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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.


by MacNN Staff

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  1. bobolicious

    Fresh-Faced Recruit

    Joined: Aug 2002

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    09/22, 03:11pm | report spam | Reply |

    Could this be...

    ...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...!

  1. cooner

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    Joined: Sep 2003

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    09/22, 03:35pm | report spam | Reply |

    Opening that iTMS ...

    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.

  1. koolkid1976

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    Joined: May 2003

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    09/22, 03:48pm | report spam | Reply |

    All this means

    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)

  1. njfuzzy

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    Joined: Apr 2001

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    09/22, 04:20pm | report spam | Reply |

    Two ways

    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.

  1. Mosi

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    09/22, 04:34pm | report spam | Reply |

    Ok,

    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

  1. DeepDish

    Forum Regular

    Joined: May 2001

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    09/22, 04:46pm | report spam | Reply |

    M$ can take a loss leader

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

  1. Go Bells

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    Joined: Jun 2004

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    09/22, 04:58pm | report spam | Reply |

    Sony advantage

    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

  1. alex_kac

    Grizzled Veteran

    Joined: Aug 2002

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    09/22, 05:17pm | report spam | Reply |

    62 cents + 8 cents + 4 ce

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

  1. Stephen.S.

    Junior Member

    Joined: Mar 2004

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    09/22, 08:19pm | report spam | Reply |

    re Ok

    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.

  1. macjockey

    Fresh-Faced Recruit

    Joined: Jun 2004

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    09/22, 09:57pm | report spam | Reply |

    Big deal 4 points

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

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