It’s Time For iRecords, The Apple Record Label
Guest post by Tyler Hayes, founder of Liisten.com, an independent music discovery site.
If someone owns something can't they do pretty much whatever they want with it? Well, doesn't iTunes already pretty much own the music industry? An Apple run record label isn't a new rumor or topic. There were rumors back in 2007 that Apple would start a label and hire Jay-Z to run it. This would have been a huge surprise, but probably a tad early timing wise. Now, however, I think the time is just right.
Disruption
In 2006, almost no one thought it would be a good idea for Apple to get into the cellphone market. It was an industry that was "entrenched" with incumbents and very low profits. Why would a company that supposedly knew nothing about making phones want to jump into a market that had low profits? It just didn't make sense until 2007 when Apple revealed the iPhone. Just 5 years later Apple has captured something like 5% of the phone market, but captured something like 80% of the profits.
Apple is amazing at disruption.
Microsoft had been making tablets a decade before the iPad and yet its Apple who is leading the way in the tablet, or should I say iPad, space.
Apple knows how to disrupt a product category and even a whole industry. It doesn't matter if there are 3 major labels or 100. Apple is a company that joins the race when they have a plan or, more importantly, a reason for doing so.
Potential Problems
On several occasions dating all the way back to 1978, Apple Corps, owner of Apple Records, has sued Apple Inc. First it was because of the name, then it was still because of the name, but because Apple Inc. was getting into the music business with iTunes. For the most part the story plays out that Apple Inc. forges ahead with things it sees fit to do in order to expand it's market and then paying a sum of money to Apple Corps, for the supposed consumer confusion over the Apple name.
This is a great, and constant example that if Apple could further move in the music industry and simply pay off someone for unforeseen issues.
Also just because Apple enters a market, doesn't mean they can change the landscape. Take e-books for example. Even after a few years, I'd argue that Amazon is clearly still in the lead and clearly the one in control. So even if Apple did jump into music industry full force, there's a good chance they'd change everything, but no guarantee.
The how and why
Why is the real question because Apple has proven to be a company that only acts if they have a really good answer for "why". The simple answer is control.
Here's how I see an Apple record label working. The record label wouldn't be one in the traditional sense, but a label of the future. One that "signed" or accepted anyone.
Just like app developers connect directly to Apple through their developers program, I think Apple could do the same thing with music. On the software, or app, side devs pay $99 a year for access to sell in the app store so why not open iRecords, charge $99 a year for access and use the same 70/30 spilt with 70% going to the artist?
Right now Apple pays out something upwards of $15 million every month to record labels. If that could be transferred to artist instead don't you think musicians would absolutely run to the new label? Apple would continue to make minimal amount from selling music, but the real change would be with rights and control.
By doing this Apple could wield even more power over the music industry and, in my opinion, finally open it up so that it's able to transform from an age of analog practices to one that recognizes and embraces digital. That's a side benefit of course, but when you sell hardware the software or music or video content is an object that is necessary. By creating their own record label Apple could be the ones to shape the music industry in their image for the next 100 years.
Given the way the CD design disappeared from the logo of the iTunes software, Apple very obviously does have an interest in that the music they sell is not related at all to a physical product which is not a device sold by themselves. So a label by them will not be called iRecords. Apple might certainly want to eat into the market share of performance rights societies and music publishers as well but at the time, I guess there is not enough money to be made in there for them to seriously consider this step. However, iTunes could become a marketplace just like amazon these days is not a book seller anymore but a marketplace. Of course, this would need to coincide with Apple branching out into the finance world, with their next iDevice incorporating a Paypal kind of structure of iMoney which is stored inside the device with a backup of your account standings in the cloud available as an additional purchase. It is beyond me how they could get that to working without a hefty increase in their customer support, though.
Well, maybe they don’t go iMarketplace first but turn every user of their next iDevice into a member of their own online social network, the structure of which would then be implemented in their next operating system iFriends, also available for the next generation device from the Mac line. This way, they would not need to increase customer support because you could always ask your iFriends how to do that what you don’t know. Who knows how Facebook would react on that kind of competition? I guess when done right, Apple could eat Facebook’s pie because the latter are not hardware based.
Anyway, this is just big corporations dicing it out amongst themselves. Where is the benefit for real musicians in all of this?
An interesting read – but for now I fail to see the benefit from the artists point of view. It’s already possible to get your music into the itunes store (as well as countless other online platforms) for a one-off fee rather thatn a yearly prescription.
The main reason for signing to a label is the marketing support, professioinal network, expertise and the less tangeable ‘credibility’ you receive in return for signing up: It would be interesting to see what the likes of iRecords would offer!
with the cut that they currently take via iTunes, perhaps an appropriate label name would be iBandit. “meet the new boss. same as the old boss.” -pete townsend
once again, peter townshend is way ahead of the curve.
http://www.bbc.co.uk/news/entertainment-arts-15528101
YES, YES, YES!!! It is time. The music industry is on a slow burn to the bottom. Most executives know this, and are trying to make as much money as possible before it hit rock bottom. Please, (retire) ALL the overpaid worthless executives. They do absolutley nothing, but go to all the parties. TJ Martell, Grammies, American Music Awards, Billboard Music Awards and MTV Video Awards. THATS ALL THEY DO!! Put them out to pasture. Its a new day.
Godvin the god
Bingo!
Apple is already known to treat indie artist as second class suppliers; So other then new artists most are already aware of how Apple works and they won’t be ripping up contracts to sign more of their rights over to Apple.
And! if they don’t go after the indies they’re left trying to ape the major model which is the one that is broke and I’m not sure that Apple would be sustainable once the other major pulled content off of Apple.
Now considering that 90% of the music produced is Indie and yet the Majors make 90% of the profits adding another Major to the mix will fix what?
BTW pay no attention to this……
“Apple points to the fact that when the depositions were taken, many individuals, including UMG employees, were sent out of the room. And that when Jobs’ deposition was played before the jury, the judge closed the courtroom, ordered many people to leave, and had the transcripts from the trial sessions filed under seal.”
http://www.billboard.biz/bbbiz/industry/legal-and-management/why-does-apple-want-to-hide-steve-jobs-secret-1006919152.story
http://thenextweb.com/media/2011/06/24/what-if-tech-companies-ran-the-music-business/
Nuff said…
I think that post sums up more of my feelings than anything I could dig into here.
Though it’s also worth pointing out that, when you consider the level of control freakery at Apple, it might not be so cool to have them involved with content decisions:
http://gizmodo.com/5490310/its-time-to-declare-war-against-apples-censorship
We can all share some of Apple’s growth by riding the iTunes bandwagon. Now I’m able to distrubute my music across the world through a number of services that connect directly to iTunes. Sure Apple takes their cut, but the growth of technology has mutual benefit.
On that note, I just released my newest album “Spirit Moves Me’ if you’d like to check it out: http://zyzzxdesigns.com/music
Good post to grasp some new info about the Apple’s growth with the help of iTunes.. Thank alot
Will it will be iRecords or GoogleRecords, take your pick. It’s just a matter of time.
I’m calling it. It will be Amazon Records.
Maybe it’s more likely to be called iTunes Records.
Nice Article. Very informative. Currently, I still using Itunes, though, I am open for changes.
Please do check new uploaded demo track in our original rock opera: “Bring about the end”. Go check it out http://crimsonchocrus.com.
That may well be the silliest idea I’ve heard this year. Never get into “product” if you own distribution. That type of vertical expansion is the best way to devalue Apple’s stock and kill investor confidence. The music business needs to be completely deconstructed and moved back to creatives not moved from one multi-national to another.
i dont understand this – itunes already distributes artists content for a cut – why would an artist now want to pay to be somewhere where they already are ?
and pay to be signed by a label ?
nonsense article