Apple Strong-Arms Music Industry
By Morelli
In January, Apple and the music industry seemed to be on good terms. With the removal of copyright protection software (DRM), and the renegotiation of pricing on iTunes, the scenario was heartening. But now, discussion over the specific timing of these changes has sparked renewed antagonism between the two giants.
Steve Jobs is purported to have made an aggressive stance on the issue back in December, leveraging Apple’s dominance in the growing mobile sales market. While Apple and Sony spokesmen declined to comment, Dave Goldberg, the former general manager of Yahoo Music said:
“I think Steve has been smart, and he knows he has the upper hand. [The music industry] can’t afford to pull their music.”
Sony Music wanted to put the price changes into effect immediately, but Apple wanted a longer “time horizon”. Since Web stores like iTunes generated $1.5 billion in 2008, compared with just $70 million in wireless sales, the music industry can’t retort. “They’re still the biggest game in town,” said David Card, a digital music analyst at Forrester Research. “It’s really Apple and everyone else.”
The music industry caved in to Apple’s demands, but looks to expand into markets where Apple isn’t so dominant, like on other mobile phone manufacturers. Apple’s behavior is typically monopolistic, which has been proved to be counterproductive for competition and healthy markets.
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