Record Labels Skip Apple’s iTunes - WSJ.com
Some in Music Industry Say the Online Store Crimps Overall Sales
By ETHAN SMITH and NICK WINGFIELD
August 27, 2008 6:29 p.m.

ITunes has been the runaway hit of the music business, selling more than five billion song downloads since it started five years ago. But a growing number of record companies are trying to steer clear of Apple Inc.’s behemoth music store, because they think that in some cases it’s crimping overall music sales.

Kid Rock’s “Rock n Roll Jesus” album was kept off iTunes’ virtual shelves. It has nonetheless sold 1.6 million copies in the U.S. since its release last year — a sizable number for the depressed music industry. Sales of the album have increased in 19 of the past 22 weeks, according to Nielsen SoundScan, vaulting it to No.3 on the Billboard 200 sales chart. After witnessing the album’s performance, his label, Warner Music Group Corp.’s Atlantic Records, last week yanked an album by R&B singer Estelle from the iTunes Store, four months after it went on sale there — and the same week that one of its songs entered the top-10-selling tracks on Apple’s download service.

Avoiding iTunes runs against the conventional logic of the music industry, where it’s now taken as an article of faith that digital downloads will eventually replace CDs. But there is growing discomfort with the dominant role iTunes already plays: The store sells 90% or more of digital downloads in the U.S., according to people in the music industry. At the start of this year, iTunes become the largest retailer of music in the U.S., surpassing Wal-Mart Stores Inc., according to research firm NPD Group Inc.

Label executives, managers and artists chafe against the iTunes policy that prevents them from selling an album only as a single unit. ITunes, with few exceptions, requires that songs be made available separately. Consumers strongly prefer that, though Apple also typically offers a special price for buyers who purchase all the songs on album.

Some artists see their albums as one piece of work, and don’t want them dismantled. Their handlers believe they can make more by selling complete albums for $10 to $15 than by selling individual songs.

“In so many ways it’s turned our business back into a singles business,” says Ken Levitan, Kid Rock’s manager. Mr. Levitan says the rise of iTunes is far from being a boon to the industry; instead, he calls it “part of the death knell of the music business.”

Maybe I’m old school, because I always buy the full album, rather than just a smattering of singles … in fact, oftentimes, I find that the “single” is not the best song on the album; not the one that most represents a band.

For example, currently, one of my favorite bands is Augie March (with many thanks to Ari for the introduction) … their biggest “hit” single is the song “One Crowded Hour”; but by buying their albums, I was able to discover such other wonderful songs like “The Cold Acre” and “Victoria’s Secrets”.

By buying Eels’ Blinking Lights and Other Revelations, not only did I get “Hey Man (Now You’re Really Living)”, but I got “Ugly Love” and “Things the Grandchildren Should Know” as well.

Of course, I also get a lot of music from eMusic.com which emphasizes more independent releases, not just alternative rock and punk, but alt-country, classical, jazz … everything. If it’s not on a major label, there’s a good chance it’s on eMusic.com.

In fact, if you click the eMusic.com link above, or on the banner to the right (if displayed), you’ll be able to try it out and download 25 songs for free … and beyond that, there are various low monthly subscription rates. Me? I’ve got two 100-song subscriptions at $24.99/month each … because I’m a complete music junkie … I don’t expect any of you to go to that extreme.

Apple itself is setting the record straight and says that iPhone 3G's GPS mapping unit is as powerful as in dedicated devices. Also, cut-and-paste is still a possibility, and outside testers have found the iPhone's battery life the best in its class.

Contradicting claims by the New York Times' David Pogue, who was told by Apple that iPhone 3G's GPS chip is too small to work for turn-by-turn navigation, Apple product chief Greg Woswiak tells ExtremeTech that the hardware is just as capable as in other GPS-aware phones, many of which provide live driving directions.

Instead, the lack of an existing program from Apple or someone else to handle real-time road navigation is due to "complicated issues," according to the executive. He expects full navigation functionality to be expanded once developers are given more time.

"It will evolve," Joswiak says. "I think our developers will amaze us."

At least two veteran companies of the GPS industry, TeleNav and TomTom, have already said they are developing fuller navigation software than what's offered with the iPhone edition of Google Maps.

Read more: AppleInsider | iPhone 3G clarifications: battery life, GPS, office apps.

Do I sense marketing spin? Especially marketing spin designed to make people money by not building in certain functionalities, so that other developers can sell an app to take advantage of capabilities?

Nah … couldn’t be.

I just love that planned obsolescence … and inventory reductions!

iPhone sold out online

SAN FRANCISCO, California (AP) — Apple Inc. said Monday its online stores in the U.S. and U.K. are sold out of the iPhone, a sign supplies are being winnowed ahead of the launch of the device’s next generation featuring faster Internet surfing speeds.

The iPhone is out of stock online, but brick-and-mortar stores run by Apple and AT&T might still have units.

The Cupertino-based company confirmed that the iPhone is out of stock online, but added that brick-and-mortar stores run by Apple and iPhone carriers including AT&T Inc. might still have units available.

Apple spokeswoman Natalie Kerris declined to comment on reasons for the shortage and on Apple’s plans for an update to the device, which is widely expected to be unveiled in June at Apple’s Worldwide Developers Conference in San Francisco.

The paucity of iPhones for sale in some markets comes as Apple is hustling to meet its goal of selling 10 million of the hybrid iPod-cell phone-Internet surfing gadgets by the end of 2008. So far, Apple has sold 5.4 million iPhones, according to the latest data as of the end of March.

One way Apple’s expanding the iPhone’s reach is by inking deals with wireless carriers around the world, even breaking with its pattern of requiring exclusivity to sell in a certain country.

Yeah … I’m an Apple/Mac/iPod geek … but far from being an early adopter, I tend to wait until at least the second generation of a product comes out before buying.

My first computer was an Apple ][+ … my first Mac was the 512K (rather than the original 128K) FatMac … my first iMac was a mid-generation “flavor” … my first iPod was a 3rd gen, and my first Nano was a 2nd gen … and my current MacBook is a late 2007 model.

I’ve been wanting an iPhone since they were first introduced, but as always I know that there will be more features on the 2nd generation. The current inventory reduction (and corresponding “shortages”) will only serve to increase demand in advance of the introduction of the 2nd generation iPhone later this summer.

And at that point, it’ll be time to jump the Verizon ship and head over to AT&T and get me some iPhone action, baby. While I’m tempted to say I can’t wait, obviously I can, since I have to this point … so suffice it to say that I am giddy with anticipation.