw-ins.


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RE: Seems Clear to Me
By MobileZone on 7/3/2007 8:33:56 AM , Rating: 2
And who will project artists in global dimension, paying for their expensive studio hours, videoclips, media relations, promotion and so on? Somebody must pay for all this expenses and somebody must get this money back after.

It's like, Oh, I hate Universal and Sony Pictures, they're evil, let's get indy everybody!


RE: Seems Clear to Me
By Wizard Prang on 7/3/2007 9:11:30 AM , Rating: 2
quote:
And who will project artists in global dimension, paying for their expensive studio hours, videoclips, media relations, promotion and so on?

You do know that most of these expenses are bourne by the artist and/or recouped from royalties, don't you?


RE: Seems Clear to Me
By MobileZone on 7/3/2007 10:52:59 AM , Rating: 2
Initially, NO. The record company invests in the artist. Royalties pays all parts later.

Famous/good recording studios costs thousands of dollars per hour. A good producer costs as much as a good movie director. A good mastering company costs A LOT. No to mention videoclips and marketing.

Of course, anyone can go "indy", but those will never reach a worldwide level without a large support.


RE: Seems Clear to Me
By Wizard Prang on 7/4/2007 9:56:34 AM , Rating: 2
My original comment stands. As I understand it, the label LENDS the band the money for production. If the record is a hit, the label gets their money back.

http://archive.salon.com/tech/feature/2000/06/14/l...


RE: Seems Clear to Me
By Wizard Prang on 7/4/2007 9:59:48 AM , Rating: 2
quote:
Of course, anyone can go "indy", but those will never reach a worldwide level without a large support.


http://www.nme.com/news/arctic-monkeys/29360


"It's okay. The scenarios aren't that clear. But it's good looking. [Steve Jobs] does good design, and [the iPad] is absolutely a good example of that." -- Bill Gates on the Apple iPad

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