iTunes to Sign Artists Directly and Go Around Music Execs

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Over Christmas there was some intense negotiations between the various record companies and Apple over the removal of Digital Rights Management and Variable Pricing for music. The primary issue was that Apple wanted to get music distribution onto the iPhone because they felt that impulse buying on the iPhone was an important component to growth. They had offered variable pricing in return for these terms but over Christmas Sony was the only hold out, which resulted in Steve Jobs intervening.

In interviews, several high-level music executives, who spoke on the condition that they not be named to avoid angering Apple, said they operated in fear of Apple’s removing a label’s products from the iTunes store over a disagreement, even though that has never happened. The labels do not have much leverage in negotiating with Apple…..