apple news/media reports
09/22/2004, 2:45pm, EDT
Wednesday, September 22nd
Apple earns 4-cents per iTunes track, labels on top
Record companies are taking such a large cut 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.
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chicken or egg, perhaps...? i say go with the egg...!
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.
(In case I didn't pull it off so you all got it, I'm being sarcastic)
1. Apple earned roughly 4 million $ for the 100 million songs sold.
2. 62 cents + 8 cents + 4 cents = 99 cents
pfft