Comments on: Universal Could Fashion IPod Royalty Fee

By: Kindell

Kindell — Thu, 07 Dec 2006 06:09:36 +0000

While Apple claims the current market, keep in mind that UMG claims the current global catalog….both in physical and digital sales.

Yes, it’s true that Zune had no choice but to concede as they simply couldn’t roll out without UMG’s vast int’l catalog — it’s like smiling and missing your front two top teeth. They’d be sorely missed. There’s no argument there.

But it’s similarly obvious that Apple will evenutally concede to UMG as well, as some form of concession HAS to be made. Why? Because as much of an impact as you think the digital format has made in overall music sales, physical scans still topple sales charts. One day soon, however, yes seamless mobile/digital platforms will help equalize physical vs digital sales but until that day comes along (which realistically won’t be for another few years), CDs win. Apple knows this. Bear in mind just how VAST UMG’s global catalog is… all their international labels like Mercury, Polydor, Island UK, and their various ventures like SRC (which AKON is signed to) or their various distribution and P&D deals with labels like Ecstatic Peace which is owned by Sonic Youth’s Thurston Moore. Now imagine if UMG pulled the ENTIRE catalog from Apple — it’d be horrific for Apple and their customers.

Granted, not all mp3 playing device owners buy their music from iTunes (or buy them period for that matter :P) but all in all, that’s where middle-America does and a good cross-section of the major markets otherwise. Blogs, sites, forums are popular but only for some, not all.

By: Som

Som — Wed, 29 Nov 2006 22:13:14 +0000

Mondogarage, you speak in past tense as if Apple doesn’t still own this market. It’s possible that Microsoft will gain market at Apple’s expense but certainly not in 2007 when the iTunes deal is negotiated. Also consider that the iTunes Store is not the primary method to fill up an iPod, so the impact on Apple is questionable. Most likely, iTunes customers will be alienated by UMG.

I do agree completely that UMG is going to use this as a bargaining chip for having more price control in iTunes. Ryan is exactly right that Microsoft only conceeded due to their desperate need to have a full catalog to compete with iTunes.

By: mondogarage

mondogarage — Wed, 29 Nov 2006 19:45:50 +0000

Great idea, but not without complications. Apple has shown that they don’t need to have all music available (see the lack of Beatles catalogue on iTunes, for example). However, that was when they held 70-80% of the mp3 player market.

Of course, they still have a gargantuan market share now, but what happens when Microsoft inevitably eats into it, and Apple drops to, say, 45-55% of the market (though still far more than any other single manufacturer). At that point, can you really afford to be without the catalog of one of the Big 4?

I suspect that a lot of this is early negotiating tactics…that Universal would be just as happy seeing Apple cave in to their desire to raise the per album download price. But only time will tell.

By: Ryan Catbird

Ryan Catbird — Wed, 29 Nov 2006 19:34:49 +0000

Or how about Apple just tells Universal to go F themselves, and yanks their catalog from the iTunes Store, cutting off that revenue stream completely. Apple will still lots of other catalogs, but Universal will lose all that download $$. Seems Apple is the one with the upper hand here, not Universal. Microsoft were the desperate party in the Zune deal, but in this scenario, it’s Universal.