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Apple’s iTunes Match creating ‘magic money’ for artists and labels

Thursday, February 9, 2012 · 2:30 pm · 17 Comments

“The first royalty payments from Apple’s iTunes Match are in, and they got me excited – the total amount is over $10,000 for the first two months,” Jeff Price reports for Tune Corner Blog. “This is magic money that Apple made exist out of thin air for copyright holders.”

“Let me explain… A person has a song on her computer hard drive. She clicks on the song and plays it. No one is getting paid. The same person pays iTunes $25 for iTunes Match. She now clicks on the same song and plays it through her iMatch service. Copyright holders get paid,” Price reports. “Same action, same song, one makes money for the copyright holder, and one does not. This is found money that the copyright holders would never have gotten otherwise.”

“Some may complain that it’s not much money. Well, before you were getting zero, now you are getting something. Some people have talked about iMatch being an ‘amnesty’ for those who steal music. It’s not. There is no ‘amnesty’ being granted to anyone by Apple or the record labels,” Price reports. “Seeing an additional $10,000+ appear out of the thin air for TuneCore Artists by people just listening to songs they already own is amazing!”

Read more in the full article here.

[Thanks to MacDailyNews Reader "Matt" for the heads up.]

Categories: News

Tags: itunes, iTunes Match, music, music business, music labels, royalties

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Comment Feed

17 Comments

Mark

Thursday, February 9, 2012 - 2:50 pm · Reply

Interesting point that Price mentioned. When music people complain about Apple, they are thinking that they could have gotten a bigger cut (somehow). But tend to forget that without Apple, they’d probably be getting a lot less (people turning to piracy).
Bizlaw

Thursday, February 9, 2012 - 3:00 pm · Reply

A bigger cut of zero is still zero. These artists are getting paid again by me because I have CDs I bought years ago that are in my iTunes library, and are now matched. Even though I legally bought my CDs, and the artist was already paid for it, they’re getting a bonus check thanks to Apple making my life easier.
- qka
  
  Thursday, February 9, 2012 - 4:10 pm · Reply
  
  +∞!
  
  On the other hand, can one now argue that if you are signed up for iTunes Match, it is OK to rip CDs you don’t own, because match will pay the music creators? (Artists vs. labels – we don’t know what the Match split is.)
  - Derek Currie
    
    Friday, February 10, 2012 - 12:04 am · Reply
    
    *DING*DING*DING*
    
    Enjoy the euphoria while you can. The RIAA have consistently been scoundrels to both customers and artists. I doubt this is even Tinkle Down Economics. It’s merely Feed The Greed Beast. SOS. Sound familiar? The spirit of the age.
danilko1

Thursday, February 9, 2012 - 3:01 pm · Reply

Either you will get in trouble for not paying to DL music, or you won’t. If you won’t, isn’t that Amnesty? I mean, if you pay $25 to match both music you own and don’t own, how is that not amnesty if they do nothing about it, but automatically assume you own it?

Just saying.
- DRMSSDB
  
  Thursday, February 9, 2012 - 3:46 pm · Reply
  
  Amnesty would be legally absolving anyone that has illegally downloaded material merely for paying for iTunes Match. The record labels have not given up their right to pursue legal action against someone for iTunes Match members possessing illegal downloads, therefore there is no amnesty.
  
  Are they making efforts to determine the source of all music that is being matched? No. That is why no one is “caught” via iTunes match. It has nothing to do with amnesty.
correctu

Thursday, February 9, 2012 - 3:35 pm · Reply

I can’t find “magic money” in the currency convertor.
gbs

Thursday, February 9, 2012 - 3:49 pm · Reply

This is genius. Apple lets you upload content you didn’t buy into the iCloud. I always wondered why (since the track could be from an illegal source.) Why would the record companies allow this?

The music industry allows this since they will Now get New royalties when I play that track (I didn’t pay for in the first place) through iTunes Match. A win win for a realistic situation (people have illegally obtained music get to use the cloud, record industry gets their royalties).
- Viridian
  
  Thursday, February 9, 2012 - 4:16 pm · Reply
  
  Absolutely spot on. That was an insightful comment, and I was just about to say something along those lines. The record companies were conspicuously silent about iTunes Match, when they should have been siccing the sharks on Apple for allowing users to upload possibly illicitly-acquired music.
  
  This is indeed genius, and testament to Jobs persuasive skills. He somehow managed to convince them that this would work; that even if users weren’t willing to pay for music, if they were willing to pay for the convenience of iTunes Match, they’d wind up paying anyway. Jobs made them realize that even pirated music would be paid for.
  
  The bigger picture is that iTunes Match is showing the way forward to an entirely new payment system for content distribution, one that could really benefit content creators because it removes the financial overhead of trying to fight piracy. What Apple is showing with iTunes Match could eventually encourage content companies to have more latitude in their thinking about file sharing. The vast majority of piracy is committed by ordinary middle class people who download a song here and there, not some hacker collective with ties to the Russian mob. These are the folks who showed that, given a choice of easy and convenient payment, they were quite willing to pay. The iTunes Store became hugely successful because of it.
  
  Now with iTunes Match, Apple is giving the users the opportunity to pay long after the fact. The media companies must feel like a store owner receiving regular payments from a shoplifter from
- Viridian
  
  Thursday, February 9, 2012 - 4:44 pm · Reply
  
  That was an insightful comment. Absolutely spot on, and I was just about to say something along those lines when I saw your post. As far as the record companies are concerned, they must feel like a storeowner suddenly getting regular payments from a shoplifter.
  
  Apple showed them with iTunes Store that people would, in fact, pay to download music, and with iTunes Match they’re giving them a way to get paid long after the fact. If it becomes successful, and I think it will be a monster, iTunes Match could encourage media companies to “think different” about piracy, and to freely release parts of their catalog, instead of going through the headaches and expense of suing millions of pre-teen girls for downloading some Justin Bieber songs.
  
  The idea of music possibly moving to a try-before-you-buy shareware model reminds me of the Mac shareware community, especially in the pre-OS X days. Release it, and you get paid if your customer likes it.
- ken1w
  
  Thursday, February 9, 2012 - 5:03 pm · Reply
  
  A correction on the method… iTunes Match does not simply “upload content you didn’t buy into the iCloud.” As the name implies, it “matches” songs you have in your iTunes library with songs that are in the iTunes Store catalog. It does this by actually comparing the song file, NOT with the song’s identification data (such as name, artist, album, etc.)
  
  For most customers, the majority of songs are matched. Apple only has to store such songs COLLECTIVELY for ALL customers that have that song. Songs that do NOT match are uploaded and stored in iCloud, INDIVIDUALLY. Since those songs are “unknown,” I guess no one gets paid royalty when they are played.
  
  Overall, it is a very efficient method that Apple has devised and negotiated with the content producers. Most songs are not costing Apple any expense for online storage per user, because they are already there in the iTunes catalog. Compare that to other “cloud” services that store EVERY song you have individually, not collectively. AND royalty is paid only when a song is played, not because it was matched. So a song that gets matched but is never played costs Apple nothing.
  
  Whoever came up with this scheme is extremely smart.
  - Darkness
    
    Thursday, February 9, 2012 - 5:15 pm · Reply
    
    But even better, Apple also allows you to download a high quality AAC copy of the song from the iTunes Store. So those crappy MP3′s you’ve had for years get augmented with clean quality files that you get to keep, even after you’ve stopped paying for the iTunes Match service. How in the world Apple got the record companies to agree to this I’ll never know. But it’s a fantastic deal for consumers.
    
    I’ll certainly consider signing up one of these days should my music library ever exceed the available space on my primary music device.
    - ken1w
      
      Thursday, February 9, 2012 - 5:48 pm · Reply
      
      Well, yes. I did not mention any benefits from the customer’s perspective. Back when I ripped all my CDs, I did it at 160 kbps MP3, because at that time (even before iPod and AAC), that was the “standard” for iTunes. I’ve been too lazy to re-rip them all. It was worth $25 just to get most of those songs “upgraded” to 256 kbps AAC, with almost no effort.
      
      Additionally, I bought a lot of songs from the iTunes Store when the standard was 128 kbps AAC. For most of them, I never paid extra to upgrade to “iTunes Plus.” And those songs were also matched and are now 256 kbps AAC (except for a few that are no longer sold in the iTunes Store). Paying the iTunes Plus upgrade fee would have been a lot more than $25.
      
      It will interesting to see some stats at the start of year two of iTunes Match. It’s a “subscription” but I don’t think the songs files downloaded as a “match” are DRMed (protected) in any way. They should continue to be playable, whether I continue with iTunes Match or not.
    - Rorschach
      
      Thursday, February 9, 2012 - 6:18 pm · Reply
      
      Depends on what you mean by ‘high quality AAC copy’. I won’t use Match for two reasons; 1) I have over 100Gb of music in iTunes and in my iPod, and apart from the cost, there’s no capacity available to me that can accommodate that amount of music, and more is being added all the time. And 2), the ‘high quality AAC files’ are lower quality than the greater majority of music in my computer, which is ripped at 320Kb.
      - ken1w
        
        Thursday, February 9, 2012 - 6:58 pm · Reply
        
        Get a larger hard drive, or external USB drive. OR, stream the music from iCloud using iTunes Match.
        
        I have a fast Internet connection and music files (even at 256 kbps) are relatively small. All of my songs are in iCloud now, either through a match or an unmatched song being uploaded. If I wanted to, I can delete some or even all of those songs off my hard drive and still play them as if they were there. They appear in my iTunes library and in playlists, just as they did before. When I play it, it gets stream from iCloud, which is nearly instantaneous with a fast Internet connection.
        
        Therefore, iTunes Match can potentially FREE UP some or all of that 100GB of disk space being used to store music locally. iTunes can increase your available storage, not take up more capacity. (To get any song back, just click the little button next to the song with the cloud icon and it downloads in a few seconds.)
        
        As for (2), if you can actually tell the difference between 256 kbps (AAC) and 320 kbps (MP3?)… I can believe that with good enough speakers or headphones, someone with good ears can hear a noticeable difference between 256 kbps and a “lossless” format. Between 256 and 320 (both lossy), it seems much less likely to be a relevant difference.
ken1w

Thursday, February 9, 2012 - 8:17 pm · Reply

I just realized that Apple has indirectly created a form of “meritocracy” for music artists and producers.

Before, some (actually a lot of) people “stole” songs through Napster and subsequent file sharing methods. The most popular songs were “shared” much more than lesser songs. But the artist received no direct compensation (royalty) for those songs, whether a song was a dud or a hit.

Now, with iTunes Match, those previously illegally shared songs are being “matched.” The most popular songs were distributed the most, so they are matched more often through iTunes Match. Therefore, those popular songs get played the most. When a song gets played, the artist gets paid. The artists with the most popular songs earn the most royalty.

Widespread illegal music distribution in the past, which was previously ONLY a bad thing, has become a good thing. The more a song was shared, the more potential it has to earn ONGOING royalty through iTunes Match. The sale of a song is a one-time transaction, not “per play.”
Derek Currie

Thursday, February 9, 2012 - 11:59 pm · Reply

This is found money that the copyright holders would never have gotten otherwise.

Really? Exactly how much of the $10,000 goes to the actual copyright holders, as opposed to the RIAA mobsters? I want numbers! Personally, I sincerely doubt the artists who create these works will see a penny. That’s how the RIAA rolls.