Guest post by Tyler Hayes, founder of Liisten.com, an independent music discovery site.
If someone owns something can't they do pretty much whatever they want with it? Well, doesn't iTunes already pretty much own the music industry? An Apple run record label isn't a new rumor or topic. There were rumors back in 2007 that Apple would start a label and hire Jay-Z to run it. This would have been a huge surprise, but probably a tad early timing wise. Now, however, I think the time is just right.
In 2006, almost no one thought it would be a good idea for Apple to get into the cellphone market. It was an industry that was "entrenched" with incumbents and very low profits. Why would a company that supposedly knew nothing about making phones want to jump into a market that had low profits? It just didn't make sense until 2007 when Apple revealed the iPhone. Just 5 years later Apple has captured something like 5% of the phone market, but captured something like 80% of the profits.
Apple is amazing at disruption.
Microsoft had been making tablets a decade before the iPad and yet its Apple who is leading the way in the tablet, or should I say iPad, space.
Apple knows how to disrupt a product category and even a whole industry. It doesn't matter if there are 3 major labels or 100. Apple is a company that joins the race when they have a plan or, more importantly, a reason for doing so.
On several occasions dating all the way back to 1978, Apple Corps, owner of Apple Records, has sued Apple Inc. First it was because of the name, then it was still because of the name, but because Apple Inc. was getting into the music business with iTunes. For the most part the story plays out that Apple Inc. forges ahead with things it sees fit to do in order to expand it's market and then paying a sum of money to Apple Corps, for the supposed consumer confusion over the Apple name.
This is a great, and constant example that if Apple could further move in the music industry and simply pay off someone for unforeseen issues.
Also just because Apple enters a market, doesn't mean they can change the landscape. Take e-books for example. Even after a few years, I'd argue that Amazon is clearly still in the lead and clearly the one in control. So even if Apple did jump into music industry full force, there's a good chance they'd change everything, but no guarantee.
The how and why
Why is the real question because Apple has proven to be a company that only acts if they have a really good answer for "why". The simple answer is control.
Here's how I see an Apple record label working. The record label wouldn't be one in the traditional sense, but a label of the future. One that "signed" or accepted anyone.
Just like app developers connect directly to Apple through their developers program, I think Apple could do the same thing with music. On the software, or app, side devs pay $99 a year for access to sell in the app store so why not open iRecords, charge $99 a year for access and use the same 70/30 spilt with 70% going to the artist?
Right now Apple pays out something upwards of $15 million every month to record labels. If that could be transferred to artist instead don't you think musicians would absolutely run to the new label? Apple would continue to make minimal amount from selling music, but the real change would be with rights and control.
By doing this Apple could wield even more power over the music industry and, in my opinion, finally open it up so that it's able to transform from an age of analog practices to one that recognizes and embraces digital. That's a side benefit of course, but when you sell hardware the software or music or video content is an object that is necessary. By creating their own record label Apple could be the ones to shape the music industry in their image for the next 100 years.