“For five years, Apple’s iTunes Music Store has been the Internet’s most successful music store. But as music publishers have sought a higher share of its proceeds, Apple has threatened to shutter iTunes,” Devin Leonard reports for Fortune.
“The Copyright Royalty Board in Washington, D.C. is expected to rule Thursday on a request by the National Music Publishers’ Association to increase royalty rates paid to its members on songs purchased from online music stores like iTunes. The publishers association wants rates raised from 9 cents to 15 cents a track – a 66% hike,” Leonard reports.
“In a statement submitted to the board last year, iTunes vice president Eddy Cue said Apple might close its download store rather than raise its 99 cents a song price or absorb the higher royalty costs,” Leonard reports. “‘If the [iTunes music store] was forced to absorb any increase in the … royalty rate, the result would be to significantly increase the likelihood of the store operating at a financial loss – which is no alternative at all,’ Cue wrote. ‘Apple has repeatedly made it clear that it is in this business to make money, and most likely would not continue to operate [the iTunes music store] if it were no longer possible to do so profitably.'”
“Piper Jaffray estimates that Apple will sell 2.4 billion songs this year, giving it an 85% share of the digital music market,” Leonard reports. “The Recording Industry Association of America says sales of digital songs and albums rose 46% last year, to $1.2 billion. But as Cue notes in his statement, Apple’s profits from iTunes remain slim. This is because Apple doesn’t think the market is strong enough for it to raise its 99-cents-a-song price.”
Full article here.
The National Music Publishers’ Association would do well to remember that, if they greedily insist on killing the goose that lays the golden eggs, there are ways for their former paying customers to obtain their product for free. The royalty rates from P2P are 0%.
@ Stick in the eye
I agree too. Apple could offer musicians digital distribution with a 50% return. They should set up a system for new artists and if it takes off work with existing artists once their contracts expire.
Royalties
(sung, sorta, to tune of Pink Floyd’s “Money”)
Royalties, give us more
We own the songs so you can kiss our ass
Royalties, are all we got
Don’t use p2p or we’ll lose our stash
Make us richer, please do it soon
Just buy our songs, and buy a Zune
BC
Apple Inc, cannot act as a label in any way shape or form.
Unfortunately, there is no legal way around this.
Apple Inc. might not be able to be a label, but perhaps an iTunes Inc. subsidiary could?
Gotta love the legal games.
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That’s a great way to kill off your business. What a bunch of GREEDY DUMB ASSES!!!! Back to P2P if they do this.
Apple should buy ALL the major record co.’s for about $7 billion, then simply run the music world. NO more CD’d AT ALL, just digital downloads.
Apple gets an award for stopping the POINTLESS manufacture of plastic music cd’s and a few fools can whine about quality and their precious stereo that cost $ 9 million and has crushed eagles feet in the woofer section, or whatever.
Time we dumped CD’s . Period.
Oh and fsck the beatles and the Apple corps, especially the greedy bitch Yoko Ono.
Does WalMart or any music retailer (B&M;or online) pay music royalties? Business entities that broadcast OTA or stream online, I understand, but retailers? If so, why? It doesn’t make sense.
Shouldn’t royalties from sales come out of the labels share of the 99¢ (or whatever) that Apple charges.
Maybe it’s for the 30 second music samples.
Good question, nobodi. Any lawyers on board with an answer?? Apple’s not the only one distributing “free” samples.
My God, so many idiotic comments…
Apple’s been trying to keep prices down endlessly, but the record companies, NBC, whoever have been fighting this from Day 1.
Before iTunes, more and more people were stealing music, hence, the frequent declaration- “Apple saved the music industry.”
Greedy as Wall Street- those music companies.
MikeK “I would be interested to read the link that says otherwise if you happen to find it.”
How’s Wikipedia?
http://en.wikipedia.org/wiki/Apple_Corps_v._Apple_Computer
“On 5 February 2007, Apple Inc. and Apple Corps announced a settlement of their trademark dispute under which Apple Inc. will own all of the trademarks related to “Apple” and will license certain of those trademarks back to Apple Corps for their continued use. The settlement ends the ongoing trademark lawsuit between the companies, with each party bearing its own legal costs, and Apple Inc. will continue using its name and logos on iTunes. The settlement includes terms that are confidential“
Note there’s stuff that’s not public about this settlement, but “Apple Inc. will own all of the trademarks related to “Apple”. While I’m not sure what terms are undisclosed but that seems fairly straightforward and cut n dry.
@auramac:
You comment on all the “idiotic comments” then you go on to agree with all those comments. Strange.
The story headline should read:
APPLE THREATENS TO DESTROY THEIR MEGA-SUCCESSFUL iPOD FRANCHISE BY CLOSING iTUNES STORE
Or how about this? :
APPLE THREATENS TO CUT OFF ITS NOSE TO SPITE ITS FACE
@ Shame on you MDN
You are a twit. They are not suggesting people “steal” music. They are simply pointing out the reality of the whole situation. Stop being so PC and living in a bubble. I know, you know, and the entire world knows people will use P2P. It’s people like you that call fat people “big boned.” Guess what? They are FAT!
@ oh no my shorts –
1st, thanks for reiterating the details of the most talked about & well-known case in the history of music publishing & thereby belying your penchant for stating the blatantly FSCKING (as they like to say…) obvious.
2nd, many creators of music own the rights to the publishing.
you can slice it, dice it, chop it, sauté, fricassee, deep fat fry, parboil, pickle, denature, transmogrify, justify or rationalize it anyway you like, but, that does not change this fact: people think it’s ok to steal intellectual property – films, music, software, ideas, et al – because it’s easy.
it requires a moral choice not to steal. most people do not make moral choices because they are disgusting, mindless morons who completely lack a sense of morality. even worse are those like you: people who have THOUGHT IT THROUGH & decided that they have a right to as much stuff as their HD’s can hold & that it’s just “downloading” – a solitary act; a victimless crime.
music throughout the ages has been UNIVERSALLY APPRECIATED & LOVED while its creators have simultaneously been undervalued &, basically, screwed. think of the few people you may know w/ actual musical talent. now think of the people who actually have enough talent to make music for a living. think of the sacrifices it may have taken them to get to that point: instruction, instruments, education, countless hours, equipment, travel. recast in this light, how is it that something so important to listeners (“i can’t live w/o my iPod…”) is not worth anything?
because there is a culture of stealing. the only thing that will change it is condemnation.
shutter
noun
1 each of a pair of hinged panels, often louvered, fixed inside or outside a window that can be closed for security or privacy or to keep out light.
2 Photography- a device that opens and closes to expose the film in a camera.
3 Music- the blind enclosing the swell box in an organ, used for controlling the volume of sound.
Shutters are used to close windows…
are they maybe implying that Apple will only keep the store open for mac users?
mmm…
Ok, let’s work from this premise:
As Music goes, so goes the rest of the Entertainment Industry – TV, Movies, Games, Software, etc – all the “things” covered by Intellectual Property Rights.
Although I looked, and not able to easily find verifiable info, do believe something I read/heard few years back is valid …
The “Entertainment Industry” – as described above – is the #1 Export for the USA. Not sure how that is defined, exactly, but think it is, roughly, Total Dollars/Profit % of Foreign Money coming into USA. But challenge anyone to discover and report back here with specifics on this, ty.
Nevertheless, to assume it is, or even that the amount is significantly large, then to consider Apple’s Global Potential in this Industry, and combine that with this Royalty situation, would reveal why the Entertainment Industry is VERY concerned about Apple’s influence. Not so much just in Music (which Jobs described as “low hanging fruit”), but the other Media yet to come to full flower in our Digital Age.
And remember, we’re not talking about just the USA, but the Whole World.
Up the road – some serious Big Money.
So the Current Entertainment Industry Leaders (NBC/Viacom/Sony/Warner/et al), in their own interest, have to tilt the field in their favor as much as possible at this time, cause if/when Apple/iTunes/iPhone becomes a primary gatekeeper of Entertainment/Media/etc to the entire World, will be more than just NBC/GE crawling on their knees.
Thanks
BC Kelly
Tally Fla
p.s.
In researching my post, found an interesting essay from 2002:
“Hollywood in the Era of Globalization”
http://yaleglobal.yale.edu/article.print?id=479
Enjoy the read
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BC
I think the big record labels (especially Warner) would like nothing more than for iTunes to shut down. They think we’d all go running back to plastic disks. They’re mistaken.
67- How much of the increase goes to the author & how much is kept by the publisher? If it’s going to the author, I have no objection to the increase.
68- Who seriously thinks Apple would shut the iTunes Store?
67- How much of the increase goes to the author & how much is kept by the publisher? If it’s going to the author, I have no objection to the increase.
68- Who seriously thinks Apple would shut the iTunes Store?
@fred johnson
It _is_ ok to “steal” music as long as you are unwilling or unable to buy it. If so, you have caused no economic damage, and no lost sales to those who are purveying it.
@Thisson:
But record/movie/software etc. companies consider every unpaid copy a lost sale. When person makes x$ / y, that person can not afford something that costs x$. If that something can be duplicated virtually free, then there is very little moral issues in “stealing” unless you use it to make money and you have no intention of buying.
Some people think that they could have all the money in the whole wide world. That is very irrational, since money is a symbol of exchange, exchange of time. “Money for nothing” stops working when people have hard time filling their basic needs (food, clothes and shelter). Would you rather eat or see a movie?
Settling for what you need builds character.
If a person or a company would get all the money in a world, money would most likely become worthless and we would use different system for trading goods (time it takes to make them).