Music managers unhappy with Apple over artist’s royalty payments

“Music managers will today wade into the row over online royalties with the claim that bands and solo artists are being unfairly squeezed in the digital era,” Dan Sabbagh reports for The Times. “The Music Managers Forum is unhappy that artists typically receive a royalty of 4.5p on every 79p track sold on Apple’s iTunes, a proportion of less than 6 per cent. On a £2.99 single, the performer’s royalty is 35p, or 12 per cent.”

“Jazz Summers, the manager of the Snow Patrol, and chairman of the Music Managers Forum, said: ‘Sale prices and royalties have gradually been eroded to the point where an artist needs to sell in excess of 1.5 million units before they can show a profit, after paying for recording time and tour support.’ Mr Summers said that the squeeze on artists is a by- product of a record industry “that has been caught with its pants down” by the emergence of digital. His group’s complaint is that the major labels have handed pricing power to the download retailers because they have not come up with an online distribution model of their own,” ,” Sabbagh reports.

“The MMF wants to improve artist royalty rates, complaining that the music industry has cut fees in an attempt to maintain its own profitability. The record companies often force artists to accept a ‘new technology’ discount on their royalty rate of about 25 per cent — replacing a now outmoded discount that was intended to reflect the cost of packaging a CD,” Sabbagh reports. “Unhappiness with Apple’s flat 79p a track pricing exists across the music industry, but the Californian computer company has been so dominant in the download market that it has been able to set rates. Last month Edgar Bronfman Jr, chairman and chief executive of Warner Music, described Apple’s policy as ‘not fair,’ arguing that pricing should be flexible, reflecting the popularity of the artist.”

“The new MMF complaint emerges alongside another related royalty dispute that is pitting Apple, other internet music retailers and the British Phonographic Industry (BPI) against groups representing songwriters, the Mechanical Copyright Protection Society (MCPS) and the Performing Rights Society (PRS). The MCPS/PRS wants to receive 12 per cent per song — discounted to 8 per cent for two years — rather than the existing 8.5 per cent, but the scheme has been challenged by Apple, the BPI and other online retailers before the Copyright Tribunal,” Sabbagh reports. “The Music Managers Forum is backing the MCPS/PRS alliance. ‘The BPI is jumping into bed with a group of digital music retailers, which are in the process of eating our lunch,’ Mr Summers complained.”

Full article here.

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Eliminate the middlebronfman. Apple isn’t the problem. Apple is the solution.

According to most reports, record labels take 70 cents for each song Apple sells for 99 cents. Apple spends almost all of their 29-cents on bandwidth, iTunes operational costs, and marketing.

Flash forward a few years: Apple has settled with or bought Apple Corps. Apple signs Snow Patrol. Snow Patrol gets far more than the mere 12-percent they so longingly dream of today.

Related articles:
Dvorak: record companies’ biggest concern about Apple’s iTunes is clear and accountable bookkeeping – September 29, 2005
In 99-cent fight with ‘Looney iTunes’ labels, Apple CEO Jobs will get whatever Jobs wants – September 29, 2005
Warner music exec discusses decapitation strategy for Apple iTunes Music Store – September 28, 2005
Warner CEO Bronfman: Apple iTunes Music Store’s 99-cent-per-song model unfair – September 23, 2005
Analyst: Apple has upper hand in iTunes Music Store licensing negotiations with music labels – September 23, 2005
Steve Jobs plays high-stakes poker with greedy record labels – September 22, 2005
Record labels accuse Apple CEO Jobs of ‘double standard’ as they seek to force iTunes price increase – September 21, 2005
Apple CEO Steve Jobs to repel ‘greedy’ record companies’ demands for higher iTunes prices – September 21, 2005
Apple CEO Steve Jobs vows to stand firm in face of ‘greedy’ record companies – September 20, 2005
NYT’s Pogue to record companies: it’d be idiotic to mess with Apple iTunes Music Store prices – August 31, 2005
Apple CEO Steve Jobs prepares for pivotal fight on digital music prices – August 28, 2005
BusinessWeek: Apple unlikely to launch music subscription service – August 15, 2005
Record labels to push Apple for higher iTunes Music Store prices in 2006? – August 05, 2005
Study shows Apple iTunes Music Store pay-per-download model preferred over subscription service – April 11, 2005
Record labels look to raise iTunes wholesale prices, music industry fears Apple’s market domination – March 05, 2005
Report: Apple CEO Steve Jobs ‘angered’ as music labels try to raise prices for downloads – February 28, 2005
Report: Music labels delay Euro iTunes Music Store fearing Apple domination – May 05, 2004
Greedy Big Five music labels looking to jack up iTunes songs to $2.49 each? – April 22, 2004

46 Comments

  1. Why are they need a middle man anyway? All they need to do is buy Mac and try garageband ( To learn about the coming of Digital age). They will find how easy to make music and distribution with out middle man. Apple should give these artists a free class lecture and hand on about the garageband and podcast.

  2. Oh g#d, Snow Patrol is whining because iTunes doesn’t pay them well enough? If Snow Patrol (or other artists) truly don’t like Apple’s policies, they are free to shop around. Nobody seems to raise a fuss about Wal-Mart’s policies to this regard. I would have never heard of them if Apple hadn’t made them a download of the week several months back. Downloaded the song, liked it, then bought the album…

    Which is exactly 100% more than they would have gotten from me if they relied solely on the RIAA to market and distribute their stuff.

    This is one of those deals where the RIAA, in an effort to squeeze Apple, is going to trot out artists to bitch and moan about iTunes prices, just like they did with the Napster thing five years ago. It reminds me of when hostages read manifestos condemning their way of life, conveniently provided by their captors (See “Patty Hearst”).

  3. “…pricing should be flexible, reflecting the popularity of the artist.”

    That’s one approach. Another is the flat rate in which the popularity of the artist is reflected in the number of sales. There is no single right answer to this issue. The problem is that the argument is fundamentally about control of the oligopolistic music market.

  4. I don’t think this is an iTunes Music Store issue. It’s yet another way that the major labels are screwing the artists. Snow Patrol gets their royalities from their record label I believe. I don’t think they deal directly with Apple, so it wouldn’t be an issue of how much Apple is paying or not paying.

  5. “The record companies often force artists to accept a ‘new technology’ discount on their royalty rate of about 25 per cent… or 12 per cent…”

    Hugh?! Apple is NOT the problem here folks. Geez! The record companies have “forced” a ridiculously low royalty rate on the artists who “agreed” to the ridiculously low royalty rate. Even if Apple doubled the price, the artists would still be getting the same ridiculously low royalty rate compared to the record companies.

  6. Ah the same ol’ story when I was in the industry…the record companies screw the musos and then cry poor. A manager does provide a function and the good ones are worth every cent. The record companies are blood suckers short and sweet.

    The only reason I won’t do illegal downloads is that it would take money from musicians. As for the companies, screw copyright and screw them. The time I spent in the industry (over thirteen years) showed me that there are some real bloodsuckers out there. The RIAA and the Australian equivalent ARIA are regular vampires.

    An Australian footnote:

    The fourth predicted launch date of the Australian opening of iTunes music store has come and gone…screw Sony/BMG and Warner Music.

  7. I’ve just read this quote, where the labels say that artists “have not had to invest heavily in creating new legal online services and fighting Internet piracy” as a way of explaining why they pay them so little.
    What did the record labels pay for in relation to iTunes? iTunes after all is the dominant player by a large margin. Apple should buy apple to avoid problems and then just let anyone sell whatever they way directly via iTunes.

  8. Is this article referring to independent artists? If not, then Apple isn’t the problem. If they are independent artists, and Apple is only giving them the same percentage as the record labels give them, then shame on Apple.

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