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Record labels taking massive chunk of music download revenues

23 September 2004 21:29 by James "Dela" Delahunty | 5 comments

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

Permalink to this article

iTunes store to launch in Canada (26 November 2004)

U.S. CD sales up by 10 percent (21 October 2004)

Apple: 150M songs sold via iTunes (16 October 2004)

Virgin Records entering music download market (26 September 2004)

PassAlong and eBay to enter music download market (23 September 2004)

EasyMusic.com downloading service from EasyGroup (17 September 2004)

Microsoft admit copying iTunes (16 September 2004)

British consumer group: iTunes UK overpriced (15 September 2004)

Microsoft targeting emerging market for music downloads on handsets (13 September 2004)

New software records unprotected music files from restricted files (8 September 2004)

Music downloads in UK rise up 200% since June (23 August 2004)

Apple iTunes: Over 1M songs available (10 August 2004)

iTunes hits 100 million downloads (13 July 2004)

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Discuss this article!
Ne007 (Junior Member) 24 September 2004 2:07
Maybe if they gave more of that 64 cents to the artists....then music sales would be profitable! Corporations don't need to be involved in music anymore. Get rid of the Corporations and music will be profitable. [ + quote]
Ghostdog (Senior Member) 24 September 2004 3:22
And we are the criminals for downloading tracks off P2P-networks? Hah! How could the labels possibly motivate getting such a huge share!? [ + quote]
Toiletman (Senior Member) 24 September 2004 9:29
Jesus, those record labels are getting a huge share.... hell, I know life is unfair, but that's just past unfair... [ + quote]
RedAnt (Member) 24 September 2004 10:07
one word is all you need to discribe Record labels. GREED. Thank you. ;) Procrastinate Now! [ + quote]
rondack (Junior Member) 27 September 2004 2:30
Now you can see why the RIAA has gone sue crazy on everybody! [ + quote]