The quest by the four major music labels to shift iTunes to a variable pricing model from its single price 99 cents per song model hit a brick wall named Steve Jobs.
This was the stuff of spaghetti westerns, of Sergio Leone and Clint Eastwood and Gian Maria Volont. This time around there was a man in black – Jobs, with his black turtleneck. And a scary villain resembling Volont in the form of the facially hirsute Edgar Bronfman, Jr, the CEO of Warner Music Group.
Trumpets blare! The high noon sun glares overhead! El Edgar and his villainous henchmen from Universal Music Group, EMI, and Sony BMG twitch near their weapons!
But this is the 21st Century, and the weapon of choice isn’t a Colt revolver fast-drawn from a steel-lined holster, but a Montblanc Skywalker pen drawn from a finely stitched leather attach case.
Jobs and Apple made the major labels sign off on single priced music singles; the 99 cents price stands, the Financial Times reported. Apple revealed all four labels agreed to and renewed contracts to keep the price in place.
One unnamed record executive cited in the report said, “The labels need Apple too much right now.”
Ultimately, the labels could not budge Jobs on the issue of pricing. Jobs has said increases in price would simply push people back into swapping songs online.
Apple makes very little on the sale of each single. The bulk of the price goes back to the music labels. Where Apple profits from iTunes is with its iPod sales.
Songs sold through iTunes carry digital rights management (DRM) called Fairplay, and it only works with the iPod media players. With millions of iPods sold globally, Jobs has overseen Apple’s renaissance and a recovery from dark times when Dell Computer founder Michael Dell suggested the company be shutdown and the money returned to shareholders.
Recently, Samsung disclosed a deal with Apple where Samsung becomes Apple’s supplier of media processors for the iPod. If this deal helps Apple’s margins, the iPod becomes even more profitable for the company than it is today.
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David Utter is a staff writer for Murdok covering technology and business.