Steve Jobs Says: $1
The record industry may be on the verge of waving the white flag in front of Apple boss Steve Jobs, and abandoning its demand for iTunes to charge different prices for different songs. Negotiations between Apple and the four major music companies - with which iTunes deals all expire in the next two months - have reached a crucial point as several record executives now say they are unlikely to convince Jobs to allow variable pricing.
It’s the story that just won’t die. Two years ago, the record labels started making noises about how they wanted variable pricing for songs on iTunes. Steve Jobs immediately made it clear that Apple wasn’t interested. A year ago, the same story popped up and again, Apple said it was news to them. Last summer, the labels started saying it again, leading to Steve Jobs to flat out call them “greedy.”
Meanwhile, many of us were wondering how these statements weren’t the equivalent of price fixing. Just a few years ago, the labels all got in trouble for telling retailers how much CDs should cost — which is illegal price fixing. It appears the labels (even post-fine) don’t seem to get this. They also don’t seem to get that Steve Jobs is serious about keeping the price at a dollar.
Just as the original iTunes contracts are set to expire, the labels who were all confident that Jobs would back down and allow variable pricing are suddenly discovering he’s not budging at all. In fact, they’re finally starting to recognize that for all their bluster, Steve Jobs is the one who has the power in this relationship — as none seem willing to actually pull their songs off of iTunes. Of course, some of the execs continue to be totally clueless. The article quotes one unnamed music exec who is upset that the labels didn’t “stand up to Jobs.” He then says: “Where in life does the retailer set the price of the content?”
Isn’t that exactly what the lawsuit and the fine in 2002 were all about? The labels can wholesale their music at whatever price they want — and then Apple (the retailer) can do whatever it wants in response — just as record stores get to set the retail price for the CDs they sell. If the labels are so upset, then why don’t they set their own variable pricing and see what Apple does in response?
With the news coming out that, as expected, Steve Jobs wouldn’t back down and convinced the labels to sign new contracts that keep the price of songs at $0.99, some are wondering if that’s really a good thing. Mathew Ingram is the latest to suggest that, in doing so, Apple is also missing out on the ability to lower the price of some songs — and suggests everyone thinks the result is good because they hate the record labels and like Steve Jobs. In fact, he suggests that Apple is “price fixing” here. That’s not quite right. The concern over price fixing is whether or not the labels are having undue influence over the retail price — and perhaps colluding to set retail prices. As a wholesaler, the record labels should be able to set their wholesale price at whatever they want — and the retailer (in this case Apple) has the right to accept it or not. However, where the price fixing question comes in is that the labels should have no say in the final retail price — and Apple’s decision to set the retail price across the board at $1 isn’t price fixing, so much as a merchandising decision of the retailer.
French lawmakers gave final approval Friday to legislation that could force Apple Computer to make its iPod and iTunes Music Store compatible with rivals’ music players and online services.
Both the Senate and the National Assembly, France’s lower house, voted in favor of the copyright bill, which some analysts said could cause Apple and others to pull their music players and online download stores from France.
The vote was the final legislative step before the bill becomes law — barring the success of a last-ditch constitutional challenge filed last week by the opposition Socialists.
Currently, songs bought on iTunes can be played only on iPods, and an iPod can’t play downloads from other stores that rival the extensive iTunes music catalog from major artists and labels — like Sony’s Connect and Napster.
Apple described the original version of the copyright bill as “state-sponsored piracy” earlier this year, but a company spokesman was not immediately available to comment on Friday’s vote.
In a statement issued after lawmakers hashed out the final compromise text last week, Apple said it hoped the market would be left to decide “which music players and online music stores are offered to consumers.”
The final compromise asserts that companies should share the required technical data with any rival that wants to offer compatible music players and online stores, but it toned down many of the tougher measures backed by lower-house lawmakers early on.
It also maintained a loophole introduced by senators, which could allow Cupertino, California-based Apple and others to dodge the data-sharing demands by striking new deals with record labels and artists.