According to an article in Wired Magazine:
“Apple is under pressure from the four major labels to change its pricing model to a tiered pricing structure,” said Susan Kevorkian, an IDC audio analyst. “The way the labels are pressuring Apple is by withholding DRM-free downloads from the service … [while] cultivating other online music services, most notably Amazon’s MP3 downloads store.”
“If Apple tires of butting heads with the labels, it could eventually cut them out of at least part of the equation by forming its own record label to keep a portion of the estimated 65 cents it currently pays out to the labels for each song sold.”
And here’s the kicker of this whole shebang.
By 2012, digital music is projected to account for 40 percent of music sold, according to InStat. If Apple holds onto its current market share, it will account for more than one-quarter of all music sales by its ninth birthday. Not bad for freeware.
Are record labels in trouble if they mess with the beast that is Apple? Sounds to me like it’s time for artists to have a solid online presence more than ever. What do you think?
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Ok, so help me out here…what exactly is a “tiered pricing structure”? I assume that means that not album will be $9.99…but hey, that’s why I LIKE iTunes! Can the record companies demand Apple charge more for their albums? I don’t really understand how the whole thing works.
A tiered pricing system is where older, less popular songs could be discounted, and in-demand singles could go for more than a dollar. Apple is against it, but record labels want it.
I think you’re right. It is time for artists to develop a strong online presence and fan-base. Labels seem to realize that their current business methods are dying and instead of trying to innovate and find new ways to make money, they are trying to force more restrictive control over music.
I think if Apple can and does hold out, they will continue to get stronger AND artists will continue to realize they no longer need labels to get the word out with tools available on the internet.
Already an indie artist can upload their music onto iTunes themselves - no record company needed - by using services like CD Baby or TuneCore. For $25-$35, an artist can get an album onto iTunes plus many other digital distributors. The artist keeps about 50-60 cents for every dollar sale (it depends on how much iTunes or Napster or whoever keeps).
I think Apple knows its weight in this fight, and that more people will look to them or places like CD Baby to get music published and skip the normal labels. The thing is, labels do have a lot to offer artists (especially ones less familiar with the game) and they do themselves disservice by continuing to try and run a monopoly. If they cooperate with iTunes they’ll probably find they have more power than if they continue to hold out.
Sounds like Apple needs to create its own record label….