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How Apple Caved to the Record Industry


iTunes LP was an apology letter written by and delivered to the RIAA.

Last-ditch efforts are rarely pretty. They reek of desperation and are usually reminiscent of all the poor choices and executions that originally landed a group at the end of its rope. While it's hard to blame an industry for showing signs of self-preservation as it nears obsolescence, if it's as odious and disdainful as the record industry, it's even harder for the public to show signs of sympathy.

An organization predicated upon greed, willful ignorance, and hypocrisy, the RIAA managed to antagonize every institution it dealt with -- artists, software developers, and consumers -- until everyone collectively turned their back on abiding any one of its draconian policies. And that abandonment became easier -- even compulsory -- with the rise of the MP3, peer-to-peer sharing, and Apple's (AAPL) double threat: iTunes and the iPod.

In a major blow to the RIAA, iTunes encouraged the pick-and-choose method to buying music, giving consumers the opportunity to pay $0.99 for a single rather than shelling out 10 times that amount for an entire album. As that practice became more commonplace, the RIAA needed a new format to boost revenue for the record industry -- you know, aside from the multimillion dollar lawsuits against college students sharing their songs.

As a result, record label executives met with Apple to discuss some new initiatives. Almost too good to be true, those meetings begot the end of DRM on iTunes tracks and flexible pricing. But hardly surprising, it's now been revealed that the underwhelming iTunes LP format also arose from the talks -- and it was the idea of the record labels, not Apple.

Paul Bonanos of the tech blog GigaOM recently spoke with a few record industry insiders to discuss the origins and status of iTunes LP. The feature expands select albums to also include lyrics, album art, videos, and related content. Titles have included Warner Music Group's (WMG) greatest hits package for The Doors, Dave Matthews' Big Whiskey on RCA Records (SNE), and Grateful Dead's American Beauty. Although the feature has posted a profit on the initial albums, iTunes LP has failed to connect with anyone but die-hard fans in the six months since its debut.

According to one anonymous source Bonanos spoke with, "It's something most people will look at once."

Part of the trouble was the prohibitive cost of each project -- somewhere in the realm of 50 to 60 grand. Sources indicated that Apple's promotion of the feature pushed sales into the black, but one participant in the project said, "If it costs $50,000 or $60,000, we're not going to do it again." While no one revealed profit numbers to Bonanos, he was told that iTunes LP's impact on record sales has been slim to none.

And allegedly, this was all a "concession" to the record labels in exchange for Apple's DRM-removal, flexible spending, and single track purchasing -- an incentive to get people excited about whole albums again. As it turns out, customers are perfectly fine with a .JPG of the cover art on their iPod screen.

Apple released an iTunes LP developers kit last year to usher more independent artists into the project. However, many artists have already gravitated to the App Store for digital extras. Bonanos wrote, "Numerous artists have released lyrics, videos, and other content in both free and paid apps, which also serve as channels for artist news and can be updated with new content anytime."

And its integration into the latest version of the unpopular Apple TV doesn't help matters much either. It was also barely a blip in the recent ad for the iPad -- proving it's as much of a "hobby" as the Apple TV. The future just doesn't look bright for iTunes LP.

Sorry, RIAA. Another one of your efforts to remain relevant in an increasingly digital world has proven fruitless.

But admittedly, it's not like you don't deserve it.
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