Apple’s music chief Robert Kondrk has been pressuring major labels for releases similar to last year’s Beyonce exclusive, excluding services like YouTube and Spotify to help shore up slowing download sales, according to music executives familiar with the conversations.
The tense talks with label executives during Grammy Week in Los Angeles in January were spurred by Beyonce’s success in launching her self-titled album exclusively on iTunes in December for one week, during which the album was only sold in its entirety. After the first week in which it sold 1 million copies globally, the album was available for sale at other retailers, and fans were able to buy tracks separately. Crucially, the pop diva kept the album off streaming services for the first week, but made two of the album’s 14 tracks available on Spotify the second week after release. Even her official YouTube videos were kept to 30-second teasers.
As music download sales decline for the first time, Apple is pressing labels to think about possible windowing strategies as a way to buoy faltering sales.
Apple operates the world’s largest music store and recently introduced an Internet radio service, but it doesn’t have an on-demand service similar to Spotify or YouTube. As a result, the iPhone and iPad maker has an interest in finding ways to preserve its iTunes business, which plays a vital strategic role in its overall content-to-hardware ecosystem.
In the meetings during Grammy Week, Apple’s iTunes contingent, led by Kondrk, even suggested the albums don’t have to be exclusive to iTunes, and that labels could give albums to other stores as well — but not streaming services. Republic Records artist Kid Cudi released “Satellite Flight” exclusively to digital retailers on Feb. 25 — led by iTunes.
Ironically, Kondrk also asked that individual track sales be locked down for a period of time before allowing them to be purchased separately and making the album available to streaming services, said executives from two major labels. This runs contrary to the album unbundling strategy first negotiated by Apple founder Steve Jobs with his original iTunes store label deal in 2003.
Kondrk’s sales pitch may have been just what label executives wanted to hear. The industry has been ambivalent about YouTube and other streaming services, which pay slowly over time as people stream tracks as compared with the immediate payoff of album sales.
“The iTunes theory was that because of the easy availability to access albums on YouTube,” says one major-label executive familiar with iTunes’ complaint, “it has punctured sales globally for tracks and albums.”