A deal could yield up to $6 billion for parent firm Vivendi and make tech maverick Steve Jobs the most powerful figure in the record business.

In a pairing that would alter the architecture of the music business, Apple Computer Inc. is in talks with Vivendi Universal to buy Universal Music Group, the world's largest record company, for as much as $6 billion, sources said.

Such a seemingly unlikely combination would instantly make technology guru Steve Jobs, Apple's co-founder and chief executive, the most powerful player in the record industry.

Universal, which reaps about $6 billion in sales annually from artists such as 50 Cent, Shania Twain, U2 and Luciano Pavarotti, would be controlled by a maverick who revolutionized the computer market and coined the mantra "rip, mix, burn," which many in the music business read as an invitation to electronic piracy.

Read the entire story in the LA Times

Apple = iPod (music sharing)
Apple = Universal = Powerhouse = LEGAL MUSIC SHARING!!

Wishful thinking.

Not really. Last week, I thought all they had to do was hook up with George Martin at GarageBand.

Steve had a better idea, apparently.

If this were to pass, something tells me (my gut instinct, perhaps?) that Apple's attitude, over time, would become more and more like Sony's in the years since THAT company entered the film and music businesses (i.e. the paranoia-based business decisions, the continuing over-emphasis on "copy protection" -- the list is endless). I'm surprised, though, that Apple hasn't proposed to purchase EMI -- which distributes Apple Records! (Ha, ha, ha.) I hope my prediction doesn't come true, mind you, but knowing the way the wind blows, I'm too much of a realist not to see what may be coming.

Also interesting that the proposed purchase amount equals what Unilateral -- er, Universal Music makes in sales.

I know Chuck Phillips - I'll take a chance and post the whole article here. Please forgive me Chuck - I'll make it up to you next week in LA at Lunch!!!

-------------------------------------------------------------------------------
http://www.latimes.com/business/la-fi-apple11apr11,1,6558114.story?coll=la%2Dhome%2Dheadlines

Apple Reportedly in Talks to Buy Universal Music

A deal could yield up to $6 billion for parent firm Vivendi and make tech maverick Steve Jobs the most powerful figure in the record business.


By Chuck Philips
Times Staff Writer

April 11, 2003

In a pairing that would alter the architecture of the music business, Apple Computer Inc. is in talks with Vivendi Universal to buy Universal Music Group, the world's largest record company, for as much as $6 billion, sources said.

Such a seemingly unlikely combination would instantly make technology guru Steve Jobs, Apple's co-founder and chief executive, the most powerful player in the record industry.

Universal, which reaps about $6 billion in sales annually from artists such as 50 Cent, Shania Twain, U2 and Luciano Pavarotti, would be controlled by a maverick who revolutionized the computer market and coined the mantra "rip, mix, burn," which many in the music business read as an invitation to electronic piracy.

The discussions, a closely held secret for several months, could founder over unresolved issues. Apple hasn't made a formal bid but may offer $5 billion to $6 billion for the music company before Vivendi's April 29 board meeting, according to the sources.

Jobs and other Apple representatives declined to comment, as did representatives of Universal Music Group and Vivendi Universal.

The Cupertino, Calif.-based computer maker's surprise play for Universal Music could alter the dynamics of the bidding for Vivendi's entertainment assets. The French giant, in a move to reduce debt, seeks to raise $7 billion this year by selling assets that probably would include some or all of its Universal film, television, theme park and music units.

Investor Marvin Davis has offered about $13 billion for 65% of the entertainment assets and has been the only known bidder to express serious interest in the music company. A separate sale of the music operation would appear to work in favor of Liberty Media Corp. and others that are focused on the company's other entertainment properties.

Jobs' pursuit of Universal comes at a time when Apple, with less than 3% of the desktop computing market, has been struggling to find its next wave of growth and the music industry has been buckling beneath the pressure of online piracy and falling sales.

Defying conventional wisdom, Jobs apparently is betting that music is finally on the verge of becoming a profitable presence on the Internet. Apple has been quietly testing a service that some music business insiders believe could pave the way for widespread online distribution of songs.

People who have tried the service, expected to debut by the end of April, say it makes downloading and purchasing music as simple and nontechnical as buying a book from Amazon.com. It allows users to buy and download songs to their computers with a single click and to transfer the music automatically to their portable MP3 players.

The computer maker, known for its iMac desktop computer and other high-profile products, posted an $8-million loss on sales of $1.47 billion for its fiscal first quarter ended Dec. 28 — marking the company's first back-to-back quarterly losses since Jobs returned to the CEO post in 1997. Apple has annual sales of about $5.74 billion and had about $4.4 billion in cash, cash equivalents, and short-term investments as of Dec. 28.

Jobs, who also is chairman of Pixar Animation Studios, helped found Apple in 1976, then stepped down as its chief nine years later to launch Next Inc. He returned to Apple when it acquired Next.

Universal Music Group, which saw operating profit slide 23% to $510 million last year, dominates the industry in 63 territories around the world and accounts for about one-quarter of all CD sales. Headquartered in New York, the record company boasts a deep roster of executive talent and music stars on such top labels as Interscope and Def Jam.

Vivendi first approached Jobs in December, sources said, not long after its music executives visited Apple's headquarters to view a demonstration of his new digital service. Impressed by the service and Jobs' vision of music's future, Vivendi initially proposed selling him a minority stake in its record operation, sources said.

Since December, the discussions have broadened considerably, with Jobs attending a series of meetings with Vivendi chief Jean-Rene Fourtou and other top executives in New York, Los Angeles and Cupertino, sources said.

By March, Jobs began weighing the possibility of buying the entire music division and hired investment bank Morgan Stanley to conduct due diligence, sources said. This week, accountants were poring over bookkeeping records at Universal offices in New York and Santa Monica, sources said.

Jobs' interest in owning a music company comes at a time when the record companies believe that piracy has decimated CD sales around the world, shrinking revenue nearly 25% since 2000. Last year, Jobs infuriated the industry with Apple's "rip, mix, burn" marketing campaign, which many executives believed promoted piracy of music on Apple's computers, though Jobs insisted that the technology was meant only for legal copying.

People close to Jobs say he is convinced that the music industry is about to turn a corner in the copyright war. With the government shutting down pirate Web sites and the record industry now going after individuals for alleged piracy, the Apple chief believes digital theft will become increasingly more complicated, prompting fans to migrate to legitimate services, sources said.

Analysts believe that the 48-year-old Jobs will have to do more than make legal downloading easy. They say he also will have to slash prices, possibly to as little as 10 cents per song, to persuade consumers, many of whom have grown accustomed to free downloads, to buy music from Apple.

The launch version of Jobs' new service was developed by Apple specifically for users of its computers and iPod MP3 device. Given its minuscule market share, Apple is likely to develop a version of the service to run on computers using Microsoft Corp.'s dominant Windows software.

Jobs already has secured deals with four of the world's five largest music corporations to allow their catalogs to appear on the service, sources said.

"Analysts believe that the 48-year-old Jobs will have to do more than make legal downloading easy. They say he also will have to slash prices, possibly to as little as 10 cents per song, to persuade consumers, many of whom have grown accustomed to free downloads, to buy music from Apple"


10 cents a song now thats what I'm talking about I'd pay that.

So does Jobs get mp3.com in this deal?

Thing is, if Apple buys Universal music, look forward to more enhanced CDs that use Quicktime. Good way for Apple to advertise, y'know.

Next thing you know, Microsoft will buy a record company and their enhanced CDs will all have Windows Media Player and only rip to WMA format with DRM enabled.

How does a company that is losing money, and has a very small share of the computer industry buy out other companies? They just bought Emagic last year. Perhaps they're trying to make money in other ways since their computers aren't making enough money. They sure are expensive enough, though. But we buy them because we love them!

Apple = Retardation

Phil Leigh Cooments on Apple possibly buying Vivendi/Universal

The Los Angeles Times reports today that Apple Computer is in talks to buy Universal Music from Vivendi.Here are our thoughts:

1. Such a merger would DOUBLE the size of Apple's annual revenues.

2. Upon reflection, such a transaction is not really as surprising as it might otherwise seem. We believe that Apple Computer has been slowly evolving into a digital media company anyway. Their computers are focused on digital media applications. They have been enormously successful with the iPod portable MP3 players and even make versions that work with Windows-based PCs. Apple is rumored to be set to start and online music service of its own before the end of this month. Steve Jobs is reported to be the personal driving force behind the company's online music initiatives.

3. To our thinking the transaction would remove any shadow of doubt that Apple intends to become a pillar of digital media. The company is clearly attempting to evolve away from being merely a personal computer company. It does not want to be controlled by the same economic dynamics that govern the conventional business PC market.

4. Once Universal is under Apple's control, it could become a trend-setter for the other major labels in the movement to online distribution. For the past five years, CD music sales have been flat-to-down and are expected to decline again this year. Online distribution is is the wave of the future. Ultimately the transition is as certain as fleas on a yard dog. The only way to offset the declining revenues from CD sales is to adopt Internet distribution.
Universal is the biggest of the five majors and holds about a 30% market share. We believe it likely that an Apple-controlled Universal Music would offer more liberal consumer use rules to the online music services. Based upon it's historical record of innovation, we believe that Apple can be relied upon to deliver a service that is consumer friendly and reliable. To date, the labels' infant initiatives for Internet distribution at pressplay and MusicNet have been plagued with software bugs and complicated interfaces.

5. While we believe that an Apple-controlled Universal Music can be a trend-setter, it is not a certainty. For example, BMG was once the innovative leader. It loaned money to Napster when the P2P service had no music licenses. BMG invited the other labels to join them in a business proposal to convent Napster to a legitimate operation. BMG was given the cold shoulder and the men at BMG who sponsored the initiative, were forced out of the company.

However, today the situation is different. All the five major labels are increasingly recognizing that something has to be done on the Internet front aside from writing ever-larger checks to their lawyers. Sony has new management. AOL is reportedly trying to sell pieces of Warner Music. EMI is in perpetual crisis. In such an environment, as Andrew Jackson put it, "One man with courage makes a majority". Universal Music can be that "one man with courage."

Phil Leigh
Vice President
Raymond James & Associates
727-575-5939

I think it proves an earlier statement of mine.
I claimed that music creation and distribution will soon be done by tech companies, not by recording labels.

It used to be that music could be sold as such, peopl epaid 10,20,40 bucks for a $.50 -CD.
Now music is free; the only place where you pay is when you buy your CDR/HDD/MP3player/etc.

Too increase sales of equipment and media, tech companies need to keep the flow of music going, something which the labels will no longer be able to do due to their bankruptcy in forseeable future(cuz the labels dont really produce anything).

I am personally quite satisfied with this situation: pay for MP3 player; get music for free.

(sorry for typos)

What is funny!! Is why are we concerned with the sale of any record company? Anyone can open a website to sell his or her music now. And use file sharing to get it out on the market place! What can they offer that is not already on the market today. Webhosting is very cheap and getting ecommerce is not to crazy and producing your own music thanks to the PC prices and all the great music programs you can turn out big fat master quality music. And distribution is a piece of cake now no hassle to get signed just release and promote!!

I am a indie artist who could not care less about the sale of Universal,EMI etc...... It seems obvious that any major label is over priced for sale these days and they are not generating much money as the P2P Networks are sharing there complete music catalog for free!! Plus the music business model is out dated and people are not keen to purchase music the old way! So you have to be desperate to try to buy a label, Also consider this people are looking for new music all the time that is why Dmusic.com is on the set!! I started my indie site mywpmusic.com to feature my music even have digital delivery system you can order the mp3 file and get it delivered via download link after purchase. Sales are OK I think that it is a pleasure to get paid for your music that you created and released without some egg head music exec telling you it not this and that!!!

There is no real point of change if apple buys Universal the same is going on filesharing is still out of control!! And since I have been promoting my music on filesharing networks I have 150 new fans a day!!!
That is 7000 download of my DRM music samples since early FEB 2003!!

Just go there and search for me Marcus Williams on Kazaa and you can sample my music right now!! And you don't need apple QT to do so! To me Filesharing is the one to watch, when will P2P Networks get a business model that can offer secure music and sales from the downloads!!!! That is when the playing field is really on the level!

So they are all grasping for straws and to me it spell the beginning of the end I expect many BIG corp in the entertainment section will fall and lots of consolidation this year as well. It is to easy to release music on the web as an artist the trick now is to promote & sell it!! Not worry about what label is for sale!!

Just my 2 cents

Lve to all

Marcus Williams
(Indie Jazz & New Age Artist)

Marcus, I am in total agreement with what you say after the second sentence. I'm doing the same thing you are.

Why should we be concerned with the sale of any record company? Because right now all the labels are attempting to criminalize that free promotion.

If just one major label turns its back on the idea of prosecuting people for listening to music, the rest have no choice but to follow suit. If it happens, you win, I win, the college students we are trying to reach as potential fans win, and maybe, just maybe, the art of music is finally allowed to enter the 21st century.

I think they are fucking up buying Sony. They suck now

Apple buying universal music isn't likely to stop its campaign on piracy, just alter it a bit. UM would start putting its music on Apples own legal download service (apple is worried Windows Media could become the De Facto standard for multimedia because of microsofts anticompatative attacks, such as bundleing WMP with windows and makeing the Windows Movie Maker the default firewire capture program on XP). Universal music would probably continue to fight p2p. It would lessen or stop its demands for DRM in everything through. Apple knows DRM will finish off its computers, which are already barely competing with windows PCs.

"I am personally quite satisfied with this situation: pay for MP3 player; get music for free."

nice one spica! really smart thinking! may i ask what kind of work you do? whatever it is, i'll have some for free. have you no respect whatsoever for music?

as a professional musician/composer/producer i'm making a very decent living nowadays. but let me tell you it was very hard work and about 10 years of sacrifice and dedication...

i do agree that cd's are way to expensive. by offering music online we can reduce the retail price by 60%-70% (without the artist losing money)...cheap enough for you?

maybe you should read the part where I explained how music becomes free due to musicians are being employed by tech companies as opposed to labels.

until then: go get a real job.

That's hardly an improvement. The tech companies should be "working for" the musicians, not the other way around. Labels were supposedly created to help distribute/market music, not create/control music.

If Apple's ownership of Universal helps put the production power back into the hands of the musician and removes the big-label barrier between music and consumer, more power to it.