More than one media source claims that Apple (AAPL) will team up with Jay-Z, former president of Def Jam Records, to start its own record label. It seems the "Beatles" once recorded on Apple Records. No?
Based on information from "The Boy Genius Report" and "Ars Technica" the new label will be announced as early as Macworld Expo.
The move would be double-edged for Apple. Right now its iTunes store represents a total of 70% of music downloads.The industry figure hit 844 million in 2007 That means iTune revenues dwarf the sales of most music store chains.
Music artists are fully aware that CD unit volume is falling. Nielsen SoundScan puts last year’s drop at 15%. The contrast between download and CD revenue is a powerful incentive for performers to cut deals with a record company with a direct affiliation with Apple.
An Apple record label would alienate music publishing companies like Warner Music (WMG). But, its shares are down about 75% over the last year and the firm’s market cap is only $790 million. Apple’s is $171 billion.
The balance of power in music distribution belongs to Apple now. Jay-Z knows that, and so does every major recording artist in the world.
Douglas A. McIntyre
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