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Print 3 comment(s) - last by Phynaz.. on May 3 at 9:48 AM
Apple contines with 99 cent music downloads for iTunes subscribers

We can all rejoice. 99 cent music downloads will continue through Apple's iTunes music service for the foreseeable future. The Cupertino-based company has re-signed heavy-hitters Universal, Warner Music, EMI and Sony BMG despite calls from some music industry execs for a variable pricing model.

Considering that iTunes downloads have accounted for over 80% of the industry's digital music sales, I don't think that these record execs wanted to take Steve Jobs to task over pricing. Apple's model is working, customers for the most part appear to be happy and the record companies are making money so it was in their best interests to strike a deal with Apple. From Reuters:

Online music sales surged 194 per cent last year to 352m units, according to Nielsen Soundscan, as overall album sales fell 3.9 per cent. Digital sales now account for about 5 per cent of the music majors' revenues.

The surge underlines the competing priorities for Apple and the music industry. While the record companies are seeking new ways to generate revenues, Apple generates the bulk of its music-related revenues from sales of iPod players.

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Clarification
By Master Kenobi (blog) on 5/3/2006 7:59:17 AM , Rating: 2
Well what they are trying to get at is that the royalties don't exceed the 99 cent range, forcing Apple to raise the cost of some music. Apple needs to make a profit, probably say 49 cents, and the music execs get the other 50 cents, that totals out to 99 cents. However if the music execs start charging 80 cents or even 1.00 per song to Apple, then Apple will be forced to raise its price past 99 cents in order to stay profitable.

I believe what they are getting at here is simply that Apple told them, pricing isn't going to change at all, simply sign here to renew the current contract, no changes will be made. This keeps Apple and the Consumers happy, and the music execs will just have to deal with making what they are making.




RE: Clarification
By Phynaz on 5/3/2006 9:48:13 AM , Rating: 1
It's been widely postulated that Apple makes very little, if anything from iTunes.

The labels take take something like 70%, so there's no way Apple is taking half.


Actually...
By Shadowself on 5/2/2006 7:49:29 PM , Rating: 2
the contracts with the music houses is for their royalties. From what I've been able to gather from many different sources the contracts with the media houses has absolutely nothing to do with the price at which Apple sells the music. The media houses get their flat fee per song wheter Apple charges 99 cents or 79 cents or $1.29 per song.

Apple might change the price of songs, but it is unlikely. Apple has made a very, very big deal about not changing the price from the current 99 cents per song. However, as I understand it Apple is not under any contractual obligation to keep the songs the same price.




"When an individual makes a copy of a song for himself, I suppose we can say he stole a song." -- Sony BMG attorney Jennifer Pariser









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