“After finally discovering that money (lots of it) can be made from music downloads, the RIAA and some of its members are rethinking the entire concept, and the iTunes deal in particular. At least a few RIAA members think that Apple is double-dipping, because it makes most of its money selling the iPod and, well, that’s not fair! So the music companies are rethinking—uh, complaining about—the whole downloading model,” John C. Dvorak writes for PC Magazine.
“Let me make it clear. Apple sells a song on iTunes for 99 cents. Apple pays for the Net connection and the costs of running a huge server farm. It also pays for development costs and the design and maintenance of the Web site. Then it pays the record companies 70 cents for each song it sells for 99 cents. For their check, the record companies do not have to do any manufacturing, distribution, or pay any spiffs. And they don’t have to deal with returns. Piracy also seems beaten by the security measures built into the system. And they still complain. Now I’m getting suspicious,” Dvorak writes. “Let me tell you what I think they are up to. The goal is to kill iTunes and any online music service not directly owned by a label. The record companies don’t like these systems for a number of reasons, not the least of which is that they work, proving that downloading music was a good idea from the beginning. I’m sure that still irks them, since it represents a decade-old ‘I told you so!'”
Dvorak writes, “I’m not convinced that the record companies’ biggest concern is pride, though. I think it’s bookkeeping… When iTunes began, I doubt that more than a few record industry executives thought it would become a runaway success, dwarfing all other initiatives. It seemed like a lark, almost an afterthought. I’m certain that most were convinced it would be, at best, a middling, sketchy business they could point to and say, ‘Look, we tried that idea, and it’s not that big a deal.’ When it began to rock, the checks in the mail were great and everyone was surprised. Suddenly all sorts of other initiatives popped up, and someone woke up and noticed that all these middlemen with computerized numbers were surrounding the business. It wouldn’t be as easy to screw over artists with this independent accounting everywhere.”
Much more in Dvorak’s full article here.
Bravo, Mr. Dvorak! You don’t read that little exclamation around these parts much, but Dvorak’s written an excellent article this time out. Dvorak thinks we’re “going to see a slow shifting of the way music is downloaded, even if it means each label does it itself through some mechanism in which retail stores get a cut. They will do whatever they have to do to get those ‘numbers’ back in-house, where third parties can’t analyze them. In the meantime, expect more complaining.” An excellent article, very highly recommended.
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