Apple Chief Executive Steve Jobs is preparing for a showdown with major record executives over the price of songs on the iTunes service, a published report said over the weekend.
If Jobs loses, the 99-cents-a-song pricing model that Apple uses could be replaced with a more complex model that prices songs by popularity, The New York Times reported.
Apple (Research), whose iPod digital music players and iTunes music service quickly established a market for paid downloads, was hailed for breathing life into the digital music business two and a half years ago, the report said.
But industry allegiance to Jobs has waned since then, and the policy of limiting Apple's music to Apple devices is increasingly under attack, according to the report.
Paul Vidich, a special adviser to America Online and former executive vice president of the Warner Music Group, told the newspaper "I just think the music companies are now at a point where there's too much money on the table not to insist" that Apple accept variable prices, informs CNN.
According to WebProNews, Sony BMG, which recently had to settle with New York Attorney General Eliot Spitzer's office for its illegal payola practices, and the other three big music publishers may be ready to start dictating terms to Mr. Jobs. That would definitely see price increases imposed on new music; the Times cites the possibility that iTunes would be allowed to offer lower prices on older music. Call it the modern equivalent of the remainder bin.
Apple reportedly pays as much as 70 cents per single to publishers now; that could be higher in the case of the major publishing houses. With Apple having now sold well over 500 million songs on iTunes, the publishers have made hundreds of millions of dollars in a short span of time.
Apple's iPod media player drives the company's profitability, and iTunes figures in that strategy. Mr. Jobs can't afford to have users defect to other services or go back to the brisk file-swapping trade. He'll have to convince the publishers that they can't afford that, either.