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Looming Royalty Decision Threatens iTunes Store, Apple Hints
eldavojohn writes "You may recall us discussing some legislation about online music. More decisions are being made that may affect how much money Apple must impart to labels and musicians. Right now, it's 9 cents a track — which adds up, when you sell 2.4 billion tracks each year. The Copyright Royalty Board is asking for 15 cents a track (66% increase) and Apple isn't going to agree."
Reader scorp1us points out a similar article at CNN; both stories mention that Apple has intimated such a change might cause a complete shutdown of the iTunes Music Store.
Update: 10/02 21:03 GMT by T : According to CNet, the rate has been officially frozen at 9.1 cents per track.
Apple has intimated such a change might cause a complete shutdown of the iTunes Music Store.
More importantly, what of the client software that interacts with the store? You know, the program that allows you to burn/listen/store "your" music?
As the user who submitted this article, I would like to point out that they removed my DRM fear mongering from my original submission. As a geek it's my duty to squeal like a stuck pig when troubles a brewin' and I think there's a rude awakening looming for a whole ton of iTunes users.
Essentially, I'm guessing the RIAA will pressure Apple into releasing or updating their client software to not decrypt the DRM'd songs (non iTunes Plus tracks) until the user coughs up the additional six cents. Hell, I have no way of knowing that this isn't already implemented in iTunes and Apple need only stop delivering the other half of keys to the clients to decrypt a user's data.
And that's why DRM has failed, continues to fail and will always fail. Nobody read the EULA/TOS of iTunes and nobody understands that when you're "buying" the song for a dollar, you're not buying anything but the right to listen to that song for some undetermined amount of time. Here's a simple case: What happens to "your songs" when you die?
Burn them to discs or convert them to an open format anyway you know possible, folks. That's the only advice I have--especially with this on the horizon. Buy Apple players, Amazon MP3s and look no further than the GPL for your software.
My work here is dung.
Yeah, right.
Call their bluff, require 15 cents.
iTunes Music Store isn't going anywhere.
If anything, prices will go up a dime. (Yes, for a 6 cent increase.)
Our music in on iTunes, and they get a cut of it. Wow, Thanks Royalty Board! Thanks for taking more of our cut . . . for doing . . . nothing to help us.
"When I want your opinion, I'll give it to you." --leonstryker
Apple is playing chicken with the Music Industry, and IMHO, rightfully so. The record companies should eat the increase in the royalty instead of passing it on to the consumer. They provide little value for the huge portion of the income they get already.
"To those who are overly cautious, everything is impossible. "
Apple pays an estimated 70 cents of every dollar it collects per song to the record companies responsible for each track. The record companies turn over nine cents to the music publishers who control the copyrights to these tunes.
So why can't the record companies absorb the extra 6 cents? Oh wait. They're greedy bastards...
* We dance where angels fear to tread *
I think what's going to get missed in this is a "good for Apple!" variety of statement. They've created a whole new market for music, and provided a whole new revenue stream for the industry. That they've stood up to that industry previously on the issue of cost-per-track is admirable. Now they're willing to drop a whole channel that makes them a ton of money in order to hit back at the music industry's greed when most vendors would just bend over and take it.
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Essentially, I'm guessing the RIAA will pressure Apple into releasing or updating their client software to not decrypt the DRM'd songs (non iTunes Plus tracks) until the user coughs up the additional six cents.
Why on earth would this apply to songs you've already bought? This is an additional royalty for new songs, making them cost 1.05 or making Apple push back on the labels to take the extra royalty out of their share...
Yes, you definitely need to turn "Rip Mix Burn" around to "Mix Burn Rip" and get CDR backups of all your iTunes music ANYWAY.
But at least iTunes DRM is "honor system" level... I mean, really, it gets downloaded unencrypted and the DRM is applied by the local client. And they haven't made any attempt to close the digital hole. Imagine how much it would suck if the labels had gotten everything they wanted from Apple like they have from Microsoft?
Finally! Then we can all go back to sharing music like we were intended to in the first place.
Apple is evil, but the music business is evil and stupid. If you were going to pick someone to make Apple look good, you couldn't pick better villains.
Do the record companies realise they're competing with free? Apple realise this. Raising the prices will drive away customers who do have another option. No-one buys music because it's the only way to get it, anyone who buys music these days does so because they want to.
BitTorrent: because fuck you, Hollywood!
http://rocknerd.co.uk
Having users that have no desire to install iTunes and all the Apple related crap on their work computers would make my life so much easier.
I am one of those annoying guys that told everyone he knew to not use the legal music stores
What, even ones like eMusic that don't ship DRMed music and never shipped DRMed music?
That's not just annoying, that's irresponsible.
I think, at 70%, Apple more than pays for the right to sell the songs. Music companies don't want to pay that additional hike to copyright holders? Tough. They're making 70% off each sale - they make more than enough to pay the additional fee. Greedy pricks.
And by "they" I mean both parties, Apple and the music industry.
On one hand, I understand Apple's stance. The recording industry would be stupid if they made moves that could shut down what has so far been the most popular online music store to date. In my opinion, it is pretty F-ing stupid to try and pass a royalty hike at this point and time.
My thinking is this: Apple is doing all the hard work of running the store, and the record industry is profiting off of this additional sales stream. If they pass the royalty hike, they might not get their increased royalty revenues - likely, they'll get NO MONEY AT ALL if Apple goes through with its bluff of shutting down iTunes. Which is better, earning several million dollars a year in revenues from iTunes, or none at all? Stop being so greedy already.
On the other hand, how wise would it be for Apple to kill off part of what makes the iPod so popular? I'm a iPod owner who has never bought a track from iTunes, but obviously there are a LOT of people out there who use it. I don't think it would be so smart for Apple to shut such a service down... I wonder if their iPod sales would suffer as a result.
And Christians wonder WHY people hate them...
Idiots...
That $1 is a magic mental limit. You go over that, many people will no longer be willing to buy tunes. May seem silly but that's how it works. There are various mental limits when it comes to prices like that. There's been research done to suggest that if iTunes songs went up even to $1.10 it would result in a massive drop sales.
I'm honestly a bit confused by all this - Record companies seem to have no problem paying artists less than the statutory royalties via one-sided contracts. Apple has contracts with the record companies saying they get x per track/album sold.
Near as I can tell, this bill will just change the "default" royalties.
A direct contract with the copyright holder (nearly always the record company) tends to bypass this sort of thing.
Admittedly digital music is a luxury. But the economy is doing so well that people won't mind spending a little more on their music. Oh, wait ...
[Insert pithy quote here]
Isn't Apple's agreement with the record labels? Surely the 9 cents comes out of the labels' share. That's what the cnn article implies. So instead of 29 cents going to Apple, 61 cents to the label and 9 cents to that guy who did nothing except all write and perform the song, it would be 29 cents to apple, 55 cents to the label and 15 cents to the worthless waste of space.
The fact that music labels don't (or perhaps don't want to) see what they might be doing by forcing Apples hand here is just amazing. What's to stop Apple from getting into the record label business to support iTunes? Like they couldn't sign a thousand acts tomorrow if they promised them prime promotion in the iTunes Music Store? They might not be able to get the big names right away, because of existing contracts or just general reluctance from artists, and they would certainly lose most if not all of their back-catalog, but Apple absolutely does have the kind of capital necessary to pull this off, and a huge built-in market that is essentially tied to their wildly popular distribution mechanism.
Losing big name artists from major labels would certainly hurt iTunes sales, but again, Apple certainly has the kind of cash necessary to subsidize an iTunes record label until it found it's footing (and until major artists realized how much iTunes sales really meant to them in this day and age). 100 million iPods aren't just going to disappear overnight, people will still turn to iTunes for their music. So long as they could keep setting the trend with their iPod line, it's hard to believe that an iTunes label would not eventually start scoring major artists, or perhaps start creating their own major artists from little known artists/bands eager to sign with the iTunes label.
I'm Christian and I didn't realize people hated me I thought they just hated the loud crazy people. So since I gather that everyone does hate me. I must now hate everything that is different and force my ideas on you just so you'll like me.
How about posting a copy of the agreement that says that? Or are you just pulling shit out of your ass when you make that claim? So far all I've seen indicates the opposite...
in the event that Apple changes any part of the Service or discontinues the Service, which Apple may do at its election, you acknowledge that you may no longer be able to use Products to the same extent as prior to such change or discontinuation, and that Apple shall have no liability to you in such case.
I would like to point out that I think the top post (the AC Troll) does not speak for the vast majority of Christians. I think that his approach to speaking his mind is infantile and (if he/she really is a Christian) is detrimental to the entire Christian movement as a whole. It is akin to passing out tracts while yelling out that "everyone is going to hell!" - ineffective, overgeneralizing (therefore inaccurate), and outright insulting.
Most likely, XxtraLarGe is correct, that this person is not a Christian, but is, instead, someone who is trying very hard to damage everyone's perception of what Christians are like. I am a Christian. Do I appear to be unreasonable, inflammatory, or irrational? Please disregard the troll, and get to know some real Christians... many of us are really some nice people out to help the world be a better place by helping out in the community and loving our neighbors as best we can.
And, since this post really needs to stay on topic (sorry for the above rant), I hope that Apple sticks to their guns. I am a musician, and I feel that musicians should get their fair share, but I know as well as anyone that any increases are not going to make it down to the musicians. I truly hope that Apple sticks up for the pricing that was originally agreed upon to that the impulse buy nature of iTunes remains.
Before commenting on the Bible, please read it first
Do anyone think there wil be any chance of apple opening up the firmware encryption on 6g units if iTunes goes down?
If they will no longer be providing music sales, would it not make sense to open it up so others can build fully compatible data loaders?
Wow, you cite Allofmp3.com as an example? You do realize it's like...totally illegal, right? Sure it's cheap to sell something if you don't have to buy it in the first place? Speaking of which, I've got a great bridge you might be interested in...
I don't understand the whining about a $1 mp3. I can understand complaining about lossless to a degree. I can understand complaining about DRM. But $1? That's less than a can of coke, a swig of beer, less than a big mac, etc etc.
Then again it seems that most people do NOT agree with your assessments, as the itunes store (and others) are doing very well selling songs for a dollar.
I think this is unlikely to happen, but if it does then the P2P networks will get rather more traffic, thereby providing even more proof that the publishing industry just doesn't understand what's happening. Every time they try to throw their weight around like this, it make them weaker and the darknet stronger.
Be that as it may, there is an inaccuracy in the BBC's reporting on this. They say:
"Apple pays an estimated 70% of digital music revenue to record companies which in turn pass on a percentage to artists [my emphasis]. It is that percentage that is expected to be changed on Thursday."
Actually, I think the National Music Publishers' Association pays this percentage to songwriters and composers of works via the publishers that the NMPA represents. And (surprise!) the publishers cream off between 3 to 15%. In many cases the composers are not the same as the artists that perform the works, and many will in fact be dead (the money goes to their relatives, estates or licensees, or nowhere if these cannot be found).
But who cares? The way the money works in music is - to say the least - opaque. With the exception of a tiny minority of super-stars like Cliff Richard and Simply Red, when you listen to your favourite band, you are listening to indentured servants. What will happen when we realise that the copyright system overall is completely iniquitous? In 1994 (MMC, 1996), 10 UK composers received more than £100,000 (from performing and mechanical royalties). How many people working in the UK music industry that year who were not composers earned more than £100,000?
I'm betting that it was rather more than 10.
"And the meaning of words; when they cease to function; when will it start worrying you?"
I'm not sure why this article refers to iTunes because iTunes doesn't pay mechanical royalties on sales - the person/entity who owns the sound recording copyright (presumably the label who released it originally) is responsible for paying the mechanical royalty on the sales that are reported by iTunes.
iTunes pays the labels 0.70 per song and at that point it's the labels responsibility to pay the mechanical, which is 9.1 cents for a recording under 5 mins or 1.75 cents per minute, which ever is higher. Where this gets interesting is for the really long songs, I've seen mechanical rates over 0.30 per song, which is why you don't see long songs over 10 minutes on iTunes. The labels just don't want to deal with them unless they negotiate a lower rate.
So beyond the fact that talking about Apple + iTunes gets people all hot and bothered, this has nothing to do with iTunes directly.