Music Labels Pressure Apple to Make ITunes Subscription Based

Several of the world's biggest music labels are expected to ask Apple to introduce a music subscription service to its iTunes store.

The push by music companies to offer a subscriptions model is part of negotiations to renew their agreements with the computer and digital media company.

The negotiations will hit full swing next week when Universal Music, the largest record company, sits down with Apple. Sony-BMG, EMI, and Warner Music are also in talks, or will soon be in talks, with Apple, according to sources close to the situation.

The talks are important to the record industry due to the continued drop in CD sales. Enders Analysis predicted this week that global music sales would fall drastically to $23 billion in 2009, a 16 percent drop from last year.

The music labels favor a subscription service instead of iTunes current model of charging 99 cents per track because they think it would increase the download of music. I

t would also mean that the music labels would share monthly payments and there would be small licensing fees when their music was played.

The negotiations between Apple and the record labels are just an example of the tensions between companies that create music content and the companies who distribute them online.

The record industry has been frustrated that Apple has gotten most of the profits from the music market through sales of its iPod player. Music labels have not seen much profit due to most of the songs played on iPods being downloaded illegally.

Unfortunately for music companies, they have been forced to accept Apple's terms because the service accounts for about 75 percent of online music sales in the US.

Neither Apple nor the music labels were immediately available to comment on the situation.

Sources:
http://ca.today.reuters.com/news/newsArticle.aspx?type=technologyNews&storyID=2007-04-14T033328Z_01_N13445821_RTRIDST_0_TECH-DIGITAL-COL.XML
http://www.msnbc.msn.com/id/18081090/