11/27/2007, 4:40pm, EST
Tuesday, November 27thUniversal: Apple using "golden handcuffs"
Universal Music Group has been slow to acknowledge technological change and has been ensnared by the "golden handcuffs" of Apple's music efforts as a result, says the music label's chief Doug Morris in a newly published interview with Wired. The executive observes that Apple approached Universal for signing on to 2003's iTunes Music Store at a time when the latter was desperate to find a successful online music sale model and was willing to take a risk on the iTunes operator, which promised minimal damage due to its small computer marketshare and the lack of a monopoly on digital music players at the time.
But by insisting on copy protection and then allowing Apple to use a proprietary format, Universal inadvertently became dependent on iTunes for success, Morris says. The music provider cannot pull its tracks from Apple's catalog without losing a large portion of its revenue, particularly in the US.
"There's no one in the record company that's a technologist," he states. "They just didn't know what to do... We were just grateful that someone was selling online. The problem is, [Apple chief Steve Jobs] became a gatekeeper... We would hate to give up that income."
This largely confirms beliefs that many of Universal's recent moves in online music sales have been an attempt to reduce the label's dependence on Apple and re-balance online music's marketshare, giving Universal greater leverage over prices and special deals. The company in recent months has dropped its long-term contracts with Apple in favor of month-by-month services and is allegedly developing an experimental service called Total Music that will build music fees into phone subscriptions and music player purchases, providing content from multiple major labels entirely outside of the iTunes and iPod ecosystems.
Microsoft's agreement to pay a $1 royalty to Universal for every Zune sold is an early example of the business model in action, according to the interview.
Written, edited and compiled by Jeff Smith.
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I've been reading more and more negative PR like this. I'm glad Apple offers songs for $1 across the board and TV shows for $2 but I think they need to please both hands that feed them. Right now, Apple is feeding their customers primarily (which is a great thing), but they can easily feed music labels and TV/movie studios a little more by offering a certain percentage of iPod royalty fees based on how much content is sold by a studio on iTunes.
Apple would be reaching out to these studios while pleasing customers more since studios would be inclined to offer more content.
Apple, PLEASE, PLEASE, PLEASE, don't become arrogant as you were in the 80s/90s!! Also, shed some of your greediness while you're at it. I want you to continue to succeed. Part of that continued success has to do with your image and how you treat your partners.
Come on. Apple makes money for selling iPods and computers. They also make money for transferring music. Universal makes money by producing music and allowing others to transfer it. It's already a win/win deal. If Universal wants to create a new service, let them. iTunes is not the golden gate, it's just a path. There are lots of paths that can be taken, it just happens that iTunes was one of the first paths that lead to profits.
If anything, the consumer would have been tied down more and the record companies would have more flexibility in limiting freedom of use... oh wait, that's what they wanted all along!
Let's see, that will net Universal about $5. Smart move Universal :-)
Ken
Translation: It wouldn't matter anyway, so we went ahead and did it. Who knew?
Where can I get 'em?
Oh... you mean, some record exec is complaining that Steve Jobs personally snapped those cuffs on the exec's wrists? Gold is too soft and malleable to be really effective cuffs...
Maybe if the exec said something about platinum handcuffs, he would be onto something...
Meh. Apple still has the right idea on prices and distribution. It is just those movie and record execs that are whining worse than a roomful of children.
User Name
I am so sick of these dumbasses whining. Screw you, Universal. And your mothers too.
Doofuses.