Is Universal Angling For A Piece Of Every iPod Sold?

from the good-luck-with-that dept

With Universal Music Group threatening to pull its music from iTunes, some are speculating that the real end game isn't just to change the pricing on iTunes, but to get some money for every iPod sold. After all, Universal somehow convinced Microsoft to pay up for every Zune sold, even though there's no legal, moral or business reason for doing so. Of course, Zune's sales are nothing compared to the iPod. However, Steve Jobs is playing a different game here and seems a lot less willing to give in. After all, Jobs knows that the music is simply a loss leader so he can sell more devices -- where he can actually make some profits. He's unlikely to give up those profits very easily -- especially when there's no compelling reason to. Given Jobs' position here, it wouldn't be totally out of character for him to call Universal's bluff, and pull their songs from iTunes. Then let's see who needs who more.


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  1.  
    identicon
    alex, Jul 3rd, 2007 @ 8:35am

    I love it when these behemoths start playing chicken with each other.

     

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  2.  
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    W.B. McNamara, Jul 3rd, 2007 @ 9:08am

    Doug Morris said as much last year

    Back in November of 2006 Reuters reported that Doug Morris (Universal Music Group CEO) was pretty confident that they would make a move in this direction in their 2007 negotiations:

    ## START REUTERS
    NEW YORK (Reuters) - Universal Music Group Chief Executive Doug Morris said on Tuesday he may try to fashion an iPod royalty fee with Apple Computer Inc. in the next round of negotiations in early 2007.

    Universal, the world's largest music company, owned by French media giant Vivendi, was the first major record label to strike an agreement with Microsoft Corp. to receive a fee for every Zune digital media player sold.

    "It would be a nice idea. We have a negotiation coming up not too far. I don't see why we wouldn't do that... but maybe not in the same way," he told the Reuters Media Summit, when asked if Universal would negotiate a royalty fee for the iPod that would be similar to Microsoft's Zune.

    "The Zune (deal) was an amazingly interesting exercise, to end up with a piece of technology," he added.
    ## END REUTERS

    http://www.topix.net/content/reuters/1126863025273698548728102347541812106732

     

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  3.  
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    jLl, Jul 3rd, 2007 @ 9:09am

    Watching Universal freak, when their music gets pulled, would be funny as hell...

     

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  4.  
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    W.B. McNamara, Jul 3rd, 2007 @ 9:13am

    Re: Doug Morris said as much last year

    And how could I have forgotten? Daring Fireball's "Conjectural Transcript of the Upcoming Negotiations Between Apple and Universal Music:"

    [...]
    Jobs: But I have a better idea.

    Jobs leans forward, and arches his eyebrows.

    Morris: OK, sure.

    Jobs: How about you take one of those white Zunes and you turn it into a brown one, Doug.

    Jobs beams the full Steve Jobs smile.

    Morris: Pardon?

    Apple Attorney: Mr. Jobs is suggesting that you take a white Microsoft Zune 30 gigabyte digital music player and insert it into your rectum.

    Jobs: In fact, how about one for each of you? (Gestures to Universal attorneys.) Seven Zunes – that should double their sales for the week.

    Morris: –

    Jobs: And Universal Music will get seven dollars.

    Jobs sits back in his chair, beaming proudly.

    Morris has broken out in a bit of a sweat. He wipes his forehead.

    Morris: Steve, I don’t think this…

    Jobs: Doug, it’s not a problem at all. The Zunes are on me.
    [...]

     

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  5.  
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    Rainer Paskiewicz, Jul 3rd, 2007 @ 9:16am

    Maybe they need a little hardball...

    May this is a little bit of what the Recording industry needs to snap it out of the dream it seems caught up in. I mean, really, what right do they have for taxing iPod sales? I know people who don't have a SINGLE universal license on their iPod.

     

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  6.  
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    Anonymous Coward, Jul 3rd, 2007 @ 9:27am

    Re:

    gay chicken

     

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  7.  
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    Anonymous Coward, Jul 3rd, 2007 @ 9:39am

    They're grabbing at anything. greedy bastards

     

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  8.  
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    Phillip, Jul 3rd, 2007 @ 9:48am

    Re:

    more likely desperate bastards, than greedy. They see their traditional business model failing and want some new guaranteed revenue.

     

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  9.  
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    Kevin, Jul 3rd, 2007 @ 10:19am

    Hilarious!

    W.B. McNamara, that is the funniest thing that I've read in a long time. (Maybe I need to get out more)

    At any rate, Apple should give Universal a free taste of what it's like and pre-emptively pull all Universal music from iTunes. It's certainly not going to hurt Apple at all. It will definitely cause a dent in Universal's profits. And then Universal isn't negotiating for a better rate for songs sold via iTunes anymore. They're negotiating to get their music sold by iTunes at all.

     

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  10.  
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    name, Jul 3rd, 2007 @ 10:24am

    Re: Re: Doug Morris said as much last year

    lol

     

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  11.  
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    Drew Robertson, Jul 3rd, 2007 @ 10:27am

    Sony

    In the old days, they'd call Apple both a monopoly and a monopsony. If you want to buy digital media, you have one place to go viz. iTunes. Apple has it pretty well wrapped up. OTOH if you want to sell digital music you have to play by Apple's rules as well. In the old days they'd worry about abuse of market power. Now weenies on TechDirt think it's way cool.

     

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  12.  
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    Anonymous Coward, Jul 3rd, 2007 @ 10:36am

    wake me up when elected officials stop referring to the public as "consumers".

     

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  13.  
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    ScaredOfTheMan, Jul 3rd, 2007 @ 11:02am

    Re: Re: Doug Morris said as much last year

    That was Hilarious! Nice work!

    Seriously, why should any company pay the Universal content Tax? And what next tax the iphone too?

    Why should Joe consumer be forced to pay this, because the cost will be passed on to the consumer (weather or not he listen to their music)?..and didn't I already pay universal when I give them my $0.99?

     

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  14.  
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    Shane C, Jul 3rd, 2007 @ 11:25am

    This idea's been around for some time...

    This is no different from the idea of taxing blank CDs. What's next, hard drives, because they store the music? Head phones / speakers because they radiate the music? Radios / Stereos because they play the music? Monitors because they list the music? Human beings because they listen to the music?

    "Congratulations Mr. & Ms. Smith. It's a bouncing baby boy! Make sure you pay your RIAA excise taxes on the way out the door. You wouldn't want little Johnny to be an indentured servant, would you?"

    At some point in time there has got to be a sanity check. Let's just hope it doesn't bounce!

    Shane

     

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  15.  
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    ScaredOfTheMan, Jul 3rd, 2007 @ 11:48am

    Re: Sony

    Which 'Internets' are you on?

    I can buy any DRM free music I want and stick it on my ipod. Just because Apple has to DRM its itunes tracks on behalf of the labels, don't blame them. Yes its to apple's benefit that they did not share their DRM scheme, so what...its no different than needing real player to play real audio streams.

    As for abusing their market power with the sellers, ANYONE who wants to go toe to toe with the big music labels to keep the price of my music down (to a reasonable $0.99)is doing a good thing. Since none of us on our own could possibly do it. So who is the real winnie now Drewski?

     

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  16.  
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    anonymous coward, Jul 3rd, 2007 @ 1:10pm

    how much of that money would Universal give to the musicians?

    if Apple agrees to pay Universal (or anyone) without guaranteeing that a substantial portion flow to musicians, they are guilty of a crime that should stop anyone from owning an ipod ever again.

     

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  17.  
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    Anonymous Coward, Jul 3rd, 2007 @ 1:37pm

    Re:

    You act as if apple would actually ever agree to this. They have the position of power, Universal doesn't, and Jobs has already repeatedly told the labels that their business model is outdated. Now he'll be able to show them.

     

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  18.  
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    SkippyTMut, Jul 3rd, 2007 @ 1:53pm

    Get 'Em Steve!

    Jobs should just pull all of their music without hesitation and then let Universal keep offering more and more money to put it back. In the long run this is only going to end up costing Universal more of its limited profits anyway. Dumbasses!

     

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  19.  
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    David Sternlight, Jul 3rd, 2007 @ 6:35pm

    Let's tread carefully here

    Let's tread carefully here. Universal may be trying to suck Jobs into pulling their music so they can sue him under business law for trade discrimination or some such. Jobs' best strategy is to stonewall Universal and let THEM pull their music, if they dare.

     

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  20.  
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    David Sternlight, Jul 3rd, 2007 @ 6:41pm

    Too bad

    And just when I was starting to like the French again for their new President and shift to a more balanced policy on Israel. Well, Vivendi has damaged American public opinion about the French, though they may not realize it. This is not just business--it is an attempted hijacking of every buyer of an iPod who does not use Universal Music's producrt.

     

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  21.  
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    Anonymous Coward, Jul 4th, 2007 @ 6:14pm

    Apple should respond to Universal by starting their own music label. They could sign a bunch of big names and sell this music for $0.99/track without DRM. Any music that is unDRMed would get front and center on iTunes. Now that would really get the folks at Universal tights in a bunch.

     

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  22.  
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    John Duncan Yoyo, Jul 5th, 2007 @ 9:05am

    Universal going out of business sale

    This just in. Universal is willing to trade a dollar per iPod for their portion of the $0.99 per song they were getting. Most iPods can contain significantly more than one song. Even if it was only a dime per song ten songs isn't a difficult hurdle for sales unless of course their misc really sucks.

    Just goes to prove most CEOs couldn't survive as accountants or talent scouts.

     

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  23.  
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    kslim, Apr 17th, 2008 @ 2:40pm

    Backwards

    Music as a "loss leader"? Maybe for now, but digital music is a potential goldmine for Apple. No distribution, no packaging, no silly in-store mark-up fees, endless supply of offerings...quick, easy, dirty, cheap. Apple is making tons of cash off of iTunes. If anything, I say they are making too much, but it is so damn easy, I really can't complain.

     

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