As Millions Worship Apple, Major-Label Executives Fear the Brand
On Sunday, the New York Times ran a story on how many major-label executives fear the computer maker. Apple and the labels announced last month a deal to allow iTunes to sell music with out any DRM (digital rights management), something Jobs has long called for. In return, the labels can set variable pricing, something they have long called for.
Even after this deal, the labels still fear the power Apple CEO Steve Jobs has over their business. Though they are still not comfortable dealing with iTunes, none of the labels can afford to be cut out now that iTunes is the largest music retailer in the country, and now that some labels are reporting more revenue from digital sales than physical ones.
All this is taking place while Apple is posting record revenue and profit in this rescission.
I have no sympathy with the labels on this. For years, they have sold out the record stores -- especially mom-and-pop stores -- in order to get in bed with larger retailers like Wal-Mart and Best Buy. And now that the large retailers are pulling CDs from shelves to make room for more profitable merchandise, the labels have no where to go to sell music. Add that to the toll e-commerce and the economic clusterfuck are having on conventional retailing, and there are not a lot of options left for the labels.
iTunes now is the largest music retailer in the country, and there is no clear alternative to it. Major retailers are abandoning the labels; surviving record stores now serve niche markets and don't care about American Idol winners or other major-label priorities; Amazon and Napster are no iTunes (even on a good day); and Limewire is free.
Many of us saw this coming 10 years ago, even before iTunes came on the scene. I remember talking with the owner of a local record store in 2001 or 2002, and he predicted that as soon as the labels killed off the indies with their major-retailer exclusives, those retailers would abandon them sooner than later and the labels would be left with nowhere to go. He may not have had iTunes in mind, but he was completely correct about everything else.
In the Times story, digital music analyst David Card is quoted as saying, "It's really Apple and everyone else. I think the industry would rather have multiple outlets." I think it is beyond irony that after all these years killing the "multiple outlets," the labels now want them. They should have thought about that when times were good.
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