Apple Computer's iTunes Music Store is in the news once again - with reports of the record industry possibly about to abandon its demand...
Apple Computer's iTunes Music Store is in the news once again - with reports of the record industry possibly on the verge of abandoning its demand for the music store to have a differential pricing system.
Negotiations between Apple Computer and the four major music labels; Sony BMG, EMI, Warner Music and Universal have apparently reached breaking point, with record executives expressing their inability to convince Steve Jobs, chief executive officer, Apple Computer, to allow variable pricing.
The bone of contention between Apple Computer and the "big four" as they are called is Apple's one-price-fits-all business model, wherein each iTunes download is charged at a uniform rate of 99 cents per track.
The music labels on the other hand charge different wholesale prices -roughly between 60 cents and 80 cents per track, although the prices remain the same within each company.
The record labels have been continuously demanding a system of variable pricing, wherein they can charge more for some songs and less for others. Jobs of course has been steadfastly resisting their demand, to the extent of creating the likelihood of a potential rift between the two sides.
Record executives have even gone on to say that at this rate, some labels might actually end-up pulling-off their music from the iTunes service. Analysts however feel that a more likely scenario is one where existing deals at some of the record companies will expire, and the two sides will continue to operate without a deal whilst they seek to reach terms.
This is not the first time the price war between the two camps has turned ugly... Last year, Edgar Bronfman Jr, head, Warner, bashed Apple publicly saying that a singular price point is unfair to artists. To this, Jobs retaliated by naming the record industry as "greedy".
The iTunes Music Store was first introduced by Apple three years ago, and since has sold a billion songs. With iTunes reportedly accoun-ting for three out of every four legally downloaded songs, Jobs attri-butes a large part of the success to the uniform pricing system followed by iTunes. No wonder the music labels' threat of pulling-off their music from iTunes does not appear in the least to have moved him.