AfterDawn: News

It now appears that online music download services are not as profitable as they would sound. The figures of sales remain massive, for example, Apple has sold a whopping 125 million downloads since the launch of its iTunes store, yet the share that Apple will receive from the sale is far less than you would think. Apple have already made indications that iTunes is not particularly very profitable, but has shown that it can use iTunes as a way of making money in other areas, mainly the sale of its hugely successful iPod music player.

If you take a 99c download and check who gets what share of it, you will find that Apple would get just 4c. The artist(publishers) would get about 8c and the copyright holders, who would be the record labels in most cases take 62c or even more in some cases and anything left over would probably be put down to tax. This is more money than the labels would get for the sales of single CDs in stores. The labels have often thrown the excuses that its costs a lot to produce the CDs and all the artwork that goes with it, then the marketing costs etc. to justify the huge chunk they take from CD sales. My question is, what is your excuse now? It seems the labels have very little respect for the booming market for online music sales and are probably shooting themselves in the foot as experts expect many of the emerging download services to disappear in just a couple of years.



Phil Evans, a spokesman for the Consumers Association believes that labels really need to change and fast. "Unless the record labels look at new [distribution] models, they're bringing about their own demise." he said. MP3.com founder Michael Robertson was blunt in his comments, referring to commercial downloading as "a race where the winner gets shot in the head". I have to say I completely agree.

Source:
Enjoyment Independent

Written by: James Delahunty @ 23 Sep 2004 21:29