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Apple earns 4-cents per iTunes track, labels on top

updated 02:45 pm EDT, Wed September 22, 2004

iTunes song profits slim

Record companies are from tracks sold online that many of the burgeoning online music stores will go out of business, experts warned yesterday. The Independent reports that labels, who take home the largest share of revenue generated from online music, make more money per track than they do with CD sales: "But figures from the US show that Apple, the dominant legal download business in Europe and the US, retains just 4 cents from each 99-cent (55p) track sale while 'mechanical copyright' holders - generally the record labels, who own copyright in the song's recording - take 62 cents or more. Music publishers take the rest - about 8 cents." The article notes that while the number of online music services grows (and many are expected to close their doors in the coming years), Apple has the distinct advantage--i.e., it is profiting through sales of its iPod.

 
Previous Comments

Could this be...

09/22, 03:11pm reply

...why the 'indys' are inexplicably slow to airtime? I could see Apple cutting out the majors in a win-win distribution situation for the artists, but they also need the current libraries to draw an audience...?

chicken or egg, perhaps...? i say go with the egg...!

bobolicious

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Joined: Aug 2002

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Opening that iTMS ...

09/22, 03:35pm reply

This is the biggest reason Apple has to step carefully when considering opening iTunes tracks to other, non-iPod portable players, and the one people usually forget about.

It's easy to sit back in the armchair and say that if Apple doesn't open its format to more players, that the iTMS will suffer from increased competition, and AAC will lose market share. But it's not that simple, especially if the profit margin on the iTMS is minescule compared to the sale of iPods.

I'm not saying Apple SHOULDN'T look into opening their formats, but I think it's a move that should be considered carefully, and I trust that's how Jobs and his posse are approaching it. I think that's why we've seen partnerships like the ones with HP and Motorola, and will see more of those as time goes on ... just my $.02.

cooner

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Joined: Sep 2003

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All this means

09/22, 03:48pm reply

Is that Apple should sell off it's software and hardward divisions, change it's name to iTunes, and just focus on selling music. Soon it'll be raking in big profits in the future when the digitial music scene explode.
(In case I didn't pull it off so you all got it, I'm being sarcastic)

koolkid1976

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Joined: May 2003

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Two ways

09/22, 04:20pm reply

There are two ways Apple could open things up. They could allow iTunes songs to work on other players-- This would just cut off the only way they can make music profitable. Alternatively, they could make it so songs from other stores work on the iPod. If this sells iPods, I think they should do it.

njfuzzy

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Joined: Apr 2001

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Ok,

09/22, 04:34pm reply

What I learned from this article is:

1. Apple earned roughly 4 million $ for the 100 million songs sold.

2. 62 cents + 8 cents + 4 cents = 99 cents

pfft

Mosi

Fresh-Faced Recruit

Joined: Jan 2001

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M$ can take a loss leader

09/22, 04:46pm reply

M$ can lose money on each sale for years just to put everybody else out of business.

DeepDish

Forum Regular

Joined: May 2001

0

Sony advantage

09/22, 04:58pm reply

Where does Sony end up in this? Yes, the current Walkman is JUNK, but they have even more potential as Sony Music Group owns so many labels (wonder if they could legally keep certain songs on their lables "out" of iTunes)... Seems like Sony could buy up more labels making iTunes music selection smaller at some point.... I

Go Bells

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Joined: Jun 2004

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62 cents + 8 cents + 4 ce

09/22, 05:17pm reply

They don't mention credit card fees, bandwidth fees, and other expenses.

alex_kac

Grizzled Veteran

Joined: Aug 2002

0

re Ok

09/22, 08:19pm reply

It does say, "generally the record labels, who own copyright in the song's recording - take 62 cents or more." Or more meaning 62 cents is a moving target.

Stephen.S.

Junior Member

Joined: Mar 2004

0

Big deal 4 points

09/22, 09:57pm reply

that's what us dealers make off most of the Apple product, so why should it be any different with Apple

macjockey

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Joined: Jun 2004

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