p2pnet - rss feed: Is iTunes about to shut down?
p2pnet news view Products | Music:- Apparently, Apple may soon close down iTunes.
Nooooooooo. Say it ain’t SO!!!
But yes. /sigh
That’s what it says in a Fortune story.
And prompting, Nay!, forcing, it is the Copyright Royalty Board which is to rule on a demand by the National Music Publishers’ Association to increase royalty rates paid to its members on songs bought from online music stores such as — Yes — iTunes.
“The publishers association wants rates raised from 9 cents to 15 cents a track - a 66% hike,” says the story, going on:
“Apple declined to discuss the board’s pending decision or its previous threat to shut down iTunes. But it adamantly opposes the publishers’ request. 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.”
Oh! The Horror!
“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 back then, says Fortune, also stating.
“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.”
Make money, huh?
p2pnet has always maintained iTunes is little more than a crafty, punter-funded online application used primarily by iPod owners who can afford $1 and up, depending on where they are, for the corporate music industry’s grotesquely over-priced digital music files.
It was initially introduced as an iPod loss-leader and who knows how long it took to get into the black? Did it ever go into the black? Apple claims it’s sold five (or is it six?) billion files. But it’s never provided a audited statement for public consumption which can be scrutinised in any kind of detail to back that claim up.
Apple says five (or is it six?) billion and the mainstream media repeat that number parrot-fashion as though it’s solid gold.
The Big 4 wholesale their ‘product’ for somewhere between 60 and 80 cents per digital track, Wayne Rosso told p2pnet three years ago. Have they dropped the price since then? Who knows.
Anyway, let’s split the difference and say Apple pays the record companies 70 cents for each 99 cent track. That leaves it with a measly 29 cents to cover all costs and still make a profit.
It won’t get very fat on that. But six (or is it five?) billion looks great in iPod promotions and even if the income from iTunes isn’t exactly handsome, it probably pays for itself, which might be all that’s needed from Apple’s perspective.
‘Brutally difficult competitive environment’
Meanwhile, “The Digital Media Association, which represents Apple and other online music services, is seeking an even lower rate of 4.8 cents a track, or 6% of ‘applicable revenues’,” says Fortune, adding:
” ‘No one disputes the impact of rampant Internet-based piracy in the marketplace,’ the association’s lawyers said in July 2 filing. ‘The result is drastic reduction in the sales of recorded music in all formats and intense downward pressure on retail prices - along with a brutally difficult competitive environment.’
“The music publishers are unmoved. They argue that the digital music market is growing and that they should get a higher rate because all parties in this squabble will ultimately prosper. ‘I think we established a case for an increase in the royalties,” said David Israelite, president of the National Music Publishers Association. “More importantly, we were able to beat back the proposal that could be a [royalty] cut.’
“Israelite said he opposed any attempt by companies like Apple and its record label allies to do away with the fixed royalty rate. ‘Apple may want to sell songs cheaply to sell iPods,’ he said. ‘We don’t make a penny on the sale of an iPod’.”
Stay tuned.
Fortune - Apple’s digital music showdown, September 30, 2008
Wayne Rosso - Mashboxx wraps Sony BMG, June 29, 2006
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October 1st, 2008 at 7:32 pm
<p>greedy bastards<br />
yup time to pirate MORE, when the cost goes up in hikes of 66% at one shot you know the next hike of 66% will then be equal to over 400% in two hikes and so on.</p>
<p>YUP……do your selves in to NO revenue GOOD ONE.</p>
October 1st, 2008 at 8:16 pm
Here’s another for you, jon:
Judge forces U of Oregon to cough up student data to RIAA
http://arstechnica.com/news.ars/post/20080930-judge-forces-u-of-oregon-to-cough-up-student-data-to-riaa.html
thnx to digg.
October 1st, 2008 at 9:48 pm
“…grotesquely over-priced digital music files.”
Lossy digital music files. People need to be reminded of that, often if possible please.
October 2nd, 2008 at 9:37 am
‘We don’t make a penny on the sale of an iPod’.”
What an absolutely ignorant and ridiculous piece of garbage. More iPods sold = greater chance of legitimately purchased content since to even use the damn things, you need to install iTunes. For every iPod sold, especially to a first time iPod owner, they make money. Not directly from the purchase of course, but from purchased content through, not only the iTunes store, but other places like Amazon (much better quality, no DRM). If apple can’t make money from running the iTunes store, they can shut it down and they will STILL be able to sell iPods, but then people will start looking even more at alternative means of getting content (from limewire, kazaa, torrents, etc).
To be honest, I can’t believe I’m still shocked by the lack of any sense coming out of the people in the recording industry.
October 2nd, 2008 at 1:30 pm
‘No one disputes the impact of rampant Internet-based piracy in the marketplace,’ The Digital Media Association’s lawyers said.
ORLY?
Oh wait, nevermind. Their lips were moving.
October 2nd, 2008 at 1:41 pm
David Israelite, president of the National Music Publishers Association states, ‘We don’t make a penny on the sale of an iPod’.
Um, David? Last time I checked, Turner Broadcasting didn’t make a penny on the sale of televisions.
Campbell’s Soup proposes royalty fee on spoons…
Is that coming out of your mouth, or are you standing on your head?
October 2nd, 2008 at 5:09 pm
I honestly cant wait
Why pay for Shackle-DRM Loaded iPod files that only play on a damn iPod
October 3rd, 2008 at 2:55 am
crossing my fingers, cant wait to hear itunes is shut down. Fuck DRM.
October 6th, 2008 at 10:22 pm
I think what most people are missing is that shutting down iTunes is precisely the desired outcome here, but they need to have iTunes do it voluntarily. They can’t just refuse to sell music outright, but they can put the squeeze on Apple so that the service becomes unprofitable.
What the big studios are interested in is regaining the iron-fisted control of content distribution that they enjoyed for the past century or so, and which they only recently lost. The fact they they’ll lose iTunes sales in the meantime is probably seen as an acceptable loss, if they can eliminate a massive distribution channel that is not under their thumb. They’ll never be able to replace iTunes themselves: they have the Medusa touch when it comes to anything new or innovative. But that’s probably okay from their perspective: face it, the record labels aren’t in the music business … they’re in the shiny plastic disc business.
These guys are sociopaths at best, and control is the name of the game. Steve Jobs and the success of iTunes took them completely by surprise. Of course, with their intrinsic lack-of-vision they’ll always be behind the eight-ball with disruptive technologies. Regardless, Jobs has far too big a stick for their taste, and they would like nothing better than to take it away from him.