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Tuesday, May 20, 2008

NEGOTIATIONS LEAK: COULD VARIABLE ITUNES PRICING BE ON THE TABLE?


Steve Jobs wants to extend Apple's lead in online music sales to the mobile market, and the 3-G iPhone expected next month positions them to make the iTunes store available everywhere you have signal. Jobs also wants in on the ringtone and ringback tones business -- thoroughly impulse buys which become feasible on the iPhone only if purchasing can be done outside of a hot spot.

Trouble is, he needs some new deals from the record labels to make this happen. The record labels have some demands of their own -- chief among them variable pricing. As music licensing negotiations between Apple and the labels continue, the labels hope to trade mobile delivery for variable pricing, according to a New York Times' source, a record label executive.

An Apple spokesperson told Wired.com, "We don't comment on rumors and speculation," but we got a couple of analysts to weigh in on the possibilities.

"All sorts of discussions happen over time as the contracts [between Apple and the labels] expire. All sort of issues get lumped in, and no doubt [OTA downloads are] going to be one of them," Michael Gartenberg, VP and research director of Jupiter Research told Wired.com. "Clearly Apple understands that its devices are dependent on getting content - music, games, movies, ringtones etc., and it's going to work hard to make that happen. Apple's track record with iTunes and the iPod suggests they probably will get the kind of cooperation they need."

Still, the labels' demand for variable pricing could be part of the deal this time around. It's been a Jobs bedrock principle that one-price-fits-all works, and it has been hard to argue the point, what with Apple surpassing Wal-Mart as the world's biggest music store. After all, Apple let NBC walk over variable pricing but only last week agreed to a two-tiered pricing system with HBO.

So, is the time ripe for some horse trading?

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