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Will Howard Stern Move to iTunes? Even the Rumor Underscores Apple's Media Clout [Update]

An explosive rumor has just hit: shock-jock Howard Stern might pack his bags and leave Sirius XM Radio (SIRI) to sign a $600 million deal with Apple (AAPL).

Given that Stern in negotiations with Sirius about renewing his previous multi-year $500 million contract, it wouldn't be surprising if his own people had started it as a negotiation tactic, or general publicity. But even if the rumor isn't true (and I don't think it is), the idea that Apple could hire Stern demands serious thought -- and that shows how precarious the media industry's position is.

Stern's leaving isn't out of the question. In September, he said it was "pretty sure" that he'd leave the satellite radio company. He previously made the hop from terrestrial radio to satellite, so a jump to yet another new medium is believable. And there is that niggling issue of Sirius having no news about Stern's contract talks.

[Update: Stern has denied the rumor that he'll go to work for Apple. However, he still appears to be on his way out and says that he doesn't know what he's doing next.]

Stern's departure would potentially be terrible news for Sirius, although it's impossible to tell from the outside how many subscriptions would leave with him. Would he go to Apple? Let's see, can you imagine the figures that would break out between him and Steve Jobs over "adult" content?

However, whether Apple would welcome Stern is beside the point. All other media outlets -- broadcasters, publishers, gaming companies, and music labels -- had better pay close attention. Apple has developed its business model to become not only a major retailer of media, but an effective publisher as well. Look at some of the data:

  • Through iTunes, Apple has virtually locked in music sales from its tens of millions of iPhone, iPad, and iPod customers. Because it is the gatekeeper to all those customers, it is also effectively a publisher.
  • Apple has already become a significant seller of e-books -- and forced Amazon (AMZN) to readdress its own arrangements with publishers and authors.
  • The company is effectively the only software publisher for the iPad and iPhone. Those with software can only do business with through iTunes.
  • Apple has connected iTunes to Apple TV, making a bid to become an effective sole source of video for those customers.
  • EA thinks that Apple has a good chance to succeed in taking on Microsoft (MSFT) and Sony (SNE) in the video game console market.
Apple plays in virtually any media market you might think of. Right now, magazine and newspaper publishers, software companies, and publishers of various stripes can find themselves stymied if Apple delays putting their products on sale, and recurring subscription sales generally have to be made through Apple.

When a company can act as a gatekeeper to a large number of customers and effectively prevent media companies from reaching those consumers through other channels, it is a publisher and all the vendors work for it. Maybe Howard Stern moves his show to stream through iTunes. Maybe he doesn't. But how long before Apple becomes the physical producer? In many cases, it might as well be.


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