Why record companies fear Apple

Stan Beer
Thursday, 15 February 2007 03:16

Opinion and Analysis

Until recently, record companies were the only avenue for talented musical artists to reach a global audience. In exchange for a contract which gave a relative pittance to artists, recording companies would handle the recording, distribution and marketing of the music.

Technology these days makes it easier and cheaper than ever for artists to do their own recording and, as far as distribution is concerned, iTunes and other download sites have a better reach than any physical music store chain. The only leverage that record companies have left is their marketing reach - and marketing prowess is something they certainly don't have a monopoly on.

Steve Jobs, the baby boomer, is known to be a music fan. His company now owns the biggest legal online music store in the world, by far the best selling portable music player and iTunes is starting to promote artists that are unaffiliated with recording labels. How far away are we from iTunes becoming a recording label?

Against this backdrop, the final sentence in the letter from Coral Consortium to Jobs is interesting: "We offer Apple, Inc. a warm invitation to join Coral's ranks and help provide interoperability and the increased choice that will bring to all of our customers."

That sounds like an ingratiating attempt to get an adversary that has become too powerful to step on side. The burning question is whether Jobs feels confident enough to stick by his guns and ignore the bait.