Steve Jobs calls Record Companies Greedy


taken from Rueters

By Astrid Wendlandt and Jeffrey Goldfarb

PARIS/LONDON (Reuters) - Apple boss Steve Jobs, the man behind the popular iPod digital music player, called the music industry greedy for considering hiking digital download prices, warning such a move would drive users back to piracy.

Record companies have begun rethinking how to price songs sold over Apple's online iTunes store -- 99 cents each in the United States and 79 pence in Britain -- before new contract negotiations come up with the California-based company.

"If they want to raise the prices, it means that they are getting greedy," said Jobs, chief executive of Apple (AAPL.O: Quote, Profile, Research), at a news conference in Paris on Tuesday.

"If the price goes up, they (consumers) will go back to piracy and everybody loses," he added.

Hit hard over the past five years by the rapid spread of illegal song copying over the Internet, music companies are struggling to revamp their business models as sales shift to more legal digital downloads from the CD format.

Vivendi's (EAUG.PA: Quote, Profile, Research) Universal Music, Sony BMG Music Entertainment (BERT.UL: Quote, Profile, Research)(6758.T: Quote, Profile, Research), EMI Group (EMI.L: Quote, Profile, Research) and Warner Music (WMG.N: Quote, Profile, Research) are responsible for three out of every four albums sold around the world.

They are divided about the next phase for digital download pricing, with some contemplating a tiered model that could charge more in the first days a popular album is available and for songs recorded exclusively for iTunes. Others prefer to wait before tinkering with the existing system.

Jimmy Iovine, chairman of Universal Music's biggest unit, Interscope Records, said last month that not enough consumers are buying music online to warrant raising prices.

"I don't think it's time yet," Iovine told The New York Times. "We need to convert a lot more people to the habit of buying music online. I don't think a way to convert more people is to raise prices."

On the other hand, Sony BMG CEO Andrew Lack said at a Reuters gathering earlier this year that Apple is benefiting from two revenue streams, sales of both the iPod devices and song downloads, while the music industry has only one.

"I'm not making any money on this," he said. "I've got one revenue stream that a proctologist would have a hard time analyzing. It's not pretty."

On Tuesday, Apple shares gained $1.10, or 2.1 percent, to $53.74 in early trading on the Nasdaq.


Jobs, whose company makes more by selling iPods than the music played on them, also cast a skeptical eye on the market for downloading songs directly onto mobile phone handsets. Some analysts believe wireless transmission will emerge as the next step in the evolution of music sales.

Apple two weeks ago unveiled a phone developed with Motorola (MOT.N: Quote, Profile, Research) that downloads up to 100 songs from a computer.

"It is not clear that buying songs over the air makes economic sense," Jobs said. "I am skeptical because of the cost ... but we will see."

Mobile phone operators, however, expect music downloads to be a significant driver of revenue growth after having invested heavily in technology and infrastructure to support the service.

Jobs also declined to say whether Apple was planning to launch an all Apple-made iPod phone.

"We do not say anything about future products," Jobs said. "We work on them in secret, then we announce them."

On a separate matter, Jobs said Apple was on track to ship computers fitted with Intel (INTC.O: Quote, Profile, Research) chips by June as targeted.

Apple had publicly expressed frustration with International Business Machines Corp. (IBM.N: Quote, Profile, Research) prior to severing its relationship with the company this year to adopt Intel chips.

Apple is now aiming to have all its computers fitted with Intel chips by the end of 2007.

Jobs said the company had a 4.5 percent share of the PC market in the United States and a 3 percent share globally.

Good Job Steve! Tell RIAA that they Suck...and that downloading music will be better for the artists to be directly from the consumer, thusly so eliminating the middle man and expensive cd prices.


Crotchety UI Nitpicker
Record companies? Greedy? When did this happen? :rolleyes:

Seriously, though, I do think that sales will plummet if they cross that magical $1 mark. But it's only a matter of time until they do. I'm glad Apple's trying to as it is, but they're fighting an uphill battle.


Registered Penguin
I think there's a lot of money to be made for independents in the iTMS structure (which, AFAIK, aren't yet accommodated).

I know how hard it is to find real CDs of some independent artists, and they're not even easily accessible on the P2P networks (even in shoddy quality), which means they're not getting a wide appeal.

If Apple offered an service (free songs by independents, or like, 5c songs or whatever the bandwidth cost was), people would use it (those bands would get more exposure, and the people would get more music).

That would, also, put pressure on the record companies to lower their prices to entice those users to buy mainstream commercial music.

I don't know, maybe I'm dreamin'.

First thing's first: iTMS in AU :p.


Staff member
Yeah, but on the other hand, Apple doesn't want to drive the music labels away, wouldn't it.

Btw.: Songs here cost 1.50 CHF (which is a little more than 1.20 USD currently, I believe), so the "magic mark" of one dollar doesn't apply here. Still, I think they have to be careful with this pricing. I mean: They _have_ to see that after all, iTMS is _helping_ them. If anything, they should push people away from real CDs and onto the iTMS bandwaggon, because their costs are certainly lower if all they have to provide is the track and the album _artwork_ in low quality.


At this point he is absolutely right: A rise in prices now has great potential to drive people back to illegal P2P nets again.

Prices will rise one day, but that should not be so soon.


These record companies need to be strangled. Apple (and others) brought to the table a brilliant model for distributing music in huge volumes at perfectly fair prices with minimal or no overhead to the record label. The record labels get to enjoy this distribution channel and take in buckets of cash. But NOOOO, that's not good enough. Now they want to take advantage of this new market, which is just aged enough to be mainstream. They can all rot.

Let's see, how can I word this so I stay within forum rules. Let's just say I can personally attest to the fact that piracy will increase if these price changes go into effect. ;)