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Music Industry, Souring on Apple, Embraces Amazon Service

An interesting story from the New York Times, containing, as usual, a typical amount of pro-Apple history rewriting:

At the Super Bowl next month, the music industry will be switching teams — from Apple to

The major record labels lined up with Pepsi-Cola and Apple four years ago to give away 100 million songs through Apple’s online store, unveiling the promotion in a Super Bowl commercial with music from the band Green Day. The effort helped spread the word about Apple’s iTunes offerings.

Pepsi’s promotion is back this year on a much bigger scale — but with the star wattage provided by Justin Timberlake instead of Green Day, and Amazon in place of Apple.

The switch is an indicator of the continuing tension between the music industry and Apple.

Though iTunes blazed a trail in encouraging fans to pay for music online, record executives now complain that Steven P. Jobs, Apple’s chief executive, wields too much clout in setting prices and other terms. At issue now is whether the labels can help popularize a more industry-friendly service and accelerate the pace of digital sales.

In trying to nurture Amazon’s service, the four major record companies have offered it one potential edge. One by one, they have agreed to offer their music catalogs for sale on the service in the MP3 format, without the digital locks that restrict users from making copies of the songs.

All of the companies except the EMI Group still require Apple to sell their music wrapped in digital rights management software [but since Apple uses AAC for even its non-protected songs, it's far less interesting than DRM-free MP3 files from and elsewhere. --Paul] In fact, it was Mr. Jobs who, in February, called on the industry to drop its longstanding insistence on the use of the software, saying it had failed to rein in piracy.

No it wasn't. Anyone who believes that Jobs somehow led the charge in DRM-free music is living in a fantasy world. The outcry against DRM had been going on for years. Jobs only jumped in when it became obvious which direction things were moving. This is a great example of Apple marketing winning out over reality.

A senior executive at another record company, who requested anonymity out of concern about irritating Mr. Jobs, said he was prepared to keep copy restrictions on his label’s songs on iTunes for six months to a year while Amazon establishes itself. Apple insists on selling all single tracks for 99 cents, while Amazon sells them for 89 cents to over a dollar.

Another bit of commonly-repeated fantasy. Contrary to Apple's claims, tracks on iTunes are not consistently a single price (i.e. 99 cents). The company regularly offers sales and prices movies, especially, at a range of prices.

Industry analysts said they expected Apple to treat the situation as a minor annoyance.

Hey, that strategy worked fine for them when IBM entered the PC industry back in the early 1980's. What could go wrong? :)

But seriously, folks. Apple makes no money from iTunes anyway. The real money is in iPods, and since the MP3s people are buying at Amazon will be used mostly with iPods anyway, this is a win-win for everyone. In fact, Apple would probably love to back off from the content distribution angle anyway: It's a lot of work for no direct return at all. They just do it to drive iPod sales.


Anyway. Amazon MP3 is quickly turning into the best online music story. Good news.
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