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News
Record Labels Want a Piece of iPod Revenues
Thursday, September 22nd, 2005 at 3:00 PM - by Brad Cook
After Apple CEO Steve Jobs' comment on Tuesday that record companies were "greedy" for pursuing higher song prices at the iTunes Music Store, Warner Music Group CEO Edgar Bronfman Jr. on Thursday shot back by saying that not only will the record industry pursue variable pricing for songs, but it also wants a share of iPod revenues.
"Not all songs are created equal -- not all time periods are created equal," Mr. Bronfman told those assembled at Goldman Sachs' Communacopia investor conference. "We want, and will insist upon having, variable pricing." His words were reported in an article on the Red Herring Web site.
Mr. Bronfman then upped the ante by describing his industry as "the arms supplier in the device wars between Samsung, Sony, Apple and others." He insisted: "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. We have to get out of the mindset that our content has promotional value only."
As for variable pricing, Mr. Bronfman was quick to point out that "some songs should be $0.99 and some songs should be more. I don't want to give anyone the impression that $0.99 is a thing of the past."
Joe Nordgaard, managing director of the consulting firm Spectral Advantage, noted: "Instead of spending $15 for a CD, you buy two cuts for two bucks. That's a lot of money left on the table. The traditional model with premium pricing has been so lucrative for the music industry. When they cut the deal with Apple, they did not realize what they had done. Now they want out."
Mr. Bronfman also turned up the heat on the Sirius and XM satellite radio networks, saying that they received "a seven-year license at vastly below-market rate to allow that business model to occur. There is no reason for their content cost to be one-tenth of what everyone else is paying and have this done on the backs of the music industry while they pay market rate to the NFL, Howard Stern, and Major League Baseball."
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