Why can't Apple become a record label?

In My Humble Opinion
1

This thread is inspired by this piece of news:

Basically the RIAA wants to increase the price of music downloads. As far as I know, the actual talent recieves such a small portion of the music record sales. Something around one percent. Apple has a distrobution method that can’t be beat. Totally digital. This obviously costs money in bandwidth however.

But why couldn’t Apple sign bands to deliver exclusively through iTunes? They could offer said bands a healthier percentage of sales without having to pay any other record companies a cent.

Maybe its a politics thing? If Apple starts to do this, maybe they’ll get the rug jerked out from under them in a heartbeat. iTunes Music store has an impressive amount of music. They obviously have this only because the record companies are satisfied.

Are we to the point yet where it would be possible to distribute music through the internet without the need for the typical record store? If you think of it in terms of information, all record stores to is provide a way to provide music. The bandwith of a music store is high, but slow and costly. I mean, where does the other percent of CD sales go?

If the medium is going to be digital (like CDs), then why the need to transport them over a hard medium? The only need I see is because not everyone has a computer and even less have a cd burner (the minimum required for this to work). But why not include a service from the Apple Stores to provide this service?

Anyway, what’s not to stop a new band from doing this? I mean if I were a new band, and could have the choice of getting 5 to 6 cents per album sold or a certain higher percent for the Apple deal, why not?

In the end, I see this as a question of the current music distrobution scheme. Most think music is too expensive and the artist recieve such little money. Where does it go? And if it isn’t going to the cost of producing and distributing CDs then is it due to promotion, etc?

To me this just speaks to the unique position Apple is in at the moment to revolutionalize the way that we recieve content. They have an opportunity to revolutionalize the way we recieve video content. With the iTunes Music store as a model they could provide DRM video on demand for a price which would be really cool. The only hindrance to the ItunesMS at the moment is that the content is controlled by the greedy Record Labels. Why are they necessary?

2

IIRC, Apple Computer entered into an agreement with the Beatles’ Apple Record Co. never to go into the music business. In return, Apple Records allowed them to use their trademarked name. I believe I saw something online a few weeks ago (although I didn’t read the article) to the effect that Apple Record Co. was suing or considering suing Apple Computer over its entry into the music business through iTunes and/or iPod.

3

Source: http://www.usatoday.com/money/industries/technology/2004-09-19-beatles_x.htm

4

What Duckster said: basically, they’re caught between a rock and a hard place - they can’t really sell on-line music without the cachet of their Apple name. and if they sell on-line music using their Apple name they’re gonna get sued by Apple records because of an agreement they signed before anyone had even dreamed that music could be stored and transferred via computer.

It’s a matter of intellectual property rights: if I’m a programmer named Jim McDonald and I start a computer company named McDonald’s Electrical, the hamburger chain can’t really touch me legally {or they’d be foolish to try} because I’m not stepping on their toes by making and selling software - the minute I figure out a way to download fast food via broadband and start marketing it as eMcDonald’s, though, watch the writs start flying.

If Apple {computers} were smarter, they would have come to some kind of agreement with Apple {records} before this legal mess - offered them a flat fee or a percentage for the use of the Apple name: of course, since Apple {records} control the Beatles back catalogue, they pull more weight than if they were, say, Sub Pop, so any up-front fee Apple {computers} paid would have likely been huge, and any percentage deal would cut into their margins, so they may have figured that either they could slip one past, or it would be cheaper to take their chance in court.

5

[hijack]When it comes to protecting its name, no one touches the Olympic games. Basically, NO ONE can have a company with the name “OLYMPIC” in it, unless they can prove a relationship to the Olympic Mpountains, or the Olympic Peninsula. So there are many small ‘Olympic’ companies in Washington State, but not too many elsewhere. You start one up, and when the IOC (or maybe the American Committee) finds out, you WILL be served immediately.[/hijack]

6

Oooh! They’re gonna get these bastages!

7

I suppose Olympic ( the national airline of Greece ) is OK because it’s Greek?

8

Disney and Playboy are two other businesses that are recognized as being very aggressive in defending their trademarks.

9

I actually knew someone who was called Ronald McDonald. I am surprised that the burger company never sued him (or his parents) for using the name of their clown. This guy would now be about 40 ,so I don’t know if he was around before the clown was invented. Perhaps he could sue them for stealing his name?

10

I’ve heard that the law which protects the Olympic’s name in the US specifically excludes a couple of counties in Washington State where the Olympic Mountains, the Olympic Penninsula, and the city of Olympia are located.

11

Why couldn’t Apple Computers buy Apple Records? That’d solve the whole problem and dramatically advance Apple Computers’ goal of becoming a major lifestyle brand… sort of like Sony, but more-or-less going in the opposite direction.

12

What about Olympic paint?

13

Apple is already a record label.

14

That’s not Apple Computers. See post #2.

15

I gotta ask. Who the heck cares or knows about Apple Records these days? The Beatles have been broken up for three decades and I knew of Apple Computers long before I ever heard of Apple Records. As for the other bands listed as having been on that label, I’ve never heard of them. Seems to me that this Apple Records Apple Computers fight is completely pointless (and would be to anyone born in the last couple decades.)

16

The remaining members of The Beatles, the estates of John Lennon and George Harrison, plus the remaining members of Badfinger, and Mary Hopkin know and care about Apple Records. The company is their continuing paycheck. And the board of directors and accountants of EMI and Capitol Records know and care about Apple Records. It is the source of a great deal of their ongoing income. Any release that comes through Apple Records means instant billions of dollars to be raked in. And millions of record collectors worldwide know and care about Apple Records. The company holds all the rights to the world’s most valuable catalogue of music. So if you’re saying that nobody knows or cares, or should, guess what, pal, that’s just wrong in every respect.

17

Ultimately, Apple Computer made an agreement and is legally bound to stick with it.

However, going back to the OP, there’s nothing to stop Apple from creating a subsidiary (e.g., Macintosh Records) that signs music acts for use on iTunes. (Once a settlement is made to Apple over the current case, of course.)

18

(a) If I recall correctly, all of the artists who “care about Apple Records” (even the Beatles) left the label by 1976.

(b) How is anything Apple Computer is going actually hurt the people who “care about Apple Records?” Do they not get their same royalties when their record sells a unit? I don’t think any consumer cares — or is even aware — what record label issued it.

(c) Apple Corps effectively ceased being a record label thirty years ago. It is more a holding company than an actual record label (it was only recently “revived” to issue unreleased Beatle songs).

(c) Even thought an “Apple Record” may show a granny smith apple logo on the sleeve, it’s actually issued by EMI Records.

(d) The fact that Apple Corp. Ltd. has let actual record labels like Bad Apple Records, Big Apple Records, Black Apple Records, Crab Apple Records, Mountain Apple Records, Screaming Apple Records be in existence sets an interesting precedent.

(e) Sadly, all this may be moot since they had a written agreement that Apple Computer stay out of the music business.

I think it’s tremendously sad that the letter of the law forbids Apple Computer from doing anything relating to music. I for one applaud them for “breaking the law” and giving the world the iPod and iTunes Music Store. These were both watershed moments in the music biz.

As a Beatle fan I hate to say it, but I think Sir Paul and Co. are just trawling for dividends without actually being put at any kind of disadvantage.

19

You’re missing the point by a couple of light years:

  1. Apple Computer have a legal settlement with Apple Corps that states they will not be involved in music.
  2. Apple Computer began to get involved in music.
  3. This is a breach of contract.

There is no way around the facts, no matter how much justification they might have. It’s not even a copyright or trademark issue: it’s a contract issue, and Apple Corps is holding Apple Computer to the contract it freely signed. No business would ever allow another to unilaterally nullify or flout any clause in any contract.

What Apple Computer should have done in the very early planning stage was to contact Apple Corps and renegotiate the agreement before iTunes was launched. For a relatively small fee, they could probably have avoided the entire issue. Instead, they went ahead and hoped to get a ruling on it. Even if they win, it’ll cost them much more than any earlier agreement would have.

20

It seems to me that if Apple Computers wanted out of the whole mess with Apple Records, they could come up with a sufficient wad of cash to make it go away without batting an eyelash.

The reason they won’t is that record labels go far beyond what Apple does with iTunes. The actual recording and distributing of the music is probably the least important thing that a record company does. The rest is all about marketing. It’s about getting the song in the Pepsi commercial, getting the song played on the radio (which occurs via a totally corrupt system of barely legal payola), getting the video on MTV, etc. Smaller acts might be able to do it on their own via their own management or a smaller label, but getting a writeup in Paste or a blurb in *Rolling Stone[/'i] or an opening slot on a bigger tour still usually takes a lot of marketing muscle.

While Apple’s marketing folks are certainly among the best, this is a totally different kind of marketing, in a very specific environment. Given the lawsuit trouble and the difficulties of entering a whole new line of business, it would only be worth Apple’s while to have a label big enough to compete with the Big Four (Sony, BMG, EMI/Warner, and Universal), and the Big Four have such a tight lock on the industry that they’re not going to let that happen.