Labels want two things: that their current business model keeps working, and that a new physical format completely incompatible with old ones comes along so users have to buy their whole collection again, as happened with DVDs.
I'm curious as to what this has bought them - there are many comparably small music services (Rdio,Napster,Rhapsody,Spotify, etc.) that I'm assuming could not have paid amounts of this magnitude. As those services I just listed indicates, there's really no shortage of competition in the cloud music space...
All the streaming service pay by usage. My guess is that the usage for Apple is a lot higher. Look at how much Netflix and Pandora pay for their licenses.
Google Music doesn't currently let you stream music that you don't already own, and it's also not tied to any particular music store. I think they're referring to Google launching a legit streaming service together with the music labels in a few months.
> The Cupertino, Calif., tech giant has agreed to pay the labels between $25 million to $50 million each, as an incentive to get on board, depending on how many tracks consumers are storing.
sounds like what Apple is launching is also a music locker service akin to what Google Music is now, and not streaming arbitrary music. Perhaps the author is referring to when Google may remove the invite-only aspect for their service, or maybe just confused.
It’s not open to the general public and the details of the service when it will open to the general public are not yet known.
We will have to wait until Google opens the doors to everyone and how much – if anything – it will cost you.
It would be seriously cool if Google continued to offer this service for free. I suspect that they will offer the service with a generous limit for free after they are out of beta (I would imagine at least 2,500 songs – that would be roughly on par with Amazon’s free 20 GB) but I also suspect that they will start charging for the service if you want to upload more. We will have to wait and see.
I honestly don't get the point behind this. Neither do I see the point of subscription services like Spotify.
I want to actually own my music. Have the file RIGHT THERE on my computer, so I can do whatever I want with it - whenever I want to.
Why do I need to have my songs up in the cloud? What about when I'm on holiday - and typically disconnect from the world for a week sans internet - how am I supposed to listen to my music then?
Assuming 0% growth in revenue, Apple could make a $150 million dollar payment to each of the big four labels, every single month and still be adding $10 billion to their cash horde every single quarter.
This advance is utterly insignificant compared to the size of their pile of cash.
$150 mil is 0.25% (1/4 of 1%) of Apple's cash & cash equivalents. They have so much cash it's absurd -- sometimes I wonder why Apple doesn't just buy all the major music labels (they could easily do it).
One reason Apple doesn't buy all the major music labels is that they can't; the second largest label is a wholly owned subsidiary of Sony.
Another reason is that the largest label (UMG) is a wholly owned subsidiary of Vivendi. There may be a parallel universe where Apple could finance a takeover of Vivendi, but that would leave Apple responsible for the P&L of television networks, film studios, World Wrestling Entertainment, Activision/Blizzard, and several phone companies.
A final, obvious reason why Apple doesn't buy all the major labels is that it's a dumb bet. Of all possible suitors for any major label, what company would see a music label as less valuable than Apple?
Companies fail when they deviate from their core purpose.
Apple's purpose is to sell "walled garden" hardware. Taking over the music industry is too big a move to remain focused on selling their hardware.
If you consider that Apple's core business is to sell a belief about themselves and their users, there isn't a conflict.
People don't buy Apple stuff because of what it is -- the identical hardware can be bought for sometimes 50% cheaper from other stores/manufacturers. People buy because of the perception that Apple has values which are aligned with their own.
The most visible value is that Apple challenges the state of normalcy in whatever industry they enter, that they oppose the status quo. This is a perception, it doesn't necessarily align with the reality of their actions (for example, how is it opposing the status quo to pay the labels' extortion fees?)
You don't have to agree with it -- that is, you don't have to believe that Apple actually challenges anything -- but you should at least understand how they sell themselves and how that drives their business. If you simply examine Apple on the basis of the products they sell, you can't develop a consistent theory that explains their success (IMHO).
Look at the commercial for the Playbook, it focuses on what the actual hardware/OS can do: run multiple apps at the same time, browse with Flash, etc. At the same time, the iPad commercial focuses on how amazed you'll be, and how much potential it has to change the future. It's audacious -- could you imagine how ridiculous it would sound if RIM billed the Playbook as "just getting started"? That's not RIM, they're not visionaries and they've never sold themselves as such. They sell themselves as people who sell enterprise solutions -- i.e., they identify themselves with what they make.
You have to consider that Apple primarily sells a belief, and secondarily sells products which demonstrate that they implement those beliefs.
I would modify your initial statement -- companies fail when they are reduced to selling commodities, instead of following their values. Dell and HP sell commodities, but Apple takes that same hardware (laptops, desktops, MP3 players, tablets) and turns it into gold, because they sell users the perception of following their values.
