Apple Inc. has begun to aggressively court record labels with the proposition of bringing “Total Music” to the iTunes Music Store, iPod, iPhone, and other affiliated devices, according to industry reports today. The term refers to a new business model in which customers that paid a premium price for, say, an iPod Touch, would gain complete and free access to the entire iTunes music catalogue. Although sources stress that any deal between Apple and the labels is a long way off, the talks have already sent a wave of buzz throughout the industry.
Apple Inc. has begun to aggressively court record labels with the proposition of bringing “Total Music” to the iTunes Music Store, iPod, iPhone, and other affiliated devices, according to industry reports today. The term refers to a new business model in which customers that paid a premium price for, say, an iPod Touch, would gain complete and free access to the entire iTunes music catalogue. Although sources stress that any deal between Apple and the labels is a long way off, the talks have already sent a wave of buzz throughout the industry.
Apple’s renewed interest in Total Music comes on the heels of Nokia’s adoption of a similar model for its “comes with music” proposal in December. Starting later this year, the cellular phone provider will offer one year of free total-access to DRM- and advertisement-free music content to those who purchase its cell phones at a premium price. So far, only Universal Music Group has come on board for the deal, with EMI reportedly in talks today. Nokia hopes to secure deals with all of the majors by the time the plan rolls out, reportedly offering as much as $100 of every device sold to labels, in return for access to their libraries.
Apple, meanwhile, is reportedly only offering $20 for every device sold, prompting skepticism of the deal’s feasibility. [UPDATE: Billboard.biz is reporting that the $20 figure is “pure speculation.”] Details have yet to emerge on any more specifics behind the proposed deal—like whether Apple’s service will be single-fee or subscription-based, or with which devices the service will work. Stay tuned to editorial.americansongwriter.com for updates.
UPDATE
Just a day after reports started to break about Apple’s potential move to adopt a “Total Music” business model, competitors have already begun to respond by labeling the as-yet-unannounced proposal “classic Sherman Antitrust Act behavior.”
David Pakman, the CEO of iTunes-rival eMusic, explained his anti-trust claims today. “It’s called tying, and it’s where a company with a monopoly position in one market uses that monopoly position unfairly to compete in another.” Pakman and others have drawn parallels between Apple’s position and that of Microsoft in the late 1990s. Just like Microsoft used its monopoly in the operating systems market to stifle any competition in the web-browser market by bundling its Internet Explorer with Windows—-a practice for which it suffered the losing-end of massive anti-trust litigation in both the U.S. and Europe—-so too will Apple, according to its competitors, exploit iTunes’ market dominance in order to gain a monopolistic advantage for the iPod.
The key issue comes down to compatibility—-and the fact that files downloaded from the iTunes Music Store are only compatible with Apple’s iPod products. If Apple were to bundle free access to the entire iTunes library with the purchase of the iPod, its hardware “competitors” would have very little chance of living up to their moniker. “The troubling thought to many of us,” concluded Pakman, “is that it’s a very logical step on Apple’s part. But because they’re a monopolist, they’re going to be held to a different standard.”
AS will keep you posted as this story continues to develop!