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.










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
Fresh-Faced Recruit
Joined: Aug 2002
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
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
Fresh-Faced Recruit
Joined: May 2003
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
Fresh-Faced Recruit
Joined: Apr 2001
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
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
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
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
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
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