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“At the moment, the music industry has little leverage to persuade Mr. Jobs to change his stance. Yet a poor performance with the video iPod could give them a stronger hand at the bargaining table by underscoring how dependent the iPod franchise is on music.”
——from a WSJ story
THE VIDEO iPOD—WHAT’S IT MEAN FOR THE MUSIC BIZ?
In Attempting to Answer That Burning Question, We Join Legit Media by Saying, "Who Knows?"
The music industry was upstaged by prime-time TV at Steve Jobs’ latest media extravaganza Wednesday, for one simple reason: Lost and Desperate Housewives are simply sexier than standard-issue music videos, and Jobs is clearly no Johnny come lately when it comes to drawing attention to a new product, in this case the video iPod. Nonetheless, the availability of music clips—2,000, for starters, at $1.99 a pop—in the iTunes Music Store could herald a sizable new revenue stream. Of course, it could just as easily fall flat. 

“The market is likely small for people who want to watch a portable video on a little screen,” Yankee Group analyst Nitin Gupta told Reuters, echoing the beliefs of many in the technology and media realms. “That will not be the main reason people buy the iPod. It is just an enhancement.”

So it would seem to be a stretch to assume that revenue from sales of music clips at the iTMS will be anywhere close to the millions generated by present and future deals between the Big Four and the online content providers for video on demand. But then, you never know what those nutty kids are going to find cool.

We looked at a bunch of stories about the unveiling this morning in search of some specific coverage of the music biz angle, and we didn’t find a whole lot. Not surprisingly, the solidest takes came from The Wall Street Journal and The New York Times, although both were far more intrigued by the dance between Jobs and new Disney chief Bob Iger than with the implications for music.

The WSJ calls Apple’s move “the biggest step yet toward making money from the clips.” But the story points out that the video clips “won't come with the same flexibility as songs sold on iTunes. In one major difference, customers won't be able to copy iTunes videos onto DVDs, which means they won't be able to watch the content on televisions unless they hook their computers or video iPods to their sets. Moreover, the quality of the videos Apple is selling isn't as high as that on standard DVDs, though Apple executives said it will satisfy most consumers who view the content on their iPods and computer screens.”

The story also takes not of the sparring that’s been going on between Jobs and music moguls “including Warner Music Group Corp.'s Edgar Bronfman and EMI Group PLC's Eric Nicoli, [who] have publicly jousted recently about the music companies' desire for Apple to sell songs for a variety of prices on iTunes rather than limiting all tracks to 99 cents each. Mr. Jobs has recently called the music executives ‘greedy.’ The recording industry, to no avail, has also pressured Apple to license its copy-protection software so iPods will work with other online music services. At the moment, the music industry has little leverage to persuade Mr. Jobs to change his stance. Yet a poor performance with the video iPod could give them a stronger hand at the bargaining table by underscoring how dependent the iPod franchise is on music.”

The NYT described Jobs’ presentation as “a drama in three acts,” moving from the introduction of a remote to control video, audio and other functions on the iMac to the video iPod to the video source: the iTunes music store. The story then pointed out Jobs’ admission that he had made an about-face on the notion of portable video: “For two years he had been consistently critical of the video quality available on portable low-resolution devices—and even the idea of using the technology to watch videos in public places while engaged in other tasks. Mr. Jobs said he was entering the video market as an experiment, but one that he felt he could not lose because the players will sell well on their music-playing features alone. ‘People will buy these iPods, because they are the best digital music players in the world,’ he said, acknowledging that listening to music is a ‘background’ activity while watching videos is a ‘foreground’ undertaking.”

In any case, the term “stay tuned” has just taken on a whole new meaning.

RIC OCASEK,
1944-2019
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