p2pnet - rss feed: UMG: offering Apple a ‘plum of a deal’
p2pnet news | Music:- Doug Morris (right), chairman and CEO of Universal Music Group, appears to be offering Apple a spratt so Universal can, it hopes, catch a mackerel.
He, “yanked music videos off Yahoo and sued MySpace for copyright infringement,” says CNET News. “He threatened to pull songs from Microsoft’s online music store unless Bill Gates forked over a $1 for every Zune music player sold. He seethed over Apple CEO Steve Job’s refusal to let him and the other label execs set song prices on iTunes.
“So why is he now offering Jobs a plum of a deal?”
The deal would centre on a device pre-programmed with Universal Music’s entire library —- and Apple could have it.
On Wednesday, “Jobs reckons he’s figure it out a new way to skin Apple users,” p2pnet posted, quoting the Financial Times as saying, “The company is in discussions with the big music companies about a radical new business model that would give customers free access to its entire iTunes music library.”
Our story went on, “”Terrific. But wait. There is, of course, a catch. Anyone signing up for the new scheme would have to pay a premium for iPod and iPhone devices.”
“The ‘all you can eat’ model, a replica of Nokia’s ‘comes with music’ deal with Universal Music last December, could provide the struggling recorded music industry with a much-needed fillip, and drive demand for a new generation of Apple’s hardware,” said the FTÂ story.
Now, “In the proposal Universal Music pitched to Apple, the device would come with all-you-can-eat music for a period of time, perhaps a year, and then owners would be ‘rolled over into a subscription service’,” says CNET.
“Universal Music was a big backer of an ISP tax, according to reports. And last October, BusinessWeek reported that Morris had also toyed with the idea of enlisting the other three majors to create a music-subscription service. The plan seemingly was derailed when the U.S. Justice Department began investigating whether such a consortium would violate antitrust laws.”
What, “can’t be overstated is Universal Music’s desire to get a taste of device sales, insiders say,” the story goes on. “While Jobs made pennies on song sales at iTunes, he pocketed 50 percent profits on some iPod models, according to estimates by iSuppli. It’s safe to say that almost all the major players in the music industry see that as unfair. They argue that what people want isn’t a music player. It’s the music.”
Nokia, “is understood to be offering almost $80 per handset to music industry partners, to be divided according to their share of the market,” said the Financial Times. “However, Apple has so far offered only about $20 per device, two executives said.”
Consumers, “would pay a premium of up to $100 for unlimited access to music for the lifetime of the device, or a monthly fee of $7-$8 for a subscription model,” according to research, said the FT, adding:
“Apple, which is thought to make relatively little money from the iTunes store compared with its hardware sales, is also understood to be examining a subscription model” for iPhone devices, “where it has a monthly billing relationship with customers through the mobile phone operators offering the device, while the ‘comes with music’ model would work with iPhones and with iPods.
“The subscription models under discussion in the music industry include the provision for customers to keep up to 40 or 50 tracks a year, which they would retain even if they changed their device or their subscription lapses.”
But Forrester Research’s James McQuivey warns whatever the labels made on device sales, they could lose in other areas, says CNET, which has McQuivey stating, “Allowing Jobs to place their music catalogs on a single device might allow him to offer a breakaway handheld that could overshadow any other gadget or music service out there.”
People who typically buy music would have a reason to stop and, “Besides killing off CD sales, the music industry would harm two areas that are going strong for it right now,” he says, adding:
“One is MP3 sales and the other is the (free streaming) music offered by social networks Imeem and Last.fm. If I were the music labels, I would tell Apple to come back in 2009, after I’ve given these other services opportunity to grow.”
[NOTE - p2pnet is running a special reader’s survey. It only takes 20-30 seconds and it’d be a huge help if you’d fill it in. Please click here. Cheers! And thanks … Jon]
Also See:
CNET News - Why is Universal Music cozying up to Apple?, March 20, 2008
p2pnet - Free, unlimited iTunes?, March 19, 2008
Financial Times - Apple mulls unlimited music bundle, March 18, 2008
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