Apple's tough iTunes note meant for indie labels
Steve Jobs & Co. really want to offer buyers extended music samples by the holiday shopping season. But to do that, Apple must iron out licensing issues.
Apple's letter to music labels about thesounded brash and uncompromising, reminiscent of how the company once seemed to negotiate with the music industry.
Apple wrote in e-mails to an undisclosed number of music industry executives--made public on Tuesday--that it would soon offer longer samples for songs that are at least two-and-a-half minutes in length. For shorter songs, iTunes would continue to offer 30-second previews, the company wrote. CNET that Apple planned to offer longer samples.
What raised eyebrows about Apple's note was that it appeared the company was offering an ultimatum to the entire record industry. But the largest stakeholders, the four top labels--Universal Music Group, Sony Music Entertainment, Warner Music Group, and EMI Music--signed off on Apple's plan to boost the length of iTunes' song previews from 30 seconds to 90 seconds in August, according to multiple music industry sources. Apple has also penned individual deals with some of the top publishing companies.
Instead of the big guys, Apple's letter appears to be directed at the scores of independent record labels, industry insiders said.
Apple stated in the letter that it would roll out longer samples soon at iTunes and that anybody who left their music up at the Web store was automatically agreeing to give Apple the right to offer the longer song samples "gratis," or for free. The message is pretty clear: accept the longer previews for longer songs, or pull them off iTunes. An Apple representative confirmed that the note was sent but declined to comment for this story.
Managers at some of the bigger indie labels were reluctant to comment today, saying they hadn't seen Apple's letter or hadn't had time to analyze it. Two did acknowledge that it seemed that Apple was playing hardball.
There's a reason for the tough approach. Apple is in a hurry to get the deals done so it can offer the longer samples for holiday shopping. Time is running out. Apple CEO Steve Jobs was expected to announce the longer samples at a press event on September 1, music industry sources told CNET. Before that could happen, thenotified the company that it would need to negotiate a deal with the publishers before going ahead with its plans.
Sources said the NMPA is still in negotiations with Apple, as is. (BMI), a group that collects royalties on behalf of songwriters and publishers. Hanna Pantle, a BMI spokeswoman, told CNET today, "We are in active and positive negotiations with Apple for the performance right of our repertoire."
At a time when many iTunes users favor YouTube to sample and discover music, a longer sample seems like a no-brainer. In its note, Apple said, "We believe that giving potential customers more time to listen to your music will lead to more purchases."
But some in the music industry havethat Apple should compensate rights owners for the previews.
"It's like giving away ice cream samples--someone has to pay the cost," said Rick Carnes, president of the Songwriters Guild of America. "I think it would be a good thing for consumers to go to 90 seconds. But they're tripling the amount of time, and they want it for free. I think there ought to be compensation. I believe anytime you use music, you ought to reward the people making the music."