Greed Killed the Trojan Horse

Seems like Apple and music labels are on collision course as iTunes contract renewals approach. Steve Jobs called record labels “greedy“, over alleged plans to move digital downloads to a tiered pricing model. Right now, iTunes buyers pay a 99-cent flat rate for singles, while most albums sell for $9.99. Apple does bundle some singles with music videos for $1.99.

So, I had thought Steve Jobs was being just a wee bit over the top, until a few days later when Warner Music Group CEO Edgar Bronfman Jr. said during an investors conference: “We are selling our songs through iPod, but we don’t have a share of iPod’s revenue. We want to share in those revenue streams” [source Red Herring]. Ah, yeah. 

If labels thought right, they would see iTunes’ flat-rate pricing as an opportunity. A huge one. Music labels made the mistake in the 1980s of not shipping CDs with copy protection. DVDs always had it, and no one complains because it’s normal. Music labels face stiff consumer resistance to copy protection and lose money to piracy because they don’t have it.

Apple is doing the labels a favor. Every iTunes song sold is one more protected song owned by a consumer. If the labels had any smarts, they would use flat-rate pricing as a Trojan Horse for promoting the adoption of rights-protected music. But the music hegemony probably wouldn’t even think of such a concept.

I’ll save intellectual property rights for another post.