They may not be taking home a little statue, but they are going to rake in some more profits and appease European anti-trust regulators at the same time. Apple announced yesterday that Steve Jobs did what he is paid to do, cut a deal. Yesterday's deal is with the record company EMI.
Apple will offer DRM-free music from EMI for $1.29 per song
Basically, Apple will charge an additional $0.30 for each song sold on EMI's behalf. That's the equivalent of $4.50 per album with no CD production costs to EMI (Plus the cut they were getting before). Throw 10 million ipod listeners at that buying one album per year (to be extremely conservative and assume low adoption rates - yeah right) then EMI will take in $45 million for doing little more than sitting down to lunch with Jobs.
What's $45 million to EMI?
Not Much but if those same listeners go onto buy 1000 songs or about 66 CD's at 15 tracks per CD that totals up to a nice $3 billion goal to chase after. Maybe you convert 1 million customers a year alone (not counting new sales) and that's $300 million in revenue. Lunch with Steve didn't even need to taste good at those rates!
What's the catch?
Well you still have to run on the proprietary ipod for starters. Second, you can buy songs through EMI for $1.29 but I haven't seen anything yet to indicate that you could upgrade your iTunes collection. Plus this is only available with EMI right now and not the other record companies, who may watch how this works and wait in the wings if it fails miserably. As this is DRM free the songs could theoretically be copied and deployed throughout the internet, so EMI may be taking 30 cents now and losing more later. (Steve's counter argument is that they aren't losing anything as the people that want to copy things can readily do that today from a CD).
Who's left out?
Great MP3 players like Creative who won a patent infringement suit against Apple for the iPod. Lesser known or less popular media players like the Zune.
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