p2pnet - rss feed: Apple versus everyone else
p2pnet.net News:- As p2pnet has been saying for months, it’s no idle rumour that the ever-venal Big Four record labels want to boost their already exorbitant wholesale rates, which at the moment start at around 70 cents per mp3 and rise steeply.
Corporate music sites buy from the cartel whose usurious rates force them to attempt to pass the cost onto potential buyers at slightly below, or well above, $US1, depending on where the services are.
Actually, the singular would be more accurate because Big Music claims that the “300″ sites it backs and supplies are serving a significant user base are about as accurate as its assertions that file sharing impacts sales, and that its sue ‘em all war against people who share music with each other is having a discernible effect.
In the real world of online music there is, relatively speaking, only a tiny handful of people willing to pay through the nose for corporate ‘product’ and only Apple’s iTunes can claim them. And since iTunes is no more than a loss-leader for the iPod and does little more than pay for itself, even that can’t be said to be a genuinely functional corporate sales site.
Apple boasts that since iTunes opened shop in 2003, it’s sold a grand total of some 500 million digital tracks. It’s eminently possible that some of those ‘buys’ in fact represent product ‘consumed’ during promotions. Be that as it may, 500 million looks like a lot until you consider well over one billion mp3s move computer-to-computer around the world every month.
However, the industry’s allegiance to Steve Jobs has now “eroded sharply,” says the Associated Press.
“Mr. Jobs is now girding for a showdown with at least two of the four major record companies over the price of songs on the iTunes service. If he loses, the one-price model that iTunes has adopted - 99 cents to download any song - could be replaced with a more complex structure that prices songs by popularity.
“A hot new single, for example, could sell for $1.49, while a golden oldie could go for substantially less than 99 cents.”
The AP story says “Signs of conflict over pricing issues are increasingly apparent.” This month, Apple launched iTunes Japan without ‘product’ from Sony BMG or Warner Music Group, “leaving artists like Avril Lavigne, Beyoncé and Rob Thomas out of the catalog because the companies refused to license their music to iTunes, executives involved in the talks said.
“That gap in the Japanese music market, the world’s second biggest, is considered a harbinger of what may await American consumers as the contracts that record companies have with Apple in the United States come up for renewal early next year.”
It continues that a, “sore point for some music executives is the fact that Apple generates much more money selling iPod players than it does as a digital music retailer, leading to complaints that Mr. Jobs is profiting more from tracks downloaded to fill the 21 million iPods sold so far than are the labels that produced the recordings.”
Why they should be taking issue now is a mystery since that’s always been the case.
Sony BMG ceo Andy Lack is quoted as saying Jobs, “has got two revenue streams: one from our music and one from the sale of his iPods” but, jokingly, “I’ve got one revenue stream” that would “require a medical professional to locate”.
But Lack hopes things won’t stay that way. He’s working with ex-Grokster and ex-Blubster boss Wayne Rosso, who’s transferred his allegiance and interests from one side of the p2p fence to the other. He’s now diligently developing and promoting the Mashboxx corporate download app supported by Snocap, a digital finger-print technology offered by another p2p deserter, Shawn Fanning.
“Some analysts suggest that the willingness of the music companies to gamble on a new pricing structure reflects a short memory,” AP continues.
“As I recall, three years ago these guys were wandering around with their hands out looking for someone to save them,” it has Gartner G2 analyst Mike McGuire saying. “It’d be rather silly to try to destabilize him because iTunes is one of the few bright spots in the industry right now. He’s got something that’s working.”
Moreover, “The push for variable pricing is not uniform across the business,” says the story. “The Universal Music Group, a unit of Vivendi Universal and the industry’s biggest company, appears to support Mr. Jobs’s desire to maintain the price of 99 cents a track for the time being. The EMI Group, the British music giant, has expressed a desire for more variation in prices but does not appear interested in a protracted fight.”
AP says the “divide among the four record companies reflects a broader philosophical argument about whether the fast-expanding digital market is stable enough to bear a mix of prices, particularly a higher top end, while millions of consumers still trade music free on unauthorized file-swapping networks.”
In reality, there is no “fast-expanding digital market”. If it’s growing at all, it’s at a snail’s pace, and a crippled snail at that. The only online music area that can truly said to be burgeoning is on the p2p networks where thousands of new people are logging in every day thanks, in very large part, to the ongoing publicity generated by the industry itself via its ludicrous sue ‘em all marketing campaigns.
In August, 2003, around the world, an average of 3,847,565 people were simultaneously plugged into the p2p networks at any given time, says p2p research company BigChampagne. Up to August 21 this year, 6,790,567 were happily surfing the p2p networks.
And yet the Big Four record labels continue to maintain that file sharing is diminishing.
On anther battleground “in Apple’s coming confrontation with the industry” interoperability of services and devices is key, says AP.
“Mr. Jobs has so far refused to make the iTunes software compatible with music players from other manufacturers, and he has prevented the iPod from accepting music sold from competing services that use a Microsoft-designed music format.”
To some, this makes Jobs “appear more concerned with maintaining market dominance for his high-margin iPods than with allowing a more open digital market,” the story states, going on:
“Sony BMG in particular has taken steps that may apply pressure to Mr. Jobs to make Apple’s software compatible with that of other companies. The company has issued dozens of new titles - including high-profile CD’s from the Dave Matthews Band and the Foo Fighters - with software to limit the number of copies that can be made from the disc.”
This refers to DRM (digital rights management), a pipe-dream touted by companies which, 100 years ago, would probably have been selling snake-oil.
DRM may have some effect on people who aren’t wise in the ways of the web. But it has zero impact on those who use p2p.
In fact, the Dave Matthews bands is so impressed that on its site, it gives detailed instructions on how how to beat it. And as further indication of how well DRM “protects” discs, the Foo Fighter’s new Best Of You is still number one on p2pnet’s weekly Modern Rock file sharing top ten.
Finally, “some music executives who favor altering the iTunes service doubt that they will be able to force Mr. Jobs’ hand by withholding their music,” says AP. “Instead, they are counting the months until the major wireless phone carriers enter the business of selling songs to mobile phone customers. Since there are many more mobile phones in use than there are iPods, the industry thinking goes, the arrival of a broad mobile music market will erode the leverage Mr. Jobs now holds.”
It adds, Apple has also been working with Motorola to develop a phone that can import songs from an iTunes-equipped computer. But as McGuire sums it up, “I think if they’re throwing down for a street fight, they may have picked somebody who’s as good or better at it than they are.”
If there’s something you think we should know, contact us - tips[at]p2pnet.net
See:-
Associated Press - Apple, Digital Music’s Angel, Earns Record Industry’s Scorn, August 27, 2005
Foo Fighter - Foo Fighters, DRM and iPods, August 5, 2005
If there’s something you think we should know, contact us - tips[at]p2pnet.net
August 28th, 2005 at 7:06 pm
An informative and interesting article. Kudos to P2PNET for writing up such a wonderful piece. I too am eager to see how this all plays out…
August 28th, 2005 at 7:24 pm
““Mr. Jobs has so far refused to make the iTunes software compatible with music players from other manufacturers, and he has prevented the iPod from accepting music sold from competing services that use a Microsoft-designed music format.””
Bull***, he didn’t design his player with WMA audio decoders. He uses aac format for his files, and has support for other more open formats like mp3 and wav, but WMA has been by it’s nature proprietary.
The simple truth is the ipod’s processors can’t decode the format, just like a DVD player can’t decode ogg or h.264. It has nothing to do with DRM.
–Microsoft has refused to open the standard to allow proper legal support for it on non-windows platforms, and insists you install a very buggy mac version of windows media player to play them (windows media player has a nasty tendency to take over mac browsers like a virus, and cause kernel panics because of terrible api support)
–Because of above fact, the support of windows media on it’s competitor’s platform would be a sell out by apple, allowing microsoft to use format hegemony to extort from any company trying to include media encoding software. I for one would rather have format wars than see a terrible format like WMA under the control of an international monopoly become a truly accepted standard.
–Any mp3 player which supports wma is probably doing so thanks to hefty format license fees and contract terms.
–WMA format itself is a JOKE to those who actually know computing. It is designed for interenet streaming, and is not properly optimized to perform at higher bitrates required for downloadable files. This is part of the reason why mp3 is still ubiquitous.
“Mr. Jobs has so far refused to make the iTunes software compatible with music players from other manufacturers, and he has prevented the iPod from accepting music sold from competing services that use a Microsoft-designed music format.”
Oh.. so apple is evil because they didn’t design their ipod with the ability to play windows media, a codec basically forced on people by monopolists at microsoft, but it’s not evil for the REST of the industry from supporting aac audio, which they are probably refusing to do because of microsoft’s notorious “incentive programs” by which they give their software out for pennies on the dollar if you promise not to use their competitor’s formats.
August 28th, 2005 at 7:58 pm
The IPOD is not a general purpose computing device. It is designed with an integrated hardware based decoder chip which is HARD WIRED for certain formats. This does not equal DRM. It is simply a cost based limitation on the hardware, and a reasonable one at that if you actually research the history of the ipod.
As such, ipod does not qualify as a general purpose computing device. It is not “artifically constrained” in the same way the PSP is, and as such this is NOT drm.
General purpose computers serve as a means of making devices/formats interoperable. It is not the job of apple to make their preferred music player WMA compatible.. to do so would mean apple would willingly and knowingly make their ipod sales and support subject to the whims of their main competitor, microsoft. Would you put your product line under the control and influence of your competitors?
The majority of the even mildly computer literate know this, and do not object. The only reason this “objection” exists at all is because the cartels are pervaying it in press releases.
Did it ever occur to you that apple may be making a point (to the detriment even of their own sales!) that DRM inhibits fair use activities? Apple is not the bad guy here.. in fact they are helping “our side” of the issues by making joe sixpack realize those files on so called copy protected disks are packed with this unreasonable restriction he’s not heard about called “DRM”.
apple should be lauded, not derided.
August 28th, 2005 at 8:37 pm
THAT stance by the recording industries is awfully hypocritical considering that in record stores CDs are not priced lower when they are older. They are all priced high. Then again, why would anyone expect their position to be logical, sane, good business judgment, … What a dumb group of old white men!
August 28th, 2005 at 8:40 pm
This is also bad considering that, eventually, all their product will be old & make less money per download & the new artist pool’ll dry up because they push so much substandard “product.” More than likely, down the road, back catalog sales will be the main source of income. This is a poor pricing model. The worst I’ve ever seen.