- Friday, 10 July 2009
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War settles nothing. To win a war is as disastrous as to lose one - Agatha Christie
Apple threatens to close Itunes
RUMOURS that Apple will close Itunes if it’s forced to pay more royalties to artists are highly unlikely to come true – but they are more than misinformed gossip?
For the last five years Itunes has been the biggest and most successful online music store – so it’s quite hard to believe it will simply close its doors for good.
But the crunch will come later today as the Copyright Royalty Board is expected to rule on the request made by the National Music Publishers' Association to hoist the royalty rates from 9 cents to 15 cents a track – that’s an increase of 66 percent.
Apple has stated that if Itunes 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," although this was more likely an attempt to stop the legal action before it started.
An Apple exec continued to say that, "I have no doubt that an increase in the per track price would lower total music purchases at the store.”
At present Apple pays around 70 cents of every dollar it gathers to the record companies. They then turn over just nine cents to the music publishers and artists which control the copyrights.
The Digital Media Association is seeking an even lower rate of 4.8 cents a track, it says that, "No one disputes the impact of rampant Internet-based piracy in the marketplace…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."
However the music publishers are unyielding as they say that the market is growing and so the higher rates are justified in terms of future prosperity.
The Copyright Royalty Board's forthcoming decision is its first affecting digital sales and will set royalty rates for the next five years. µ
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IF the publishers (and artists) are guaranteed 9 cents of a song purchase AND the market is growing, THEN the publishers could count on an increasing income stream. 

Asking for a larger percentage of the pie while knowing that the pie is getting bigger is just plain greed.

And they wonder why we don't respect them?
I'm confused - if the market is growing why do the publishers want to raise prices. Normally the more you sell of something the lower the overall costs (economies of scale).

This looks like a money grab - if the market is growing then the music publishers get more money/profit even if their slice of the pie is constant. It's not like it's costing them anything as Apple and it's OEM's are doing all of the infrastructure (servers, web maintenance, etc)

Apple will clearly just pass any additional costs on, which will just push more people away from legitimate sales. These folks are nuts - they have a GROWING revenue stream and now they want to potentially screw it up?
Go ahead Apple, close iTunes, if you do then someone else will just step up (Microsoft? Virgin?) and you'll lose market share. 

I hope someone calls their bluff

P.s Steve Jobs is a smary twat
I have a familiar funny feeling that the artists won't see a single penny of any increase. You have to wonder where any of that extra money really would go to.....
"However the music publishers are unyielding as they say that the market is growing and so the higher rates are justified in terms of future prosperity."

One possible business strategy would therefore be to lower fees slightly, both to encourage growth - and make [even more of] a darned fortune when the market does grow..... and appear to be a bit nice about things at the same time.

But no. They can't do that can they; what we end up with ninety-nine times out of every hundred, is more factual evidence to justify our views of the grinning-hand-rubbers of the music industry.

Another balls-out show of greed by the bunch who dismissed the internet before it happened, pooped a brick when it did happen, and are now once again trying to strong-arm the show.

'Profit' and 'profiteering' are two different things. And I have my own steadfast opinions as to which one we are being treated to here. Again.

Shonky.
The record-labels are just another form of organised crime. I buy music from the iTunes store in Belgium, and until last week I also bought the occasional song from 7digital.com in the UK. Now, 7digital have closed the site for people outside the UK. It took a couple of mails and some insisting to make them tell me why I couldn't buy from their store any longer, and they said it is due to new licensing restrictions from the record labels, who no longer let them sell music outside the UK.
I honestly don't know any other business that treats their customers like these thieves.

I have some news for them: if the price goes up per song on iTunes, I will (like many others no doubt) simply stop paying for my music. I'm starting to get really fed up with being treated this way! I will in the future honestly give all possible purchases of music some serious thought before parting with my hard-earned money. It's bad enough that we're being treated as 2nd rate citizens in Belgium by media companies already.

Enough said - stuff 'em.
"However the music publishers are unyielding as they say that the market is growing and so the higher rates are justified in terms of future prosperity."

What?!? More sales projected, and that gives them justification to RAISE their rates? How much money do those skankers need? All of it?
What outrageous greed! Of course, if cocaine prices were rising, that could explain their behaviour.

Go ahead, close ITunes, see what I care. In fact, shut down the entire music recording industry. I already have all the CDs I need.
If Itunes closes shop how many people do those greedy music companies think will begin to prirate music? 

So many people are used to digital distribution these days that I believe they will find there music one way or another. Add the fact that now P2P has encypted tunnes how many people will worry about getting busted? 

No loss IMO; 7digital.com is better anyway.

So, I say, go right ahead; kill iTunes!
Let iTunes close. Does anyone really believe that closing down iTunes will totally prevent the sale of digital music? It won't. There are competing music services who would be happy to take up the slack. Google's Android phone platform is hooked into Amazon for music sales and downloads. Anyone ever heard of Rhapsody? Who needs the Apple Ripoff machine. I'll just start my own record company, be the only artist signed by it, and Apple can pay me the $0.70 record company royalty plus the $0.09 artist royalty and therefore make me $0.79 per song while they make $0.20. How's that work for you Apple???
"The Digital Media Association is seeking an even lower rate of 4.8 cents a track, it says that, 'No one disputes the impact of rampant Internet-based piracy in the marketplace…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.'"

This industry still lives in its own little world doesn't it. There have been a number of studies that have actually found that piracy has not had a statistically negative effect on music sales. Now I am not agreeing or disagreeing with the studies but to say that no one disputes the effect of piracy is simply a blatant lie and an attempt at inflaming the matter. Here are some examples of 'disputes':

http://arstechnica.com/news.ars/post/20070212-8813.html
http://strategis.ic.gc.ca/epic/site/ippd-dppi.nsf/en/h_ip01456e.html
http://www.unc.edu/~cigar/papers/FileSharing_March2004.pdf
The Publishers have a fixed cost to supply the track to Apple which is NOT affected by the number of times the track is sold by Apple. Thus they can absorb the extra cost of the songwriter fee and ONLY get 64 cents not the current 70 cents per sale of a track. Apple OTOH has a cost for selling the track (which comes from their 20 cents).