Are Apple Really Going to Buy Universal?!

The rumour mill is working over time following a report in the LA Times that Apple are supposedly on the verge of a multi billion dollar bid for Universal Music.

This doesnít make a lot of sense to me. I am guessing that this is misinterpretation of meetings that Apple have been having regarding Apple launching its online digital music service or even regarding the as-yet-unreleased new Ipod.

Letís just imagine for a moment that Apple are planning on buying Universal. Why? There is an argument for Apple to buy into another company: Apple may see themselves as standing on the edge of a decline in the PC and hardware market, so will want to get some their cash tied up in a money making business rather than simply feed ongoing losses. But buying a record company is not going to be the life jacket that will buoy them through troubled waters.

So the other possibility is a very visionary long-term strategic approach. Technology and content are undoubtedly converging. Successful new technology formats have been successful because of wide availability of compelling content (e.g. PS2, the CD) whereas those without have struggled (e.g. MiniDisk). So, perhaps Apple are willing to swallow short term losses in order to be better placed 5 years or so from now. But I donít buy this argument either. Digital distribution is not about to replace the CD. Within 5 years it will be established as a significant but minor channel (4% of all sales in Europe in 2008) but nothing more.

I’m not convinced…

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