More on the iTunes Pricing Negotiations

22 Apr ’06

The NY Post is reporting that Apple is not budging on its price negotiations with the music labels, and that the labels may well have blinked. It’s beginning to look like none of the labels have the confidence or nerve to unilaterally raise their wholesale pricing, or the foresight to create their own online distribution systems. Perhaps this is because of the price-fixing investigations and class action litigation, but in any event, it means that, for a while at least, they’ll likely be trapped where travel providers were after that business went online – captive to the first guys to successfully stand in between the industry and its customers. Just ask Stu how that worked out.

What I don’t understand is why the labels – which have very strong brands on their own – don’t have the gumption to leverage those brands by distributing music themselves, and cutting out the middleman, Apple – or at least giving themselves more power with Apple come contract negotiation time. Given the monopolies they have on the content produced by their respective artists, this would put them in very strong positions – both against Apple, and with respect to their margins. At least one of them ought to step up to the plate and develop a killer online presence – buy Pandora or Last.fm, use it to showcase the label’s own catalogue, and distribute music, videos, and whatever. And so on.

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