Gigs & Bytes: Thinning The Herd
Thus was the case at this year’s MIDEM in Cannes, France, where one of the biggest rumors was if Napster would be acquired by a telecom giant or a computer equipment manufacturer.
A Napster official denied such a scenario and said, “The company is not looking to be sold, the management is not looking to step out. It’s simply not true,” according to Reuters.
But Napster’s MIDEM rumor might have been due to various remarks indicating that it may soon be time for a thinning of the herd for online music services. Plus, a later announcement by the company that it will cut about 10 middle management-level jobs probably added fuel to the rumor blaze.
Currently, the the International Federation of the Phonographic Industry says there are about 355 online services worldwide, and their revenues reached $1.1 billion in 2005. However, Apple’s iTunes gets the lion’s share of that amount, leaving most of the remaining 354 services to fight it out over the scraps.
“The market keeps growing, and there will be winners and losers,” said Barney Wragg, senior VP of Universal Music Group’s eLab’s division. “The fact that there are 355 retailers – are they all economically viable? Clearly the market is adjusting all the time.”
There was also news of sorts regarding the major labels’ efforts to convince Apple to change its flat rate, 99-cent pricing structure. For months there have been reports that the labels want more money, leading Steve Jobs to describe the record companies as “greedy.”
Regarding major label efforts to convince Jobs to change his mind, IFPI chief exec John Kennedy noted there had been “almost no progress.”
“Apple is going to listen to their customers before they listen to the industry,” Kennedy said. “They have commercial advantage.”