Apple Protects iTunes, Asks Labels Not to Participate with Amazon Daily Deal

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Apple has gone into a protective mode with iTunes, according to Billboard magazine, asking the major record labels not to participate with Amazon's Daily Deal on its MP3 download store. At issue is frustration at Apple for working to promote major new releases, and having those new releases available at a steep discount on Amazon the day before its iTunes release.

"The whole issue is a kind of interesting dynamic," an unnamed senior major-label distribution executive told Billboard. "Amazon is fighting a guerrilla war against iTunes, and now iTunes is getting frustrated because they work hard to set up and promote a release weeks in advance of the street date, and then lo and behold, Amazon jumps in there with this deal of the day and scrapes off some of the cream."

The Daily Deal was introduced in 2008 as a loss-leader promotion for Amazon's MP3 store. It was successful enough, however, that the online retailer was able to negotiate exclusivity deals for a day before the "street date" for some major new releases. According to another unnamed source, that eventually began including banner ads and announcements on artist sites at MySpace and other social networking media promoting the Daily Deal.

"When that happened," the executive said, "iTunes said, 'Enough of that shit.'"

In response, Apple, whose iTunes Store is the #1 music retailer in the U.S., began declining to promote releases that took part in Amazon's Daily Deal, which in turn prompted the major labels to begin declining to participate in the Daily Deal.

"They are...diverting their energy from 'let's make this machine better' to 'let's protect what we got,'" yet another unnamed source told the magazine.

The labels and Apple have often had a contentious relationship, as Apple has managed iTunes and its business model from the standpoint that Apple Knows Best, while the labels chafe at how much power within the industry Apple has been able to garner by simply building an online music store that people actually wanted to use.

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2 Comments

Tiger

At least they asked and didn’t demand. And I don’t blame them. It doesn’t hurt to try. There is nothing contractual, therefore legally binding in asking. And being so public about it means the pressure is higher, but the risk is actually less because it’s not seen as covert and below board. Keeps ‘em out of hot water with the SEC, FCC, and any other government agency who might like to get bent out of shape for something like that.

FlipFriddle

The labels better watch it. If His Steveness decides the iPad will make him more money that music, and he’s a bit cranky, he could shut off their money spigot at the drop of a hat.

Wouldn’t be too bad though. Maybe some of them will finally go out of business after circling the drain for so many years. Then maybe we’ll get to start hearing bands with talent, instead of good-looking American Idol bands.

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