Apple Set to Cave to Music Labels In Exchange for More Ringtones?

Have the music labels found a way to get Apple (NSDQ: AAPL) to cave on some of their age-old requests as well as an interesting new one? The NYT’s Saul Hansell reports the Cupertino-based company is deep in “active” negotiations with major music labels to increase the range and inventory of music content available on the iPhone. Specifically, Apple wants to increase its ringtone inventory and to start selling ringback tones. It’s also hoping to hammer out an agreement on whether it can sell songs directly from the iTunes store to iPhones, via the operator’s network. But the music labels have their own list of requests, and are seeing this as their best opportunity to get Apple to relent on some of their eternal demands. What do the labels want? For a start, they want more money on over-the-air downloads. iPhone users currently “sideload” music on to their phones—that is they download it first to their PC, and from there upload it to their mobile. But with 3G versions, they’ll be able to download directly to their devices over their carrier’s network. The labels believe this service should command a higher price than web downloads, which wholesale for $0.70 each. They also want more flexibility on charging different tracks at different prices, rather than the $0.99 price that Apple sells all iTunes songs for. This has been a sticking point in the past, even before the iPhone’s arrival. The labels have long argued that hits should be priced higher than $0.99, and older songs for less. The biggest demand comes from Universal Music Group which apparently wants Apple to do a similar deal to what the label has done with Nokia (NYSE: NOK) and its forthcoming “Comes With Music Service.” UMG wants Apple to consider bundling the iPhone with the right to download any song from a label for a certain period of time. No shock here that neither can agree on the price of such a service, with what Apple wants to pay far lower than what the labels think its worth.
http://www.paidcontent.org/entry/419-apple-needs-more-mobile-music-umg-demanding-nokia-style-comes-with-musi/