iTunes faces music price hikes
As contracts are being renegotiated, the record labels want more than 99 cents a song. Plus: Movie downloads draw negative reviews.
SAN FRANCISCO (Business 2.0 Magazine) - You'd think Steve Jobs would be the hero of the music industry, after a year in which online music sales almost tripled to $1.1 billion. But no. The record labels are again pressuring Apple (Research) to raise prices at the iTunes Music Store from 99 cents a song. Apple and the labels are renegotiating deals struck when its music store launched three years ago, and a key issue is variable pricing -- the right to charge more for singles from a hot band, and less for music from lesser-known acts. But charging more could backfire, since pirated music is still widely available to consumers on file-sharing networks, Needham & Co. analyst Charlie Wolf told the Associated Press: "[Customers] have an alternative -- they can get it for free."
Movie downloads get a thumbs down
Record labels aren't the only ones who want a bigger cut of digital sales -- Hollywood wants in on the action, too. On Monday, when two online movie services, Movielink and CinemaNow, brokered deals with major studios to sell A-list movies over the Internet beginning on the same day DVDs are sold in stores, the mainstream press hailed the deal as a landmark. The tech types weren't as impressed. Ars Technica says "the value proposition is weak," noting that downloaded movies are expensive compared to DVDs in stores and can't be played on a television or iPod-like device or burned onto a blank DVD. Blogger Lux.Et.Umbra asks if the studios "learned ANYTHING from iTunes," arguing that to prevent piracy, studios should lower the price, not increase it, compared to what they charge for DVDs in stores.
Venture-backed IPOs drop in first quarter
Hoping for a big score when your hot new startup goes public? Think again. IPOs of venture-capital backed startups raised $541 million in the first quarter of this year, down from $721 million in the first quarter of 2005 and $2.7 billion for the same period in 2004. Why the paucity of public offerings? Techdirt doubts that Wall Street restraint is a factor, noting a number of questionable dot-com deals that investment bankers are pushing. A simpler explanation: For the last few years, selling out to the likes of Google (Research) or Yahoo (Research) has proved a much faster and more certain way of cashing in than taking one's chances on the market.
Wireless gaming startups stick together
Two of the top contenders in the mobile videogame business are joining forces. San Mateo, Calif.-based Glu Mobile announced last night that it has acquired iFone, a British company. The combined company could have a value of $250 million, British trade MCV estimates. As cell-phones with color screens and powerful processors proliferate, the potential for the mobile gaming business has become ever more apparent, and kicked off an ongoing wave of industry consolidation. In December, Electronic Arts (Research) bought then-industry leader Jamdat for nearly $700 million. Mobile gaming enthusiasts saw that deal as confirmation of their industry's growing momentum. With iFone, Glu adds top-selling titles like Sonic the Hedgehog and Monopoly to its roster, but it remains to be seen if the new Glu's product lineup is the mobile equivalent of Boardwalk and Park Place.To send a letter to the editor about this story, click here.