“Apple has destroyed the music business”
… said NBC Universal’s CEO, Jeff Zucker. As the Financial Times reports,
Jeff Zucker, NBC Universal’s chief executive, yesterday warned that Apple’s iTunes digital media store was undermining the ability of traditional media companies to sell their content online at profitable rates, and he urged them to take a stand. “We know that Apple has destroyed the music business – in terms of pricing – and if we don’t take control, they’ll do the same thing on the video side,” Mr Zucker said at a breakfast hosted by Syracuse’s Newhouse School of Communications.
The article also points out that
Mr Zucker also suggested Apple had rejected requests to share revenue from its sales of iPod devices, which are far more profitable than the digital media store. During his remarks, Mr Zucker emphasised that conventional media companies were struggling to develop economic models for new forms of digital distribution, and trying to ensure that a dollar of traditional revenue was not reduced to mere pennies in an online world.
It will be interesting to see how the digital distribution will play out, and to what extent the conventional media companies will be able to adapt. It is easy to see that antitrust laws may be implicated along the way as the industry transitions.
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October 31st, 2007 at 12:27 pm
More to the point, Apple might have destroyed profits from an outmoded distribution model. It certainly has not destroyed the “music business.” It’s funny how profits are seen as entitlements. The complaint that “Apple’s iTunes digital media store was undermining the ability of traditional media companies to sell their content online at profitable rates,” simply means that disruptive competition is driving down costs and prices to the benefit of consumers. “Way to go, Apple!” is all that I can say.
October 31st, 2007 at 7:21 pm
Apple single handedly saved the music industry. They have given the consumer what it wants - high quality, unbundled music distributed in a highly efficient manner in exchange for a market price. The “traditional” media executives still have not figured out that their mode of distribution is, for many consumers, outmoded, and their stranglehold on the artist is likewise outmoded. In addition, Apple solved the piracy problem through innovation. Innovation - maybe the media executives ought to try that.