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Apple Business Partners Losing Patience

Some say it was inevitable. Steve Jobs says he's shocked.


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STOCKHOLM (Rixstep) — Apple's quarterly results get better and better, the Cupertino company achieving success in more and more markets, but criticism of their business ethics is growing as well.

IFPI accidentally discovered two months ago that the sales statistics they buy from Nielsen weren't right anymore - they lacked data for iTunes sales.

IFPI started taking streamed music into account at the first of the year. Evidently Steve Jobs didn't like this - Spotify crushed Apple in Sweden.

So Apple - without saying a word - stopped turning over their sales stats to Nielsen.

Heard it on the Grapevine

'We heard it on the grapevine', says local IFPI boss Ludvig Werner. 'They didn't like our idea of making a top sales list that combined streamed and purchased music. Especially as this list shows how much music is streamed.'

Spotify music dominates in home country Sweden with twice the supply of digitally distributed music as iTunes. 'Apple pulling a stunt like that isn't a catastrophe', says Werner, but he says Apple's reaction is typically 'silly'.

'Sweden's sales represent only 2.5% of worldwide sales. Yet we're ahead of the game with streaming services. If Apple perceive us as a threat then they should observe us and learn from us instead.'

The consequences of Apple's reaction might have been different if they'd happened in the US where iTunes sales represent 70% of the total digital distribution.

'Everyone was happy about iTunes when it first came out', says a member of the music industry who wishes to remain anonymous. 'But you hear more and more critical voices today.'

Changing the Rules

Uneasiness with Apple's power in the industry escalated in February when Apple presented new conditions for selling subscriptions through their App Store and Apple stores.

The new conditions give Apple 30% of the subscription revenues companies earn - this for subscriptions to newspapers, films, and music services.

'Apple haven't said anything specific to the music industry', says the same source. 'So we're not changing our routines or strategy yet. But if we have to give them 30% of the subscription fees for Wimp and Spotify, we get a negative margin on each and every subscriber. And that's not financially tenable.'

But Gunnar Selleg isn't worried. He's sure the antitrust authorities are on the right side. 'They don't like Apple - as the biggest digital distribution service in the world - introducing rules that force all competition to close down.'

Apple distribution for media companies is also important. The powerful Bonnier Group were one of the first to accept the new conditions with their Popular Science app, introduced only hours after Apple announced the new rules.

Kinnevik's MTG are on the other hand not interested in doing business with the new Apple.

'Android is growing faster and it doesn't want a cut of our profits, so we're more interested in that', says MTG CEO Hans-Holger Albrecht.

MTG's chief of investor relations Jacob Waern adds that he doesn't think the current level of criticism directed at Apple will change anything yet, but as reactions grow stronger, Apple may be backed into a corner and have to rethink things.

'What we hear, Apple were shocked to discover there was so much criticism.'

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