Verizon (VZ) Works Around Apple (AAPL) iTunes
August 1, 2007 by Douglas A. McIntyreVerizon (VA) has set a deal with Columbia Records to allow its wireless users to download songs from band AD/DC for a modest fee. No PC is necessary. And, consumers can’t buy it on Apple (AAPL) iTunes.
The move is smart for Verizon because the new iPhone that AT&T (T) has exclusively runs music from the iTune platform. A little exclusive music for Verizon customers won’t hurt its marketing efforts.
But, the more important part of the deal is that its shows the extent to which music publishers will go to get back at Apple for setting the bar on pricing digital music and dictating the cut that the industry will get. The publishers are already waxing wroth about digital music replacing CDs and their loss of pricing leverage.
Apple has made the music industry, its the major content provider for the iPod, into its worst enemy. As long as it holds the upper hand of distribution that will not matter.
But, a billion cellphones are sold around the world each year. Some of those can run music. And cell providers plus the music publisher may be the only challenger iTunes has.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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