"Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal".–The Sherman Antitrust Act, 1890.
Apple’s iTunes is sort of the digital Standard Oil of the 21st Century. Its share of the music download business is breathtaking. The Wall Street Journal writes, "The store sells 90% or more of digital downloads in the U.S., according to people in the music industry."
Several fairly big rock groups are boycotting iTunes. They say that the service’s program to sell songs for $.99 undercuts the marketing of their albums. People would rather buy songs one-by-one than shell out $10 or $15 to buy a CD.
The whole Apple model makes it more difficult for record labels and artists to make a buck. The music industry’s margins on iTunes are not as good as they are on CDs. A simpleton’s view of the trouble might be that Apple’s stock is up over 150% in last last two years and Warner Music Group’s (WMG) is off over 60%.
The fight against iTunes is not one that the artists or labels can win. They may be able to get one or two very successful albums sold without Apple. When sales dip, they will come right back. Long term iTunes is the only option for wide distribution of music. Apple has sold over five billion downloads and there are over 150 million iPods floating around somewhere.
The labels and artists are likely to have just one way out. The argument that iTunes is a monopoly which can fix both pricing and distribution has become compelling as online music stores set up by the competition have been pole-axed by Jobs & Company. iTunes has become the Microsoft (MSFT) Windows of the digital media age.
Most industries which have been beaten down end up in court suing those who have bested them. The music people are no exception.
Douglas A. McIntyre
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