updated 9/20/2005 8:17:29 PM ET 2005-09-21T00:17:29

Apple boss Steve Jobs vowed Tuesday to repel “greedy” record companies’ demands for higher music download prices, warning that any such move would encourage piracy.

Jobs, speaking before the opening of the Apple Expo in Paris, said some music majors were pushing for an increase in prices on Apple’s online iTunes Music Store.

Apple’s co-founder and CEO said record companies already earn more profit from songs sold through iTunes — cutting out costs of manufacturing, marketing and returns — than from those sold on CD.

“So if they want to raise the prices it just means they’re getting a little greedy,” he said.

As their contracts with Apple come up for renewal, music companies are seeking to improve their take from sales through the U.S. iTunes site, which charges 99 cents per song. Prices are typically higher in Europe, Japan and other regions.

Cupertino, Calif.-based Apple Computer Inc. launched its Japanese iTunes site in August without Sony BMG’s music catalogue, as negotiations dragged on.

Observers say the same issues are likely to surface in talks between the two companies on their U.S. sales, and Warner Music Group Corp. is also reportedly seeking price increases.

Warner Music and Universal Music Group declined to comment. Sony BMG and EMI Group PLC did not return calls.

Jobs indicated he plans to stand firm. “Customers think the price is really good where it is,” he said.

“We’re trying to compete with piracy, we’re trying to pull people away from piracy and say, ‘You can buy these songs legally for a fair price,”’ he added.

“But if the price goes up a lot, they’ll go back to piracy. Then everybody loses.”

Industry analyst Philip Leigh, who runs U.S. market research firm Inside Digital Media, said record companies were smarting over their loss of control as online customers cherry-pick favorite hits.

“A full CD might have only three or four popular songs,” Leigh said. “Now that the consumer’s able to buy each song individually, they don’t have to buy the whole CD, and the labels are concerned that this will result in lower revenues.”

But as long as Apple controls the market for music players and paid-for downloads, Leigh said, “it’s going to be very difficult for the labels to avoid dealing with Steve Jobs on his terms.”

Apple’s iTunes accounts for 82 percent of legal downloads in the United States. The company has sold more than 500 million songs online and about 22 million iPod digital music players.

Ted Schadler of Cambridge, Mass.-based Forrester Research said studies showed consumers would pay more for the most popular tracks. But he agreed with Jobs that any move to raise prices could backfire.

Among Internet users aged 12 to 21, Schadler said, about 50 percent share tracks illegally, while just 6 percent buy online and don’t share.

“This is a minority phenomenon,” he added. “Why would you do anything to put a kink in that?”

The latest, smallest iPod incarnation, the Nano, wowed consumers and technology experts at its Sept. 7 launch. It also helped offset disappointment with the ROKR, the first iTunes-equipped cell phone, unveiled the same day by Apple and Motorola Inc.

Launched just as handset makers and U.S. cellular operators are gearing up to market a new generation of music-playing phones, the ROKR was criticized for its limited 100-song memory, slow PC connection and inability to download songs over the mobile network.

Jobs played down the phone’s cool reception and hinted that better handsets were in the pipeline.

“I could imagine other products in the future,” he said. “It was a way to put our toe in the water and learn some things.”

But mobile operators’ charges are likely to remain an obstacle to growth of music downloads over expensive 3G high-speed networks, Jobs said. “We’re working on that too, but I’m not so sure it will be successful.”

Apple remains on track to equip its Mac computers with Intel Corp. microprocessors from June next year, Jobs also said. The company announced the switch to Intel chips on June 6, ending its long-standing relationship with International Business Machines Corp.

Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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