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Steve Jobs to Labels: Just Say No to Greed

Steve Jobs to Labels: Just Say No to Greed

by , 8:40 AM EDT, September 20th, 2005

The major music labels must resist the urge to get greedy with online downloads, specifically downloads at the iTunes Music Store, according to Apple CEO Steve Jobs. The Associated Press reported Tuesday that Mr. Jobs said that he will be resisting the labels, who have been urging the online music leader to raise its prices. The prime reason cited by Mr. Jobs in his comments is his belief that higher prices will turn consumers away from legal downloads, and back towards piracy.

"We're trying to compete with piracy, we're trying to pull people away from piracy and say, 'You can buy these songs legally for a fair price,'" he said during a press conference in Paris ahead of the opening of Apple Expo. "But if the price goes up a lot, they'll go back to piracy. Then everybody loses."

Mr. Jobs further drew a line in the sand by pointing out that record labels already make more profit for each 99 cent downloads through services such as the iTMS and its competitors than they do from traditional CD sales.

With digital distribution, record labels face none of the inventory issues involved with managing physical inventory, and stock never goes out of date.

"So if they want to raise the prices it just means they're getting a little greedy," he told reporters.

Those are strong words for a public venue, but the stakes involved are enormous. Apple has sold more than 500 million songs, which is the equivalent of more than 40 million CDs. That makes Apple one of the major players in the music industry, and one of that industry's most important sales outlets.

The Mac Observer Spin:

The fact of the matter is that 99 cents for a digital download is already too much for a digital download, precisely because of the distribution issues mentioned above. The music industry has long been plagued with a myopic look at its own woes, and has consistently made the wrong decisions in the face of decreasing profits.

The labels have drastically decreased the number of new albums put out, squelched all but the most homogenized music, and raised CD prices substantially in an effort to substitute economic discipline for creative ways to actually growing their businesses in the age of the Internet.

The funny thing about this topic is that it is Apple's iTMS that shifted the music industry's fortunes to a more positive upside. Digital convenience, a great interface, and a cheaper price for downloads brought music consumers in drove to the iTMS, and away from the P2P networks.

That the labels see only an opportunity to make artificially higher profits, and can not see that this will only further hurt themselves is simply par for the course.

All that said, don't let Mr. Jobs' comments to allow him to appear altruistic. The music business is now Big Business for Apple, and his job as CEO is to protect that business, even if it is from its own partners. This public shot across the bow is the kind of negotiating tactic that he has used for decades when faced with stubborn opponents.

Looking forward, the best thing the labels could do for themselves would be to lower prices, not raise them. Such a move would bring more consumers to the table, and further repair the music industry.

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