AfterDawn: Tech news

iTunes Store to close down?

Written by Andre Yoskowitz (Google+) @ 01 Oct 2008 13:47 User comments (27)

iTunes Store to close down? Apple has threatened to close down its iTunes store if proposed royalty rate increases for digital music sales pass tomorrow.
The Copyright Royalty Board is set to meet tomorrow to vote on whether to increase royalties 66 percent, to 15 cents a track from the current 9. The rise would either have to paid by Apple, the record labels or the consumer.

Apple is completely against the rate hike and has said it will close down the store rather than absorb the hike or raise the price of a track to over 99 cents.

Eddy Cue, the vice president for iTunes, said this to the Board at the Library of Congress.

"If iTS (iTunes Store) were forced to absorb any increase in the mechanical royalty rates, the result would be to significantly increase the likelihood of the store operating at a financial loss - which is no alternative at all.

"Apple has repeatedly made clear that it is in this business to make money, and would most likely not continue to operate iTS if it were no longer possible to do so profitably,"
said Mr Cue.

The NMPA (National Music Publishers' Association) has repeatedly asked for the royalty rate hike ans believes the move will benefit everyone as the market for digital downloads continues to grow.

"I think we established a case for an increase in the royalties,"
added David Israelite, president of the NMPA.

"Apple may want to sell songs cheaply to sell iPods. We don't make a penny on the sale of an iPod."


Apple says they currently pay 70 percent of total revenue from digital music sales to the record labels which then passes a percentage on to the artists.

It is clear that the royalty rate hike will not benefit anyone, and the record labels are as unwilling as Apple to absorb the hike. Tomorrow should be interesting.

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27 user comments

11.10.2008 14:07

They should shut down, at least temporarily.

The resulting uproar among the clueless consumers who don't know any other way to get music would shut down the greedy record industry's latest grab.

It would only work once, of course, but at least it would put the suits on notice.

21.10.2008 15:14

This is interesting. It doesn't seem that iTunes are selling as much as we all thought they were. Surely if they were selling tons of tracks over iTunes they wouldn't threaten to shut down as a minor price hike wouldn't mean too much.

31.10.2008 15:20
13thHouR
Inactive

Originally posted by Mik3h:
This is interesting. It doesn't seem that iTunes are selling as much as we all thought they were. Surely if they were selling tons of tracks over iTunes they wouldn't threaten to shut down as a minor price hike wouldn't mean too much.
apple is the one thing that stands between us and the RIAA's attempts to force us all to a pay per play model and HUGE price hikes, this is why there is so much hate directed towards the iTunes service, from the music industry.

One thing that apple does do is give everyone the ability to bypass their DRM which is a condition set on them by the RIAA members via the burn to disc facility and they tell you how to do it.

Originally posted by DVDBack23:
"Apple may want to sell songs cheaply to sell iPods. We don't make a penny on the sale of an iPod."
here is the clincher RIAA wants to tax mp3 players because they don't see revenue from format shifting, even though 70% of the sale goes to the RIAA, but how much do they pay the artists. FAT CATS WANT TO GET FATTER!

iPod tax: UK music biz open to format shifting... for a fee
Quote:

And then came hints that this apple might come with a serious worm. Early this year, the BPI again said all the right things about format shifting, but we noted that the Association of Independent Music was making noises; apparently, the group wanted to get paid whenever music was transferred from a CD to a portable device.

Device manufacturers, who are apparently building their fortunes on the back of the music industry's content without paying for the privilege (err, but didn't the consumers already pay for the discs?), would have to pay a license fee to the music business that would be split among all the involved parties according to a formula that makes the Schrodinger equation look like a bit of first-term algebra.
Are Apple standing up for their customers, as this hike would push the price of music to around the same cost as the physical CD, doesn't digital distribution cost a lot less?
This message has been edited since its posting. Latest edit was made on 01 Oct 2008 @ 15:29

41.10.2008 16:19

Record producers make a killing by distributing the CD's.. because they own the whole process.

Ipod's and other digital means remove the producers from the distribution process thereby reducing their market share and thus, profits.

There is no doubt that this rate hike is punitive in nature and not due to "market forces". I hardly think the market would be open to a "more than .99 per trac") model. It barely makes it as it is.
In otherwords, they hope the rate hike will cause Itunes to raise their prices or quit distributing.

51.10.2008 16:34

Originally posted by ThePastor:
Record producers make a killing by distributing the CD's.. because they own the whole process.

Ipod's and other digital means remove the producers from the distribution process thereby reducing their market share and thus, profits.

There is no doubt that this rate hike is punitive in nature and not due to "market forces". I hardly think the market would be open to a "more than .99 per trac") model. It barely makes it as it is.
In otherwords, they hope the rate hike will cause Itunes to raise their prices or quit distributing.
I couldn't have said it better. At least Apple recognizes this instead of saying "thank you sir, may I have another" bending over, taking it, and then passing the increase on to the consumer!

Retailers don't make much profit on the sale of iPods either. However, the iPod is such a phenomenom, that it attracts customers into stores in search of gadgets, widgets and gizmos for said device. The money is in the accessories.

Again, none of this has to deal with fattening the wallets of the greedy RIAA corporations, so they would rather find ways to force MP3 players and internet radio out of business, so they can go back to shilling one-hit wonder CD's for inflated prices.

61.10.2008 18:20
SamNz
Inactive

dam this will end badly for alot of apple consumers (thank god ive never gone anywhere near anything apple) and if the riaa want to get taxes and payperplay crap then everyone will be like "well since ive already paid for pirating music F*** it i might as well get my moneys worth" and bang they are illegally downloading music. ????????

71.10.2008 18:24

Quote:
Again, none of this has to deal with fattening the wallets of the greedy RIAA corporations, so they would rather find ways to force MP3 players and internet radio out of business, so they can go back to shilling one-hit wonder CD's for inflated prices.

Let them try. Only thing they'll acomplish by taking away all the legal means that people have to buy digital music online is encourage more illegal downloading than what is already going on. They'll receive no money and then they'll realize what a stupid greedy mistkae they made. Maybe there isn't much profit in digital downloads but at least it's something.

81.10.2008 18:43

somebody else wants their cut of another persons music

who'd be a musician in this day an age ?

91.10.2008 20:42
FlakMNKEY
Inactive

Just once I would like to see a well known artist with a succesful career who is at the end of their contract with a record publisher, do this just once to see what happens. I sware, once an artist realises how much he's getting screwed by the record lables he would never go back.

Call up apple, walmart, whatever online music store they can get ahold of and say here is my new album, put it up and charge whatever reasonable amount. say $1.00 per track, and up to 14.99 for the album - depending on number of tracks.

You keep .25 cents per sale. I keep .75. The greedy damn record publishers who do nothing but promote the music and make discs that nobody want's to use anymore gets absolutly .00

I don't know why in today's world you can't eliminate the middle man. As far as concert tours go, there's this amazing thing called the internet. you find the venues and citys you would like to play and call them up. set a date. Not so hard to do yourself months in advance.

The only reason I can think of why artists even go through a publisher anymore is so they can get a big fat signing bonus. In return the publisher owns your music and gets pretty much everything from individual sales. Sorry that's bs.

101.10.2008 21:04

This'll be yet another reason for people to download music from p2p or torrents...iTunes Store was doing fine until some greedy bastards wanted to raise the price...then they'll run around wondering why no one is buying music anymore and just downloading it illegally instead...

111.10.2008 21:24

Originally posted by Mik3h:
This is interesting. It doesn't seem that iTunes are selling as much as we all thought they were. Surely if they were selling tons of tracks over iTunes they wouldn't threaten to shut down as a minor price hike wouldn't mean too much.
Or Apple IS selling a ton of tracks, and the record industry wants more, more, MORE!

121.10.2008 21:38

who cares let them shut down

131.10.2008 21:55

you know, i've been using itunes for years. first with my ipod, and now my iphone. i don't get all my music from itunes, as a matter of fact i have a library of about 5,000 songs in itunes right now and only about 300 of those songs were purchased through itunes. still though, that's close to $300 that i've spent over the years just through their store. i really like itunes and i would hate to see the itunes store get shut down.

on the other hand i have to agree with some of the previous comments. with millions of users buying music through itunes, shutting it down will effectively cut off a bigger portion of revenue to the labels than what is coming from itunes. i for one will tell you right now, if itunes shuts down because of this, i'll never PAY for music until this issue is resolved. and that's exactly what most people are going to do. p2p and torrent sites are already flooded with anything and everything you could want. and this is just all the more reason to go that route.

TO HELL WITH THE RIAA!!!

141.10.2008 23:07

FlakMNKEY ; I think AC/DC is making a deal with WalMart now...I don't know how any label is involved, but we should all Google it!
http://www.billboard.com/bbcom/news/arti...t_id=1003813749
Columbia is the label. If only they could squiggle out of their contract and dump the middleman. It's coming....

151.10.2008 23:26
atomicxl
Inactive

They should close down. I'm sure everyone else who sells music online has been trying to find someway to take over iTunes' marketshare.

#1 Considering that you do nothing about music, you should be splitting money 50%

#2 You do nothing but you keep 85% of what you charge people per song (and you guys say the RIAA is mean). How horrible is your business model where something like that can't keep you afloat?

You guys say the RIAA is satan. The royalty rate is increasing to $0.15 on a $0.99 download. How they hell is that fair to the people that actually do all the hard work?

"Just once I would like to see a well known artist with a succesful career who is at the end of their contract with a record publisher, do this just once to see what happens. I sware, once an artist realises how much he's getting screwed by the record lables he would never go back."

The irony is that in order to become a well known artist and to have that type of clout you need the financial backing of people who can pay radio promoters to push your songs on a global level and to finance those multi-million dollar tours so you become a household name.

That entity is called a record label. From reading your post, you really have no clue about how the industry works. You seem to think indie artists are sitting on millions of dollars and can pay the staff and crew that it takes to fill support a show at a major venue, let alone rent this major venue.

Big business does some bad things sometimes but you guys have your heads in the sands so much it's ridiculous. Just because you are large doesn't mean you are satan. Just because you think you should get 15% of what people who don't do crap to help you make or promote music, they just sell songs and charge you for ad space, that makes you greedy and you should burn in hell for all eternity.

Apple DRMs there songs. I thought you guys hated that. You say artists are scum bags and are greedy scum then you turn around and say that the people selling you DRM songs and locking out indie artists and taking 90% of money generated from work they had nothing to do with is the salt of the Earth and are the saviors of humanity.

I think this is what happens when you take art education out of schools. People place ZERO value on art and view it as being worthless and if any artist ever tries to make a living off of their craft they are the scum of the earth and should burn in hell for all eternity.

162.10.2008 1:00

We all KNOW that itunes would NEVER close down as long as the Ipod/Iphone is a popular item. Itunes feeds Ipod sales as much as Ipods feed Itunes sales. Saying that they don't make a penny from Ipods is BULL S H I T. They make at around $200 PROFIT per iphone from AT&T(subsidy), and I'm betting the ipod touch is being sold and profited at least at $150 a unit.

They WOULD increase their prices, and I would almost guarantee they would switch to a non-drm model (less upkeep on their own servers / equipment) and charge $1.49 for 320kbps mp3s.

If anyone thinks that Steve jobs is going to let his Ipod empire go down, they're out of their mind.

172.10.2008 1:08

I'm not sure how they don't make money off each ipod. Those things are insanely overpriced.

I don't really care either way for Apple's iTunes store since I never went anywhere near it. That and their iTunes/quicktime are such crappy/bloated software.

182.10.2008 4:37
13thHouR
Inactive

Originally posted by Ragnarok8:
I'm not sure how they don't make money off each ipod. Those things are insanely overpriced.
It was the RIAA (NMPA, MPA) stating they don't make any money from the iPods, but i don't think apple makes any money from bl-ray sales either. The RIAA basicially want everyone on a pay per listen model and Apple has stood up to them on many ocastions to stop the RIAA and MPAA's anti-consumer tactics such as blocking the package deals (scams) and charging more for popular songs, another RIAA scam just as is regional pricing and DRM locks.

The RIAA want to charging everyone as many times as possible even though they are stealing 70% of the profits and giving a very small cut to the artists and composers. $0.045 in the $1

remember all those "teach guitar lessons" on youtube, this was the body name, trade group name the RIAA members used to remove the videos with, talk about destroying new talent...

Now if the RIAA were actually trying to reward the talent it wouldn't be so bad but as per usual Sony, Warner, EMI and Universal are just trying to screw everyone over, so the only way to stop them is to stop purchasing their DRM riddled hardware and all their media, purchase second hand media or download it, then go and support the artists by going to their concerts!

RIAA Wants Songwriters to Get Less Royalties
Quote:
Published by Bob March 14th, 2008

In pursuit of their mission to suck the lifeblood and very souls from the musicians who provide the real product in the music industry, the RIAA is seeking to lower the royalty rate that the artist gets for each downloaded track from its current 4.5 cents per song to about 2.5 cents a song.

4.5 cents, an artist who works for Sony, BMG or Warner (to name just a few), gets 4.5 cents from every legal download. The publisher demands an equal fee for all that they do.

I can only imagine that they are running out of cash after all of the recent frivolous lawsuits. Im sure that the difference will line their pockets. Much like the sums that they have collected, none of that money has reached the artists yet. Its just blatant misappropriation of the funds.

WASHINGTON Music publishers, the record labels and digital music distribution outlets began a three-way legal wrestling match Monday over just how much songwriters and the publishing houses should get paid for digitally delivered music.

The case before a panel of copyright judges is different from the usual squabbles over money that pit the major record labels against new-media companies because it also features a family fight between the music publishers and songwriters and the rest of the music industry.

(more after the jump)




So the RIAA get $0.65.5 and apple get $0.30 and the artists and composers get $0.045.

The RIAA wants to lower monies for artists and raise the monies gained from digital sales, something feels very wrong with this.



Originally posted by Get Less Royalties link:
The labels contend that the music publishers have gotten fat as their business has starved and want the payment method rewritten.

Sony BMG posts loss despite larger profits
Quote:
the second quarter totaled $851 million
Universal Music sees record profits in 2007
Quote:
revenues increased 7 percent to $137 million and digital music sales increased 9% sequentially and 25% year-over-year.

This message has been edited since its posting. Latest edit was made on 02 Oct 2008 @ 5:05

192.10.2008 5:52

still the same old story all over again.
i guess they should shut down for a while; maybe it will get something done.

the music industry might not make any money from the sales of ipods or distribution of digital files,
but that is certainly their own fault!
if they Really wanted the "new format" they've tried so hard to crush to succeed,
they would have started long ago selling it in the same ways/places they sell cd's.

not everyone has high-speed internet, which is the Only way downloads are worth $1/song,
and even such people without broadband connections have something that plays mp3 files.

kiosks in stores would do the trick well, and no one would care how much drm was involved.
because of the perceived convenience, consumers would pay a premium for the files.

This message has been edited since its posting. Latest edit was made on 02 Oct 2008 @ 5:56

202.10.2008 6:12
13thHouR
Inactive

Originally posted by snowlock:
kiosks in stores would do the trick well, and no one would care how much drm was involved.
because of the perceived convenience, consumers would pay a premium for the files.

Would disagree as when the public actually realise they are being screwed over, history would show that protests and boycotts pursue, which is why it is important to name and shame the RIAA - MPAA and not allow them the anonymity to hide behind trade body names so artists and consumers can get treated fairly instead of these fecks stealing all the loot.


iTunes store shutdown feared "Public backlash"
Quote:
Greg Sandoval at CNET said the timing of the emergence of the Apple document is interesting.

"When it comes down to mass appeal, Apple holds all the cards.

" If word gets out that music publishers are trying to stick it to consumers, and Apple is fighting to keep prices down on their behalf, well, there's liable to be public backlash against the labels.

"If this thing follows the normal course, there would be calls for boycotts, protests and so on."

Piper Jaffray estimates that Apple will sell 2.4 bn songs this year, giving it an 85% share of the digital music market.


This message has been edited since its posting. Latest edit was made on 02 Oct 2008 @ 6:17

212.10.2008 8:33

Originally posted by R01010100:
you know, i've been using itunes for years. first with my ipod, and now my iphone. i don't get all my music from itunes, as a matter of fact i have a library of about 5,000 songs in itunes right now and only about 300 of those songs were purchased through itunes. still though, that's close to $300 that i've spent over the years just through their store. i really like itunes and i would hate to see the itunes store get shut down.

on the other hand i have to agree with some of the previous comments. with millions of users buying music through itunes, shutting it down will effectively cut off a bigger portion of revenue to the labels than what is coming from itunes. i for one will tell you right now, if itunes shuts down because of this, i'll never PAY for music until this issue is resolved. and that's exactly what most people are going to do. p2p and torrent sites are already flooded with anything and everything you could want. and this is just all the more reason to go that route.

TO HELL WITH THE RIAA!!!

You are whats wrong with music fans these days. Actually proud of using iTunes.
The RIAA i can live with.
Music fans that are stupid and deaf, i cannot.
You guys are the ones really killing music by embracing DRM, shit quality music, one download policy and the list could go on.


...Long live physical music...

222.10.2008 9:39

Originally posted by FlakMNKEY:
Just once I would like to see a well known artist with a succesful career who is at the end of their contract with a record publisher, do this just once to see what happens. I sware, once an artist realises how much he's getting screwed by the record lables he would never go back.
Ice Cube cut a direct deal with Best Buy last year, in which he cut out the middle man from CD distribution. I see more and more digital tracks (versus CD production) from some artists, such as Trent Renzor (NIN) and Radiohead. Then there's Prince, who stuck it to his record company by distributing 2 million CD's for FREE with a UK newspaper, days before the release.

You're onto something, but I think a lot of artists have already started to figure this out. The problem is, you essentially have to be a big act already, and then have to build out your business distribution and contacts to mirror that of the middleman you are leaving out. That in itself can be costly.

I've also read about a company that operates much like iTunes, but allows anyone to sell their music through their service for a membership fee (yearly or lifetime.) The artist keeps all of the revenue from the music, so it's not even a 75/25 split, as you were suggesting. (The name of this service escapes me, but it's in the latest Maximum PC magazine.)

232.10.2008 11:24
FlakMNKEY
Inactive

Originally posted by JRude:
FlakMNKEY ; I think AC/DC is making a deal with WalMart now...I don't know how any label is involved, but we should all Google it!
http://www.billboard.com/bbcom/news/arti...t_id=1003813749
Columbia is the label. If only they could squiggle out of their contract and dump the middleman. It's coming....
Yea they are and I think it's just for their new album + rockband. But AC/DC is almost worse than metallica. They are competly against Itunes and selling individual tracks. They want people to purchase their entire album. I don't use itunes, I use zune marketplace. Either way though someonebody is going to have to say enough and take a stand. If apple was to shutdown itunes at least temporarily and put a message up on the webpage stating why - people would be outraged. p2p sharing would skyrocket.

243.10.2008 16:22

iTunes shutting down? Right! ...Gimmie a break! Amazon would love it if iTunes shuts down... Napster would love it... All of the struggling download services would love it. Misrosoft would love it too.

253.10.2008 19:03

Federal judges have ruled the old rates prevail....plus new ones for ringtones and such..

263.10.2008 20:00

dont blame the RIAA all the time, they are not that evil.

273.10.2008 23:23
miltex
Inactive

Now look


http://forums.afterdawn.com/thread_view.cfm/706964


When the chips are down, you can count on miltex !


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