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Is Apple driving music to mobiles?

John Borland CNET News.com

Published: 20 Apr 2005 17:25 BST

When Apple CEO Steve Jobs walked into the suites of top record label executives in 2002, iTunes software in hand, he was welcomed as a trailblazer to a digital music future.

Now, nearly two years after Apple's iTunes launch, record executives have become worried that they have inadvertently ceded too much power over their industry to this charismatic computer executive.

Frustrated at what they see as Jobs' intransigence on song pricing and other issues, some record executives are now turning their hopes toward other partners, particularly mobile phone carriers eager to get into the business of selling music. They see this new focus as a way to broaden the digital music business, and lessen Apple's dominance over their market in the process.

"The [mobile networks'] economics are aligned with us much better than Apple is aligned with us," said one senior executive at a major record label, who asked to remain anonymous because of his company's ongoing relationship with Apple. "The mobile market is very important, as important to us as the PC."

Jobs is given undeniable credit for jump-starting what is now a fast-growing digital music market, but some music executives complain that his company, with 70 percent of the digital download market, is setting the ground rules for their own business.

While iTunes is designed to propel the sales of iPods — more than $1bn worth in the last quarter alone — the labels complain that Apple's policies are insensitive to their goals and limit their ability to grow their digital business even faster.

For example, Apple wants to sell all its songs for 99 cents each, a single price point that's easy for consumers to understand. But the record labels have pressed for the ability to vary prices to maximise their own sales. They want to sell older titles at a discount — like the $9.99 CDs available in most record stores — and charge more for popular songs to take advantage of market demand.