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Archive for Sunday, August 20, 2006

Online holdouts give in as iTunes popularity surges

August 20, 2006

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— Bob Seger turned the page, and Metallica finally found justice for online fans. Now, only a few remaining big-name musical acts refuse to make their songs available on Apple Computer's popular iTunes Music Store.

Analysts say the online holdouts - including the Beatles, Led Zeppelin, Garth Brooks, Radiohead and Kid Rock - probably can't avoid iTunes forever as fans flock to the Internet to buy music.

But the artists argue online distribution leaves them with too small a profit. And, they say, iTunes wrecks the artistic integrity of an album by allowing songs to be purchased by the track for 99 cents. Some bands, such as AC/DC have released albums on other, more flexible sites, but not iTunes.

"We've always thought certain artists put out albums that aren't meant to be compilations with 50 other artists," said Ed "Punch" Andrews, manager for both Seger and Kid Rock. "We're hoping at some point albums become important again like they were in the past 30 years."

There are other reasons bands avoid cyberspace. In some cases, various parties that own or control older music catalogs can't agree to a distribution contract. Others have avoided the Internet altogether out of piracy concerns. (Most online stores, however, use rights-management technology to protect against unauthorized distribution.)

British rock 'n' roll group The Beatles, from left to right, George Harrison, John Lennon, Ringo Starr and Paul McCartney, are seen during their first U.S. tour in 1964. The Beatles and other artists refuse to allow their music to be sold on iTunes for downloading, claiming that they are getting only a small slice of digital profits.

British rock 'n' roll group The Beatles, from left to right, George Harrison, John Lennon, Ringo Starr and Paul McCartney, are seen during their first U.S. tour in 1964. The Beatles and other artists refuse to allow their music to be sold on iTunes for downloading, claiming that they are getting only a small slice of digital profits.

Since record companies have realized the popularity of iTunes and other sites, many reworked contracts to give artists less money per download. Andrews said while record companies once offered artists about 30 cents for each song sold, now musicians are earning less than a dime.

Contractual issues, the fight to save full-length albums and piracy fears have kept both Seger and Kid Rock from distributing their works online, Andrews said. Seger, however, did allow online stores to sell his new single "Wait For Me," from his upcoming September release - his first studio album in 11 years.

Seger, the legendary rocker from Michigan who entered the Rock and Roll Hall of Fame in 2004, is considering releasing his classic 1976 album "Night Moves," but wants to make it so it only can be downloaded as an album, Andrews said.

"It's amazing how many people go there," Andrews said of iTunes. "We're hoping albums work there." Andrews said he wasn't sure if Apple would allow the album to be kept intact.

An Apple spokesman declined comment.

But bands can no longer risk losing out on sales and marketing generated from the digital formats, especially on iTunes, said Phil Leigh, an analyst with Inside Digital Media, a market research firm. With CD sales continuing to drop, it's only a matter of time until the last holdouts give up, he said.

"Any artist that doesn't is going to be left at the station," Leigh said. "It's not a secret that growth in the CD market is as dead as General Custer."

The popularity of iPods already has made Apple's iTunes the dominant way of legally downloading music. The three-year-old store has already sold more than a billion songs.

Because songs downloaded at Microsoft Corp.'s MSN Music, Napster and other sites won't work on Apple's 58 million iPods, iTunes holds about 70 percent of the legal downloading market.

Metallica, who helped lead the charge to shut down the old Napster in 2000, finally gave in late last month and released their songs on iTunes, including several unreleased live tracks.

"Over the last year or so, we have seen an ever-growing number of Metallica fans using online sites such as iTunes to get their music. ... Fire up your iTunes, your iPods and whatever else you've got, like we do, and enjoy iMetallica," the band wrote on its Web site.

The Red Hot Chili Peppers joined iTunes in April with the launch of "Stadium Arcadium," their first album in three years. The band presold tickets for its tour and gave bonus content to fans who preordered the album. This month, Bob Dylan also used the site to presell concert tickets.

Record labels say they're working with their bands to embrace all possible formats, including online music stores.

"It's undeniably clear that fans go online to keep up with artists," said Jeanne Meyer, spokeswoman for EMI North America, which has represented the Rolling Stones and Beastie Boys among other bands as they made successful leaps online. "So it follows that there is a fairly big demand for buying music legitimately online."

Still, online holdouts remain.

The Beatles, who were one of the last bands to embrace CDs, haven't allowed any online service to sell their music. Solo songs from John Lennon, for instance, are not on iTunes but are available on MSN Music and other sites.

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