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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.
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]
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?"