Apple, record labels to face off over pricing

The love affair between record labels and Apple Computer Inc. could be headed for the rocks as they bicker over prices ahead of licensing renegotiations set for early next year.The licensing agreements between Apple, maker of the wildly popular iPod digital music player and operator of the most widely used music download service, and the record labels are set to expire next spring.

Both sides, which have benefited enormously from music sales created by the iPod phenomenon, are jockeying for position.

Apple's chief executive Steve Jobs, believed by some to be the savior of the music industry, insists that prices should be uniform at 99 cents a song and $9.99 an album, saying that the buying experience for consumers should be simple.

Record executives, however, are seeking some flexibility in prices, including the ability to charge more for some songs and less for others, the way they do in the traditional retail world.

"There's no content in the world that has doesn't have some price flexibility," said Warner Music Group Corp. chief executive Edgar Bronfman at the Goldman Sachs Communacopia investor conference here. "Not all songs are created equal. Not all albums are created equal.

"That's not to say we want to raise prices across the board or that we don't believe in a 99-cent price point for most music," he said. "But there are some songs for which consumers would be willing to pay more. And some we'd be willing to sell for less."

Apple's Jobs blasted the record industry for mulling higher prices. "If they want to raise the prices, it means that they are getting greedy," he said at a press conference, adding that if the price goes up, the industry faces a higher risk of piracy.

Hit hard over the past five years by the rapid spread of illegal song copying over the Internet, record companies -- Universal Music Group, Sony BMG, EMI Group Plc and Warner Music -- have struggled to revamp their business as sales shift to more legal digital downloads from physical CDs.

The music industry was also aided by key legal victories against so-called peer-to-peer services, which allowed users to use the Internet to download music from one another's computers without permission from artists and labels.

Apple, for its part, played a huge role in setting that transition in motion with its iTunes service, by far the most popular legal Internet music service with about 70 percent share of digital downloads. iPods have a similar share in the digital music player market.

With that commanding lead in digital players and rave reviews for its new ultra-slim and sleek iPod nano, some have speculated that Apple will have the upper hand in negotiations over new licensing agreements, Washington Post reported.