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New rate increases could make service unprofitable, put America's largest music retailer out of business

The music industry is a complex business.  At its head are the major labels, which control the distribution of the most popular tunes online and off.  Their never-ending hunger for a bigger slice of the revenue pie has taken many forms, from representative organization RIAA's ceaseless lawsuits, to the labels' demand of increased royalties.

The labels' dreams may come true when the Copyright Royalties Board (CRB) meets today.  The CRB is the U.S. judicial entity which was created by the Copyright Royalty and Distribution Reform Act of 2004 and governs everything from webcaster fees to the cuts labels receive on online music track sales.  The CRB already has gained a controversial reputation for enacting rate increases which may put small webcasters out of business.

Now as the CRB reconvenes to possibly enact increases to online track royalties, a threat from Apple has emerged -- raise rates, and Apple may pull the plug on iTunes.

In the recently released testimony by Apple vice president Eddy Cue to the Board at the Library of Congress in April 2007, Mr. Cue tersely stated, "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."

The news that Apple would consider shutting down iTunes upon a rate increase is a shocking one for the business world.  ITunes is currently the largest music retailer in the U.S. and its death would leave a major gap in the music business and likely sink sales in the short term.

If the major labels get their way, and Apple loses, the CRB will pass a 66 percent royalty increase, which will tack on an additional 9 to 15 cents per track.  The higher rate would have to paid by Apple, the record company, or the consumer.  Apple is unwilling to raise its 99 cent track price, nor is it willing to take a loss itself.  And the record labels, suffering from 20 percent lower cd sales in 2007, are likely equally unwilling to swallow the loss.

The National Music Publishers' Association, however, argues that the royalty increase will help everyone and will not hurt online music growth.  David Israelite, president of the NMPA, the organization which is requesting the increase, stated, "I think we established a case for an increase in the royalties.  Apple may want to sell songs cheaply to sell iPods. We don't make a penny on the sale of an iPod."

The Recording Industry Association of America, who works closely with the NMPA cited that digital sales rose 46% last year to $1.2B USD.

Apple already pays approximately 70 percent of its track revenue to music labels.  The meeting today will likely change that rate, and will stay in effect for five years.  The Digital Media Association, which represents Apple, RealNetworks, and other online music retailers has asked the Board to pass lower rate increases of around 4.8 cents a track.

CNET's Greg Sandoval commented on the document's curiously timed appearance on the eve of  the rate increase decision, stating, "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."

Apple current controls 85 percent of the online music market and is set to sell 2.4 billion tracks this year, according to Piper Jaffray.  With the current pro-copyright holder sentiment among many in the U.S. government, it certainly seems possible that the NMPA will get its desired rate increases -- but at what cost?


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Another example
By FITCamaro on 10/2/2008 9:14:47 AM , Rating: 2
Of the government interfering in private enterprise. This is stuff that should be hashed out between the music labels and Apple. Not mandated by a government run review board.




RE: Another example
By blaster5k on 10/2/2008 9:26:01 AM , Rating: 3
Yeah, I don't understand the CRB at all.


RE: Another example
By jmtabak on 10/2/2008 9:39:52 AM , Rating: 5
Apple is bluffing.


RE: Another example
By iheartzoloft on 10/2/2008 9:45:41 AM , Rating: 5
Even if they are its still very poor timing. Common sense would seem to indicate that in an economicly rough state demanding higher royalties for an already profitable setup (from the label side) is just more proof of the greed that got us in the state we are now.

/lame label people../lame


RE: Another example
By MrBlastman on 10/2/2008 9:57:38 AM , Rating: 5
I say LET them increase the royalties. It will create a simple, but timely solution:

1. Costs for music will go up
2. iTunes will stop selling music
3. Music companies will ultimately lose money because of lost sales
4. Music companies go out of business
5. Music shifts to a new distribution/marketing model with new companies/blood in the industry and no more horrible music
6. Music lovers win :bannana dance:

So, yes, lets let them raise prices. This is good! We will be one step closer to getting rid of the companies we hate - without ever firing a gun at them. Let them pull their own trigger.


RE: Another example
By vapore0n on 10/2/2008 10:08:27 AM , Rating: 5
I think what will happen is, if iTunes goes offline, amazon, Walmart or Realnetworks will want to pick up that huge market they just flushed down the toilet.

Apple is in no position to give up that market given that it is #1. Too much money. Their shares would crash.

If this goes down I see Apple increasing the cost per song accordingly.

With this article Apple just shifted the blame. So i see no users going up with pitchforks and torches at Apple.


RE: Another example
By omnicronx on 10/2/2008 10:21:45 AM , Rating: 5
Apple won't give up anything, they are just trying to sway public opinion on the matter. Usual Apple PR to make them out to be the good guy. Now if they are forced to raise their prices over 99 cents, they can point fingers, while still maintaining a good image.


RE: Another example
By StevoLincolnite on 10/2/2008 10:48:20 AM , Rating: 2
Or you can expect a massive increase in the amount of advertising on the iTunes Store, and keep the price of music the same, or perhaps Apple might add a "small" 10 second sound byte at the start or end of ever song with a tiny bit of advertising. - There is ways to make money without selling anything.


RE: Another example
By erikejw on 10/2/2008 11:09:16 AM , Rating: 5
It is amazing that the government that is superpro capitalism(correctly) goes out of their way to support one of the largest monopolys in the history, music and movie business.


RE: Another example
By Hellfire27 on 10/2/2008 11:52:02 AM , Rating: 5
As a musician, actively selling content on all of the major digital music stores (including iTunes and Amazon), I am opposed to the idea. This will only hurt sales in the long run. In these troubling times, customers and businesses will be unwilling to pay more to buy or sell the same music. The RIAA can go to hell.


RE: Another example
By kkwst2 on 10/2/2008 1:38:24 PM , Rating: 5
I'm guessing by your ID it's not easy listening.


RE: Another example
By Hellfire27 on 10/3/2008 10:22:29 AM , Rating: 2
http://www.myspace.com/ixxionmetal

If you are looking for easy listening, I would steer clear.


RE: Another example
By MRsnufalufagus on 10/2/2008 2:21:17 PM , Rating: 3
I think everyone in this thread needs to read a book called All You Need To Know About the Music Business.

Record lables DON'T want or make money from a mechanical rate increase. They LOSE money from it. why? because this is money that goes to the PUBLISHER to split with the COMPOSER, usually at a 75% composer, 25% publisher split. (in a copublishing deal they split the publisher's share 50/50 and the writers share goes 100% to the composer). Think about it. the composer is the one who actually makes the music you are listening to.

When distribution costs and marketing costs are shrinking due to the internet, this means that the the Labels' cost and Apples cost are shrinking. recording an album is somewhat cheaper these days for the person singing on the album, but the guy writing the songs has as much work if not more than he always did. Since mechanical royalties are specified in cents, and inflation is ever present, it only makes sense that this rate go up from time to time. and since the writer/composer does proportionately more work these days, it only makes sense that it go up more than inflation.

Everyone that doesn't work for apple or one of the big labels should be supporting as large a rate increase as possible, because it means that your 99 cents will be steered more towards the people who have to eat food and pay rent while making those songs we love. Right now there are very few people who can live off it. A rate increase will bring a few more composers into the field and maybe some real talent along with it.


RE: Another example
By Spuke on 10/2/2008 2:46:26 PM , Rating: 2
quote:
A rate increase will bring a few more composers into the field and maybe some real talent along with it.
A rate increase in THIS economy will only serve to put you out of business. Buying music is a luxury and people are cutting back these days (in case you haven't heard - http://finance.yahoo.com/). Best to stick with the current pricing or preferably lower it.


RE: Another example
By MRsnufalufagus on 10/2/2008 4:33:50 PM , Rating: 2
That's always a good point to discuss, but it turns out that entertainment is the only other industry besides organized crime that tends to be relatively immune to the ups and downs of the business cycle. This means that supply and demand curves stay relatively stable for itunes purchases through recessions and growth periods.


RE: Another example
By Adonlude on 10/2/2008 8:13:21 PM , Rating: 2
Dont forget about Pandora. You are all fixated on itunes but I could care less about itunes. Its Pandora radio that will go under becuase of this increase!!!


RE: Another example
By George Powell on 10/2/2008 4:22:16 PM , Rating: 2
Last time I checked inflation hadn't yet reached 66%. Inflationary rises I can understand and would most likely be absorbed into higher album costs rather than per track ones.


RE: Another example
By MRsnufalufagus on 10/2/2008 4:46:05 PM , Rating: 2
mechanical rates aren't raised annually, so much of it is making up for lost time. you are also missing the point about how the composer's share of the work is proportionately more than it used to be, because everything else is cheaper.


RE: Another example
By the goat on 10/3/2008 7:54:45 AM , Rating: 2
quote:
Record lables DON'T want or make money from a mechanical rate increase.


100% correct. This rate increase is not money that goes into the pocket of the big record labels. This is what the big record labels are forced to pay the artist who made the song.

Everybody is always talking about how the artists don't get much out of music sales. The reason who is this rate. It should be raised.

Also:

How can itunes' profit margin be that slim? itunes has about 1/10 the overhead of a brick and mortar music store and itunes charges more per track then brick and mortar.


RE: Another example
By 1078feba on 10/2/2008 4:32:32 PM , Rating: 2
quote:
The National Music Publishers' Association, however, argues that the royalty increase will help everyone and will not hurt online music growth. David Israelite, president of the NMPA, the organization which is requesting the increase, stated, "I think we established a case for an increase in the royalties.


Yeeeaaaaah. Riiiiight. Because in the economic history of the planet, one can find all sorts of data supporting the idea that raising the price of your product won't decrease sales.

/sarcasm


RE: Another example
By MRsnufalufagus on 10/2/2008 4:49:43 PM , Rating: 3
let me ask you this.

raising prices will lower quantity demanded for recording rights to a composition, but it will also raise the number of suppliers willing to supply at that price. some of these people will be talented and will offer better songs at that price. your hard drive is already filled up with thousands of mp3s. Do you really want more quantity? Or would you like to try quality?


RE: Another example
By ilkhan on 10/2/2008 7:25:11 PM , Rating: 2
The artists arent limiting their supply based upon profitability. If they can sell commercial grade music, they already ARE selling commercial grade music. Price, and thus demand, is the only thing that would change.


RE: Another example
By Ringold on 10/3/2008 3:52:00 AM , Rating: 2
quote:
Because in the economic history of the planet, one can find all sorts of data supporting the idea that raising the price of your product won't decrease sales.


You laugh, but look at womens shoes / handbags / all other accessories. Not that I expect demand curves for anything related to women to be entirely logical.


RE: Another example
By othercents on 10/2/2008 10:50:43 AM , Rating: 2
That is more than likely especially since iTunes is tied closely to the iPhone and iPods. If they shutdown iTunes you have a large group of people who would start a class action suit against Apple since they specifically purchased their Apple equipment based on the service they were getting out of iTunes. Remove the service kill the product.

Other


RE: Another example
By ebakke on 10/2/2008 11:11:06 AM , Rating: 2
I'm sure the terms clearly state somewhere that Apple can pull the plug whenever it sees fit to do so.


RE: Another example
By jimbojimbo on 10/2/2008 3:22:21 PM , Rating: 2
iTunes != iTunes Store

And by the way for the non-adventurous people iTunes is the ONLY way they synch their iPods to their music.


RE: Another example
By HeelyJoe on 10/2/2008 10:16:30 PM , Rating: 2
Installing Winamp is adventurous?


RE: Another example
By michael2k on 10/2/2008 11:54:55 AM , Rating: 2
Why shouldn't Apple give up the iTunes store? The iTunes store+iPod accessories make up 8% of their revenue, and I am willing to bet that the iPod accessories pull in more than the iTunes store!

The only reason to run the iTunes music store (profitably) is to prevent Microsoft et al from locking the iPod out of the market. Now that P4S is dead and Zune is an afterthought, and iPod sales are plateauing in favor of the iPhone and iPod touch, the music store is only important for mindshare.

And if Apple gets more PR value for "keeping costs low" and "taking one for the consumer", then closing the music store makes a lot of sense.


RE: Another example
By mikefarinha on 10/2/2008 10:37:18 AM , Rating: 1
Your analogy could be applied to taxes as well, except only the politician's will be happy.


RE: Another example
By AlexWade on 10/2/2008 11:34:39 AM , Rating: 5
You are using real world logic, not Big Media logic. This is Big Media logic:

1) Costs for music/movies go up
2) We are selling less music/movies
3) Piracy is to blame not our inept business decisions


RE: Another example
By evilharp on 10/2/2008 12:26:06 PM , Rating: 4
Don't forget the Big Music Business Model:

1) Pay crap manufactured acts/performers enormous sums of money and act surprised when they flop
2) Squander vast sums of profits marketing said acts/performers
3) Squeeze the consumer/retailers/real-musicians for everything you can get, and complain that it isn't enough (sales are down, boo-hoo)
4) Introduce a super new format to increase sales... oh wait, MP3s/WMA/etc decreased sales... correction ==> Introduce a super new format with unhackable/unbreakable/unstoppable/rootkitable DRM to increase sales
5) Sue anyone who stands in your way (via RIAA) without realizing any measurable return (actually incurring more losses), darn single moms and retired people file-sharing and seeding torrents over dial-up!
6) Lobby Government(s)($$$$$$) to ban/limit/tariff media, media players, recording devices
7) Eliminate independent labels/publishers/artists/broadcasters who present a market challenge
8) Cry poor and console yourself in a pool in Tahiti/Fiji/Maui wondering where all the profits went, while you drop several million on Britney's comeback effort.

Maybe musicians need to return to basics, tour and perform live to make money? It worked in the first half of the 20th century. Oh wait, TicketMaster/King will give them and us the shaft if they do... hell they are scalping tickets now: http://webtrends.about.com/b/2008/01/15/ticketmast...


RE: Another example
By kkwst2 on 10/2/2008 1:22:57 PM , Rating: 2
Is there a reason that Apple can't get into the publishing business. Couldn't they buy up a label with experience on that end and start signing bands and publishing the music, cutting out the recording industry entirely.

I know it's a stretch and out of their market really. They could keep the company separate but linked. They make a lot of money off iTunes, so it seems like they could leverage that into more clout in the music industry.

I'm guessing there is some regulation or preventing them from doing this. I'm not an Apple fan particularly, but it seems like they're in the position to take over the music business, given that they control a large part of the distribution now.


RE: Another example
By Jimbo1234 on 10/2/2008 11:22:47 PM , Rating: 2
There was a lawsuit brought against Apple waaaay back when they became Apple. It was by Apple records (The Beatles' label). Apple Computer (now just Apple) was allowed to use the name with the stipulation that they could not enter the music business.


RE: Another example
By ICE1966 on 10/2/2008 3:05:33 PM , Rating: 1
I agree. I have not read or heard of any of these music stars living in poverty. In fact, after watching MTV cribs, I would say it does not look like hard times is hitting any of them. Most of the albums sold now very rarely has more than 2-4 good songs on them to start with, and we pay anywhere from $13 -$16 for the crap. The record labels are the ones who make the money, not the artist,and from some the crap I hear on airways now, some of the artist are payed way to much.
All this crap about protecting the artist creative ideas and thier material is complete horseshit, it's all about the money and who gets it. I know there are folks out there who work jobs that pay hardly above minimum wage that will buy the music of some artist who is living in the lap of luxury. I think in some ways its the people who do that that are the really stupid ones not the labels. Stop buying thier shit and demand more for your hard earned money. I hope apple does stop selling tracks.


RE: Another example
By Regs on 10/2/2008 3:41:52 PM , Rating: 2
Why can't the government let this mother f'ers just fail? Why do we have to keep bailing them out? I'm so sick of it. No wonder why everything is over priced, because the debt gets passed onto the buyer.


RE: Another example
By Radnor on 10/2/2008 9:59:51 AM , Rating: 2
No it is not.

RIAA/MPAA wants to put their paws on everything.
And i hope they get what they want, and Apple Closes Itunes.
And then all hell breaks loose.

I hope they do it. At least this travesty will end.


RE: Another example
By Alias1431 on 10/2/2008 10:49:16 AM , Rating: 2
Pretty much.


RE: Another example
By michael2k on 10/2/2008 11:46:19 AM , Rating: 4
The last time people thought Apple was bluffing, they pulled NBC out of the iTunes store months ahead of contract.

Apple doesn't bluff, they play to win.


RE: Another example
By Griffinhart on 10/2/2008 2:19:35 PM , Rating: 2
You have that backwards. It was NBC that pulled out of iTunes, not the other way around.

They thought they could do better elsewhere, but as a testimony to the strength of the iTunes store they came back. I just don't see Apple willingly giving up that kind of industry pull.


RE: Another example
By michael2k on 10/2/2008 2:39:11 PM , Rating: 2
No, I don't have it backwards, you have it wrong.

NBC informed Apple they were not going to renew. Rather than waiting for the end of the contract to end distribution of NBC's content, they pulled the content immediately (the day after), arguably to prevent viewers from being interrupted in the middle of the season. More info here:
http://www.nytimes.com/2007/08/31/technology/31NBC...
http://www.apple.com/pr/library/2007/08/31itunes.h...

So... yes, Apple pulled NBC's content IMMEDIATELY rather than play a bluffing game.


RE: Another example
By akugami on 10/2/2008 1:10:02 PM , Rating: 2
It doesn't matter if it's a bluff, if is a bluff then it's an awesome bluff. As omnicronx notes, it's a PR campaign. The RIAA and CRB knows it, Apples knows it, many consumers know it. The problem is that either Apple wins and royalties are not increased or Apple raises prices due to increased royalties and makes a huge PR campaign over how they tried to keep lower prices (think of the consumers!) but the greedy RIAA companies wouldn't let them.

Online sales is already a money losing business due to the fact that the music distributors want such a huge cut of the money. It's why so many of them fail or continually lose money. Apple makes little if no money already, its bread and butter is iPod sales.

What happens when Apple goes with a smear campaign and puts out iTunes commercials and at the end they say woops, we gotta raise the prices because the greedy RIAA is raising our costs even though we fought to keep it low. Then list the RIAA members. Takes a few similar ads out in the major newspapers across the globe. They can afford the ad costs. It also gets them lots of publicity (not necessarily positive but not negative) while the RIAA's get a ton of flack for screwing over consumers.


RE: Another example
By goku on 10/2/2008 1:20:45 PM , Rating: 2
While I do hate apple, in this case I'm rooting for them, and defintely not the RIAA/MPAA.


RE: Another example
By bigboxes on 10/2/2008 1:31:45 PM , Rating: 2
You're right on the money. Apple is bluffing big time. It's all a game to see if they can keep their costs down. Personally, I could care less. I will never pay for DRM infested, poor quality music. If I ever did want to purchase digital tracks I would use Amazon's service.


RE: Another example
By michael2k on 10/2/2008 2:34:32 PM , Rating: 2
1/3 of Apple's music is 256kb DRM free.

So why wouldn't you buy those tracks?


RE: Another example
By bigboxes on 10/2/2008 4:03:18 PM , Rating: 3
Because I'm a pirate. Argggh!!!


RE: Another example
By NullSubroutine on 10/3/2008 1:25:21 AM , Rating: 2
You rape, pillage, and plunder? All with drinking grog, feeding your starving parret, starring down your enemy out your one good eye, and while chasing down that white whale who took your one good leg? Tis true pirating, aye?

Oh wait, I have that backwards, the white whale is 'piracy' that RIAA/MPAA crusade against. Go Ahab!


RE: Another example
By Griffinhart on 10/2/2008 2:13:29 PM , Rating: 2
I agree, they are bluffing. Without iTunes the iPod is just another MP3 player. It's the whole ecosystem and lock in to iTunes that keeps the iPod on top. Shutting down iTunes would kill the biggest advantage Apple has in the market.


RE: Another example
By wwwebsurfer on 10/2/2008 10:47:02 PM , Rating: 2
There is NO WAY Apple would close the most profitable thing it's done in the last 25 years. Are you kidding? TOTAL bluff.


RE: Another example
By MrPickins on 10/2/2008 9:41:55 AM , Rating: 2
Exactly. Since when was it any of the government's concern what the price/royalty for music is?


RE: Another example
By lawstcawz on 10/2/2008 9:51:34 AM , Rating: 3
Are we reading the same article? If it were up to the labels, a rate increase would ALREADY be in effect. The government approval is currently the hold up.


RE: Another example
By FITCamaro on 10/2/2008 10:19:16 AM , Rating: 4
My point goes either way. If the market can't bear something then it will adjust or disappear. Cheap online music isn't a right. So a government agency shouldn't exist to keep royalties low. Nor should a government agency exist to approve/disapprove a change in rates up or down.


RE: Another example
By omnicronx on 10/2/2008 10:42:16 AM , Rating: 3
quote:
If the market can't bear something then it will adjust or disappear. Cheap online music isn't a right.
No its not, but music labels colluding to raise prices on tracks to make it not worthwhile would probably be considered illegal.


RE: Another example
By TheBaker on 10/2/2008 11:34:06 AM , Rating: 4
quote:
No its not, but music labels colluding to raise prices on tracks to make it not worthwhile would probably be considered illegal.


Yeah, and it shouldn't be. That's his point. Unlike the steel and oil monopolies of the early twentieth century, music is not a requirement of daily life. The companies can raise the prices as high as they want. When it gets so high people won't buy anymore, they will either lower the prices or go out of business. They will seesaw back and forth until they find the price where the most people buy the highest priced music that makes them the most profit.

This is what's known as good business.

Some people won't have music, true. But that's what radio stations are for. I don't hear you complaining that the car companies need to have more regulations so that fewer people have to take the bus.

Government price regulation in any industry is a VERY bad thing, and the music industry is no exception.


RE: Another example
By FITCamaro on 10/2/2008 11:55:39 AM , Rating: 2
I'm glad someone agrees with me. I don't think that price fixing is right but if music companies want to price themselves out of their own market, that should be their own stupid mistake to make.


RE: Another example
By omnicronx on 10/2/2008 12:14:49 PM , Rating: 2
quote:
if music companies want to price themselves out of their own market, that should be their own stupid mistake to make.
Your are merely speculating on what the public reaction would be. For all you know if online music stores close down, we could see physical media sales boom, which would benefit the music industry. I just don't see how raising royalties could possibly price themselves out of their own market, after all people use to buy CD's for 20-30 dollars an album, if it starts costing even 3/4 the price of physical media, it would be a win win situation for the music labels. Either people buy physical media, or they pay more for their music download.


RE: Another example
By FITCamaro on 10/2/2008 12:16:17 PM , Rating: 4
And whats wrong with this? I don't care what happens either way. Prices go up. Prices go down. The government has no business getting involved.


RE: Another example
By omnicronx on 10/2/08, Rating: 0
RE: Another example
By omnicronx on 10/2/2008 12:03:33 PM , Rating: 3
His point has absolutely no baring on monopolistic activity. Since when was being a necessity a requisite for being considered a monopoly. Price fixing is illegal, and if the entire industry agrees to increase prices higher, than obviously nobody is going to go out of business, because there will be no competition and thus no incentive.

Oil companies only get away with it, because it is a freely traded commodity, and lets face it, oil companies hide behind rising demand and the excuse that OPEC is responsible for the rising oil prices, even though this is probably not entirely the case.


RE: Another example
By Spuke on 10/2/2008 12:29:25 PM , Rating: 3
quote:
I don't hear you complaining that the car companies need to have more regulations so that fewer people have to take the bus.
Garbage analogy. You can buy cars from $100 to 1 million. Music has a VERY narrow price point.


RE: Another example
By NullSubroutine on 10/3/2008 1:53:55 AM , Rating: 1
Actually, I would argue that entertainment is a necessity of all society, not just a commodity. All community has needs that need to be fufilled many of which include shelter (home), sustenance (food/water), protection/freedom (safety/liberty), health/education, entertainment, econimic oppritunity, etc.

The most basic society cannot function without shelter or sustenance, a civilized society cannot function without protection/freedom or entertainment. The more modern and advanced the society becomes the more needs that are fufilled and required and if these needs are not met there is more for them to revolt against.

I could say that you have no right to economic oppritunity, freedom, or even security because all you all you really 'need' to survive is safety and sustanence. The truth is in an advanced modern society as our is (supposed to be), entertainment is as necessary of a need as any other.

Let us look at music, while a person may not just have a right to 'have' whatever is they want in order to satisfy their need of entertainment they do have a right to have reasonable access to it and to have a provider who is not monopolizing such an entertainment business.

The media conglomerate is in the practice of not free market, but buying and creating their own legislation in order to receive special and unfair treatment in the business community.

They not only are trying to receive welfare for the rich, but they are trying to create themselves a special class of 'business citizenry' where their product is held as the egg of the golden goose and they have complete control and say over. They want to ignore all consumer protection laws that all other businesses have to abide by and even want a special 'Czar' so they can lobby directly into the ear of the President of our country.

In a day in age when we have more serious concerns of energy, security, liberty, and economic stability for the entire American people, these lobbiest and media executives are trying to influence law making in order to benefit themselves, screw the consumer and their rights, and abolish any chance of competition. They are destroying the very free market principles that many here like to champion.

It does nothing to help the actual artists and creators of such entertainment but cement the monopoly of control and ownership of their intellectual property by big corporations whose sole existance was created by marketing on the backs of others.


RE: Another example
By lawstcawz on 10/2/2008 12:07:24 PM , Rating: 3
Yes, but it is a shame that "pricing themselves out of the market" through collusion not only effects them, but many other companies. Greed is one of the main reasons our economy is in its current state. Short term gains can have large economic impacts down the road. The death of iTunes may start an avalanche that apple cannot cope with, and I am no apple fan. If the music industry is allowed to price fix, I see no reason why it should not have to pass government approval. If they do acquire it, then you get your wish, and they price themselves right out of the market. At least this way, Apple has a chance to fight back.


RE: Another example
By AntiM on 10/2/2008 10:03:11 AM , Rating: 4
I wouldn't quite call it "interfering". I'm sure that the CRB exists to the delight of the major labels. It's another example of a greedy industry with a powerful lobby with lots of money buying government influence. Let them raise their royalty rates. The days of the music industry are numbered. They've shot themselves in the foot time and time again, now they're putting a noose around their own necks. 66 percent increase?? With the present economy? LOL! They would do well to consider lowering their royalty rates. The bottom line is, they can raise their prices/rates all they want, it just makes their product less attractive. I would love for Apple to close iTunes over this.


RE: Another example
By zombiexl on 10/2/2008 10:08:35 AM , Rating: 2
While I agree it seems stupid that there is a govt body there. If it wasn't there these prices would be even higher. All music companies would just agree to raise the royalty prices and iTunes, the Zune store, Amazon Music, etc would just have to deal with it.

That said.. I have to add..

Boo-freakin-hoo Steve. Now apple might have to actually add some real value to the iPod instead of the perceived value of the iTunes store.


RE: Another example
By FITCamaro on 10/2/2008 10:22:21 AM , Rating: 3
quote:
If it wasn't there these prices would be even higher. All music companies would just agree to raise the royalty prices and iTunes, the Zune store, Amazon Music, etc would just have to deal with it.


What you mean like every other industry? Should a government panel exist to regulate car prices? How about the price of cereal? The cost of materials for those industries fluctuate and the prices adjust as the companies need to. Or they adjust quality to use less expensive materials, use cheaper labor, etc.

If a market is only feasible because government intervention allows it to be, then it shouldn't exist. If people don't want to pay increased prices, they shouldn't. If all the music stores can only exist at a certain price per song, then they should not exist when it goes above that price.


RE: Another example
By reader1 on 10/2/2008 10:30:14 AM , Rating: 2
So you're saying companies should be allowed to engage in price fixing? Great.


RE: Another example
By rcc on 10/2/2008 10:49:26 AM , Rating: 2
OK, that comes in from waaaay out in left field. And has nothing to do with his post.


RE: Another example
By nycromes on 10/2/2008 10:56:21 AM , Rating: 2
No, FITCamaro is saying that if these companies raise royalties, they will lose business. They will be pricing themselves out of a job basically. Music isn't a necessity for life, believe me there are lots of other ways to entertain yourself.

The point was to explain how free market principles should regulate business, and to show that the govt shouldn't barge in and mess with it. I for one wouldn't mind not buying music for a while till these companies realize that the market is in control and not them.


RE: Another example
By on 10/2/08, Rating: -1
RE: Another example
By FITCamaro on 10/2/2008 11:56:54 AM , Rating: 2
Good to see the guy trying to impersonate as me. Nice making a post that has absolutely nothing to do with the subject at hand.


RE: Another example
By FITCamaro on 10/2/2008 12:02:17 PM , Rating: 2
And I guess now I have to ask that people read the name of the person posting stuff. Make sure its me saying it, not this clown.


RE: Another example
By omnicronx on 10/2/2008 12:28:16 PM , Rating: 2
quote:
The point was to explain how free market principles should regulate business, and to show that the govt shouldn't barge in and mess with it.
His point was that he believes in the 'laissez-faire' Free market, which is personal opinion. I respect his beliefs, but unfortunately for him, the law of the land does not agree with him. Whatever your beliefs the law states price fixing monopolistic activity is illegal, plain and simple.


RE: Another example
By omnicronx on 10/2/2008 10:32:08 AM , Rating: 2
It could be considered monopolistic, music labels could drive online retailers out of business by raising royalties to make it not worthwhile. My guess is it was a measure to protect the industry from unfair business practices. What better way to stop digital downloads than to make it more expensive than physical media.


RE: Another example
By ET on 10/2/2008 11:12:04 AM , Rating: 2
Royalties are not a direct part of a business, in the sense of car prices. Royalties need to be paid to any person who creates something that others play, even if he's not affiliated with any business. That most copyrights are controlled by big businesses is a big problem, but the government panel needs to exist because this is not the natural state of affairs.


RE: Another example
By FITCamaro on 10/2/2008 12:01:26 PM , Rating: 2
It's not the natural state of affairs for a company to be able to charge for the use of their product? Or to own the product that they create.

Don't think that in any way I like the music industry. I think they're greedy, soulless bastards. But if they want to be so greedy that they drive themselves out of business, they should be allowed to. The government shouldn't step in to force them to play fair.


RE: Another example
By lawstcawz on 10/2/2008 1:25:34 PM , Rating: 2
Think about what you said. This is not a single company, but rather a collection of competitors trying to force the consumer to purchase physical media to make the consumer purchase an album, rather than only the songs that are worth buying. The music industry would NOT be driving themselves out of business, but online retailers, an indirect form of competition.


RE: Another example
By FITCamaro on 10/2/2008 2:05:32 PM , Rating: 2
Worth buying to you. Just because you only like 3 songs, doesn't mean others feel the same way. And if that is how they want to push their product, they have that right. You still have the ultimate choice of whether to buy it or not. Windows comes with plenty of features people never use or want. As does OSX.


RE: Another example
By walk2k on 10/2/2008 12:50:10 PM , Rating: 2
Oh geez.

quote:
Should a government panel exist to regulate car prices? How about the price of cereal?


Grow up, go to school and learn something. Both the auto and agricultural industries in the US are HEAVILY regulated (and subsdised!)


RE: Another example
By Yossarian22 on 10/3/2008 12:09:21 AM , Rating: 2
That is a horribly shallow analysis. Car manufacturers can't wipe out competition with arguably monopolistic practices. Zero regulation advocates are living in a world as absurd as Communists and Anarchists.


RE: Another example
By michael2k on 10/2/2008 11:56:26 AM , Rating: 2
Steve surely doesn't care...

And as for value, what do you call the iPod touch, or the new iPod nano?


RE: Another example
By michael2k on 10/2/2008 11:43:02 AM , Rating: 2
Except copyright is a government mandated IP, and that is almost all digital distribution is, copyright.


RE: Another example
By Hive on 10/2/2008 12:41:13 PM , Rating: 2
And who paid the government to do that? I can bet they didn't come up with that of their own accord.


RE: Another example
By Reclaimer77 on 10/2/2008 5:50:23 PM , Rating: 1
quote:
Of the government interfering in private enterprise. This is stuff that should be hashed out between the music labels and Apple. Not mandated by a government run review board.


I agree but your missing the point.

Without the government screwing up the market economy and f'ing over businesses, how are they going to get 900 billion dollar " bailout " pork barrel plans approved ? In which they, ironically, blame the very businesses for the problems THEY created in the first place.


Jobs is bluffing
By Pirks on 10/2/2008 9:32:51 AM , Rating: 5
He won't close iTunes because THAT will make Zune FINALLY a serious competitor to his iPod toys, and he knows it. And recording industry bosses know it too. So... good luck bluffing Steve. Those bosses probably will be a tougher target for your RDF.




RE: Jobs is bluffing
By Master Kenobi (blog) on 10/2/2008 9:43:13 AM , Rating: 2
Yea, they're bluffing. I expect this measure to pass, and Apple to simply take it in the teeth or raise the price over 99 cents. I'm sure Amazon and Microsoft would savor Apple's exodus from the online music sales field. This would also kill a revenue source and that's something Apple can't afford to do.


RE: Jobs is bluffing
By michael2k on 10/2/2008 12:05:09 PM , Rating: 2
Apple can afford to shut down music. The entire iTunes store is less than 8% (including iPod accessories), so the music store alone might be something like 3% of their revenues.

The last time people thought they were bluffing, they pulled NBC from the catalog. So long as music is still available for the iPod (Amazon et al), I don't see why Apple would fight for the iTunes music store so strongly.


RE: Jobs is bluffing
By Pirks on 10/2/2008 12:16:00 PM , Rating: 2
quote:
entire iTunes store is less than 8%
8% of what?


RE: Jobs is bluffing
By michael2k on 10/2/2008 12:28:45 PM , Rating: 2
If you had continued reading:
quote:
The entire iTunes store is less than 8% (including iPod accessories), so the music store alone might be something like 3% of their revenues.


So less than 8% of their revenues... And music along might be 3% or less.


RE: Jobs is bluffing
By walk2k on 10/2/2008 12:45:26 PM , Rating: 2
Duh of course they are bluffing. They own the online music market they would never just "shut it down". El-oh-el Steve. Not to mention sales of the Ipod are probably the only thing keeping Apple from going bankrupt.


RE: Jobs is bluffing
By FITCamaro on 10/2/2008 12:53:13 PM , Rating: 2
They make a pretty penny from the sales of their overpriced computers as well.


RE: Jobs is bluffing
By Pirks on 10/2/2008 2:14:22 PM , Rating: 1
Some people call premium goods "overpriced", this could be seen with regard to cars for example. I've noticed many times people calling Lexus and MB cars "overpriced". I'm just saying that "overpriced" and "premium" seem to be freely interchangeable terms these days, and which term one prefers to use is up to debate.


RE: Jobs is bluffing
By Myg on 10/2/2008 4:32:55 PM , Rating: 2
Better not worry about different references to same concepts and let old wisdom ring true: "A fool and his money are soon parted"


RE: Jobs is bluffing
By Pirks on 10/2/2008 4:59:35 PM , Rating: 2
I would avoid calling people buying Lexus and MB cars fools if I were you. You look like you envy them by calling names.


RE: Jobs is bluffing
By Myg on 10/3/2008 6:44:38 AM , Rating: 2
They wern't my words; since I am quoting an old peice of wisdom, but I would subscribe to such thoughts because I think only people acting like Gobs would buy such cars :-)

I envy many things, but people with flashy cars definetly arn't one of them.


RE: Jobs is bluffing
By Pirks on 10/3/2008 4:08:11 PM , Rating: 2
Lexus isn't flashy. Apparently you never driven one. Never mind.


RE: Jobs is bluffing
By michael2k on 10/2/2008 2:07:33 PM , Rating: 2
As FITCamaro says, Apple still makes money on Macs.

In fact, half their revenues come from the Mac. Music? Only 3% or so (actually 8% for the entire iTunes store+iPod accessories). iPod sales? Only 21%


RE: Jobs is bluffing
By michael2k on 10/2/2008 11:59:57 AM , Rating: 2
Um, how do you explain NBC getting pulled from the iTunes store then?

Steve, I'm sure, is perfectly willing to pull music out of the store if it doesn't work out.

After all, music accounts for less than 8% of Apple's revenue (even lower when you consider that 8% also includes iPod accessories).

And the PR! Apple will come out looking like a good guy, fighting for lower prices for the consumer.


RE: Jobs is bluffing
By Pirks on 10/2/2008 1:28:19 PM , Rating: 2
quote:
how do you explain NBC getting pulled from the iTunes store then?
To me it looks pretty stupid to equate pulling just one content provider and shutting down the WHOLE store. Don't you agree?


RE: Jobs is bluffing
By michael2k on 10/2/2008 1:59:20 PM , Rating: 2
Well, Apple still will be selling movies, games, programs, and TV shows, so it's not exactly as if the entire cash cow is going away in a puff of smoke.

And it doesn't appear stupid to me at all. It appears like Apple has balls and aren't bluffing. If Apple can survive without 1/4 of their TV content, they can survive without ALL their TV content.

As I said before, music likely makes only 3% of their revenue (quite possibly less), so they can afford to pull out of music (in the US).


RE: Jobs is bluffing
By Pirks on 10/2/2008 2:06:50 PM , Rating: 2
quote:
Apple still will be selling movies, games, programs, and TV shows
How big is revenue and profit from all this movie/game stuff compared to revenue/profit from music? If music is say 90% of their iTMS revenue or profit, then what would you say? That they have the balls to kill 90% of their iTMS revenue, right?


RE: Jobs is bluffing
By michael2k on 10/2/2008 2:12:58 PM , Rating: 2
Even if music was 90% of iTunes, they should still kill the music store (on principle) if the rates go up. Especially if that only amounts to 3% of their entire revenue!

In other words, Apple makes $7.4b in the last quarter. iTunes music is probably only accounts for $200m. To put that in perspective, sales of mice, keyboards, wireless routers, and hard drives was $437m!

Data here: http://images.apple.com/pr/pdf/q308data_sum.pdf


RE: Jobs is bluffing
By Pirks on 10/2/2008 2:39:10 PM , Rating: 2
Where the heck did you get that $200m number? This PDF says that "Other Music Related Products and Services" brought in more that $800m which was close to $900m a quarter or two ago. That's close to a BILLION total, and there's nothing in this PDF suggesting that music brought in "just $200m" as you mentioned. Am I missing something?

It feels like they are to lose close to billion bucks per quarter (that's why I said Jobs was bluffing, he'll never let this much money go), maybe less of course, but your number ($200m) is really weird, did you just make it up? ;)


RE: Jobs is bluffing
By Spuke on 10/2/2008 3:18:00 PM , Rating: 2
quote:
Consists of iTunes Store sales, iPod services, and Apple-branded and third-party iPod accessories.
That $819 million figure consists of the above quoted text not just iTunes music. He speculated that 3% of the iTunes revenue was probably for just the music portion. $200 million is off but he stated that before he found the document with Apples revenues on it. In reality, the dollar amount is probably MUCH lower than that.


RE: Jobs is bluffing
By Pirks on 10/2/2008 4:04:06 PM , Rating: 2
Why much lower? Why not much higher?


RE: Jobs is bluffing
By michael2k on 10/2/2008 6:46:16 PM , Rating: 2
Because the raw revenue of ALL music Apple sold in the entire time the iTMS existed only comes up to 1.45b; another data point, they only expect to sell 2.4b tracks for 2008, which translates to $696 million for the whole year, or just about $174m per quarter

So if they won't even come close to making $800m in a whole year's worth of sales, why do you think it will be "much higher" than $200m? All my math (average sales divided by quarter, estimates based on halfs, etc) point to a range from $174m to a high of $225m

Nowhere near close to a billion as you think.


RE: Jobs is bluffing
By michael2k on 10/2/2008 4:01:31 PM , Rating: 2
If you read the PDF:
iTunes+iPod accessories is almost 900m.
If we assume half of the income is from accessories and half is from iTunes, that makes the iTunes store roughly 450m.
If we assume that half that is music and the other half is games, movies, TV-shows, and iPhone apps, then you get $225m.

I was merely rounding down.

Regardless of the assumptions, iTunes music is still less than 10% of their income; 50% is Mac, 20% is iPod, 5% is iPhone, 6% is peripherals, 7% is software... iTunes+iPod is 11%

So my point is that they will lose nowhere close to a billion bucks a quarter: That 819m is split up into international/local markets, applications, games, movies, TV shows, music, and iPod accessories. Apple shutting down the US music store won't amount to much more than 5%, and as I keep reiterating, much closer to 3% revenue.

25% US music
25% international music
15% TV shows
15% iPod accessories
10% movies
10% games/applications

25% of 819m? $204m. You can play with the distributions all you like, but US music revenue is nowhere close to a billion dollars.
http://online.wsj.com/article/SB121987440206377643...


RE: Jobs is bluffing
By Pirks on 10/2/2008 4:10:15 PM , Rating: 2
Okay, let's assume it's close to $200m indeed. Then let's add up lost sales of iPods (no iTMS music ==>> less people buying iPods, more people buying Zunes), does it increase quite a bit potentially? Can we talk $1b lost together, counting lost music sales and lost iPod sales together?


RE: Jobs is bluffing
By michael2k on 10/2/2008 4:22:26 PM , Rating: 2
Nope. People don't buy iPods because of the iTMS; at last count it was something like 25 tracks from the iTMS per iPod.

On a 120GB iPod? On a 80GB iPod? That only ammounts to 100mb, not even 1% of the music on an iPod.

My library is 13GB, and only 10 tracks are from the iTMS.

Even without the iTunes store music, people will be buying iPods because they are one of the best MP3 players out there (insofar as computer illiterate people know). The iPod's strength is to play music, not to play iTunes store music.

You can claim all you want that the iPod will decline, but you will need to provide proof of that effect. My counter-proof? iPod sales grow even without an iTunes store (locally, internationally, whatever). The iPod survived for three years without a store, and four internationally.


RE: Jobs is bluffing
By Pirks on 10/2/2008 6:28:12 PM , Rating: 2
quote:
The iPod survived for three years without a store
Do you have even a slightest idea how close to zero was the iPod market share before they introduced iTMS? I think not!

"Survived" is a perfect word here. So when iTMS is down iPod will get back into "survival" mode. Sure, it'll "survive"... with the _same market share_ as in pre-iTMS days :)))


RE: Jobs is bluffing
By michael2k on 10/2/2008 6:48:48 PM , Rating: 2
You can believe that if you wish; so far everyone is now selling iPod compatible music, so there isn't an "impetus" to switch away from it, and the only music player even close to as good is the Zune and it isn't even available outside the US.

You tell me how long it will take for the iPod to fall and we can come back to this discussion later.


Ipod sales
By SeeManRun on 10/2/2008 9:12:25 AM , Rating: 5
The artists complain they don't make money on the sale of an Ipod.. But I doubt they ever made sales on Walkmans or record players or CD players that go into cars. They made their money on making one or two hits, and then putting in filler songs to sell the whole album. Itunes makes that not possible, and the consumer wins. If an artist puts out 15 awesome songs, they will now make a lot more money than if they only put out 2 on an album. Good for the consumer, and makes the artists work harder.




RE: Ipod sales
By sleepeeg3 on 10/2/2008 9:22:54 AM , Rating: 2
Agreed. These rates were negotiated awhile back. This is BS trying to reneg on that deal and to go through the government??? Why is our government even involved in this?


RE: Ipod sales
By xsilver on 10/2/2008 10:16:39 AM , Rating: 3
Hey why should singers like britney and paris have to try hard to put 15 songs together, cant you see they already have trouble putting 2 words together while making sure their panties are still on?

People need to be able to dream that one day they can grow up to be shitfaced drunk while accepting an MTV award and thank the millions of fans that are paying for their plastic surgery. That is the american dream....

/sarcasm

btw. I think the industry will for a while yet stay like it is. Fact is that most of the music is bought by fickle teens and it is much easier to trick them with the "latest" thing rather then focusing on producing good music.


RE: Ipod sales
By tential on 10/2/2008 2:22:39 PM , Rating: 3
The acronym MTV makes me shiver in fear. MTV is probably one of the worst TV channels ever to be created.


RE: Ipod sales
By Spuke on 10/2/2008 3:22:34 PM , Rating: 2
quote:
The acronym MTV makes me shiver in fear. MTV is probably one of the worst TV channels ever to be created.
It used to be really good.


RE: Ipod sales
By kampret on 10/2/2008 4:21:46 PM , Rating: 2
Yes, when they still show music...(which apparently they still do in some part of Asia) and not those reality shows crap...

quote:
It used to be really good.


UgH Clean Up Your Act
By Silver Bullet on 10/2/08, Rating: 0
RE: UgH Clean Up Your Act
By rdeegvainl on 10/2/2008 11:02:24 AM , Rating: 2
STFU, seriously, if you cannot handle words on the internet with an arbitrary label of "foul" then GTFO. This is the internet, not some child daycare, not your local grocery store, and definitely not a schoolyard. Get over yourself and your ideals about what words are taboo.

tl;dr
Take your care bear stare elsewhere


RE: UgH Clean Up Your Act
By Myg on 10/2/2008 4:48:25 PM , Rating: 3
What is the internet but the daycare, the local grocery store and the schoolyard? Are these not places and mediums that human beings grow up/spend their time and are hopefully taught manners to properly show respect to others on a normal basis?

The internet is not an abstract place or thing which transends humanity; it is just an emulated expression of the human peer interaction model. It is a subset; not a superset of ourselves.

Which draws us to the conclusion that what manners and etiquette are required to properly convey respect of yourself and respect to others outside of this mode of interaction apply here too.

If you cant act with dignity, respect and self control in this medium; You will not be able to outside, so he is right: clean your act up or lose out in life.


RE: UgH Clean Up Your Act
By rdeegvainl on 10/2/2008 8:25:16 PM , Rating: 2
you actually said that the internet is a place to learn manners... wow!

Oh and this medium has no control on how others act outside of it. Take your squeaky clean ideals and shove them. You don't have a right to not be offended.


RE: UgH Clean Up Your Act
By Myg on 10/3/2008 6:58:12 AM , Rating: 2
I would suggest paying close attention to this part:

"If you cant act with dignity, respect and self control in this medium; You will not be able to outside, so he is right: clean your act up or lose out in life."

Such ideals exist because they are good for you, reject them and you will suffer greater and longer then the suffering it takes to correct yourself.


RE: UgH Clean Up Your Act
By rdeegvainl on 10/4/2008 12:44:00 PM , Rating: 1
I'm saying that is bullshit, and you have absolutely nothing credible to back it up with.


RE: UgH Clean Up Your Act
By Myg on 10/5/2008 3:26:46 PM , Rating: 2
Of course I do; try talking like that at an interview...


RE: UgH Clean Up Your Act
By rdeegvainl on 10/7/2008 2:02:02 AM , Rating: 2
then where is your support?


RE: UgH Clean Up Your Act
By Gzus666 on 10/2/08, Rating: 0
RE: UgH Clean Up Your Act
By rudolphna on 10/2/2008 12:02:18 PM , Rating: 1
oh shut up. Nobody made you go to this site. Its the internet, not kintergarden.


RE: UgH Clean Up Your Act
By Myg on 10/2/2008 4:49:56 PM , Rating: 2
What is the internet but the daycare, the local grocery store and the schoolyard? Are these not places and mediums that human beings grow up/spend their time and are hopefully taught manners to properly show respect to others on a normal basis?

The internet is not an abstract place or thing which transends humanity; it is just an emulated expression of the human peer interaction model. It is a subset; not a superset of ourselves.

Which draws us to the conclusion that what manners and etiquette are required to properly convey respect of yourself and respect to others outside of this mode of interaction apply here too.

If you cant act with dignity, respect and self control in this medium; You will not be able to outside, so he is right: clean your act up or lose out in life.


GREEDY SOBS!
By Dean364 on 10/2/2008 9:49:56 AM , Rating: 4
This is why I feel it is perfectly ethical to steal music. Eye for an eye. If the record industry is stealing from us, then we shall steal from them.

Greedy bastards!




RE: GREEDY SOBS!
By Radnor on 10/2/2008 10:13:55 AM , Rating: 3
i++

I love a good rant.


RE: GREEDY SOBS!
By Brainonska511 on 10/2/2008 11:17:31 AM , Rating: 2
Your ethics could use some work. If you don't agree with the major labels' practices, don't buy music from them, but don't go stealing it off the internet either. You want to support an artist directly? Buy merch from their own online store, go to one of their shows and buy stuff their directly from the artist.

Or just buy music from independent labels.

Either way, it doesn't make it okay to steal the music, as the RIAA is not stealing from you (so that whole eye for an eye crap does not hold). No one holds a gun to your head and forces you to buy that new Britney Spears CD.


RE: GREEDY SOBS!
By Radnor on 10/2/2008 12:10:42 PM , Rating: 4
First off, isn't stealing. It is copyright infringment.

Second the RIAA want my privacy. RIAA wants what Google has. Loads and Loads of comercial informacion so you can swallow up their product.

Honestly i just hope they will do enough crap to implode.

And Itunes closing was a great start !!


RE: GREEDY SOBS!
By Denithor on 10/2/2008 12:16:11 PM , Rating: 2
I wouldn't go so far as to call it ethical, it's still stealing.

However, I would imagine if they push through this rate increase, Apple will pass it along to the consumer--many of whom will decide to start pirating for the first time instead of paying the higher costs to get the music legally.


The DRM problem
By devolutionist on 10/2/08, Rating: 0
RE: The DRM problem
By rudolphna on 10/2/2008 12:05:46 PM , Rating: 2
that wont happen because consumers would mob apple headquarters, and probably injure/kill people. I myself have at least $100 invested in music from itunes, and I would definetly file a lawsuit over that if I couldnt use it anymore


RE: The DRM problem
By michael2k on 10/2/2008 12:30:44 PM , Rating: 2
Apple can easily shut down the store without shutting off the DRM servers.

On the flip side, Walmart is shutting down their DRM servers but not shutting down their store!


RE: The DRM problem
By FITCamaro on 10/2/2008 12:54:44 PM , Rating: 2
Since when do iPods connect to the internet before playing a song?


RE: The DRM problem
By omnicronx on 10/2/2008 12:58:07 PM , Rating: 2
Ya I was about to say, as long as you have itunes on your computer, you will always be able to play and transfer your songs.. It is not internet dependent.


RE: The DRM problem
By FITCamaro on 10/2/2008 5:04:11 PM , Rating: 2
I defended an Apple product. I feel dirty..... :)


SEVENTY PERCENT!?
By Sunrise089 on 10/2/2008 10:38:01 AM , Rating: 2
We all know Apple charges 99 cents for a single track. Is the article really right that the labels, who don't make a single physical product, don't handle marketing, don't handle support, didn't design the store, etc, see 70 of those 99 cents? And want a rate increase? Nice.




RE: SEVENTY PERCENT!?
By mydogfarted on 10/2/2008 10:55:52 AM , Rating: 2
Let's not also forget that there is almost no overhead for the labels with digital distribution: no CDs to make, store or distribute. A few e-mails to the various on-line stores and you're done.


RE: SEVENTY PERCENT!?
By psychobriggsy on 10/2/2008 11:33:30 AM , Rating: 2
I believe the rate increase is what the label pays out to the copyright holder / songwriter. I.e., a measly fraction of the ~70 cents they receive from iTunes.


RE: SEVENTY PERCENT!?
By Flunk on 10/2/2008 6:05:31 PM , Rating: 2
Yup, Apple has to operate their entire service on 29 cents on the dollar. They really don't do it for the profit, more to support sales of their iPod music players.

The record labels are so greedy these days I'm hoping artists realize that they don't need them anymore. An artist selling directly to iTunes could make 10x what they do now at about 50cents a song. Even add on a brokerage fee of some sort and they're still far ahead.

Artists deserve to be paid, record labels just sit in the middle and leech cash from both sides.


Apple = idiots
By UNCjigga on 10/2/2008 10:59:29 AM , Rating: 2
Rather than shutting down, they should start selling music for ALL DAPs--i.e. offer DRM-free 320kbps iTunes+ tracks only, and allow iTunes software to sync with more than just iPods. That would justify the price increase. It would also stick it to the industry (in fact aren't Wal-Mart and other online music stores shifting to DRM-free?)




RE: Apple = idiots
By JustTom on 10/2/2008 11:49:27 AM , Rating: 1
They won't do that because it violates their business model. iTunes exists to service iPods, and to tie iPod owners to Apple.


RE: Apple = idiots
By lifeblood on 10/2/2008 12:28:38 PM , Rating: 2
The iPod and iTunes are not completely tied to Apple. I have a Nano and sync it with iTunes. But I buy my music from Amazon (DRM free) as well as ripping it from CD's I buy . The only time I buy something from iTS is when someone gives me an iTunes gift card.


RE: Apple = idiots
By JustTom on 10/4/2008 10:32:58 PM , Rating: 2
You are correct that one can play music from other providers on iPods, I own a touch and do exactly that. However, the iTunes store still exists to serve iPods and the reason it is the number one digital music seller is because iPods are the number one DAP.


ugh
By plonk420 on 10/2/2008 9:19:41 AM , Rating: 2
as if it hasn't been said enough lately, FUCK THE RIAA.

i've minimized purchases from RIAA labels. even the last one i made the mistake of buying before sampling was pretty underwhelming (i liked Dream Theater's Octavarium but not their latest). i'm pretty relieved to find out that Sleepthief on Neurodisc isn't an RIAA label. bought my first Magnatune disc (Kirsty Hawkshaw) who allows you to give a legit copy to 3 if your friends. and have been picking up a few lossless tracks here and there from Beatport (i'm not sure how associated they are with the RIAA, tho)




RE: ugh
By killerroach on 10/2/2008 9:40:00 AM , Rating: 2
Not sure how Dream Theater's most recent album would have been affected by an RIAA label, as Warner didn't buy their majority stake in Roadrunner until after the album was already recorded and produced...

On the idle threat of Apple: Do it. Make us proud. Give your cash cow over to Amazon on a silver platter. Don't let the door hit you where the good Lord split you.


RE: ugh
By plonk420 on 10/2/2008 6:25:24 PM , Rating: 2
Roadrunner isn't (/wasn't) RIAA?

Octavarium was Atlantic/WEA. Systematic Chaos is Roadrunner (distributed by Atlantic/WEA) .. and previously since 2000 or 2001 was UMG. so distribution BY an RIAA label/parent company doesn't necessarily mean they're in the RIAA's pocket?


I fully support the rate hike...
By DanoruX on 10/2/2008 10:01:56 AM , Rating: 5
...as long as they agree to pay for the Wall Street bailout.




Bluffing
By Elementalism on 10/2/2008 10:59:16 AM , Rating: 3
Yeah Apple is going to get out of a market they currently hold the #1 position and that fuels sales of iPods and indirectly iMacs.

If they leave Ill piss my pants in laughter.




Represent artists - huh??
By jhb116 on 10/2/2008 3:31:38 PM , Rating: 3
I read this on Toms yesterday where they actually had the split:
<http://www.tomsguide.com/us/Apple-iTunes-Royalties...
Labels - 61 cents/99 cent song
Artists - 9 cents/99 cent song
Apple - 29 cents/99 cent song

Does anyone else see the problem with RIAA saying they represent the artists?? Between this and suing single mom's - they wonder why people are PO'd?????

Dear RIAA - FYI - this is why I have an extremely limited music collection. I won't steal the music and I'm afraid I'll be accused of stealing it or helping others to steal it even if I buy mp3's from Itunes or other authorized vendor.




Seventy percent already?
By fishbits on 10/2/2008 10:17:53 AM , Rating: 2
Dunno, seventy percent of purchase price (or the offered seventy-five) doesn't seem very bad, all things considered. To put it in perspective, note that the labels aren't showing that there's much fat to be trimmed by distributing the music themselves.

I wonder, out of every dollar that currently goes to the label, how much typically goes to the artist. Something tells me that that info is something that could embarrass the labels who are claiming that there's too much overhead in music distribution.




Good Riddance!
By rickon66 on 10/2/2008 11:52:54 AM , Rating: 2
Good Riddance!!
Bye Bye
Who Cares?
Etc.




Boycott iTunes
By lightfoot on 10/2/2008 12:22:22 PM , Rating: 2
I will definitely boycott iTunes if Apple shuts it down.




Independent Music Revolution
By DarthKaos on 10/2/2008 12:51:02 PM , Rating: 2
That is what needs to happen. Apple needs to get behind independent artists not involved with the music industry yet and customers need to help that support. Write reviews of the independent bands and start a revolution. End the involvement of big business with music.




This doesn't just affect Apple
By msheredy on 10/2/2008 1:18:30 PM , Rating: 2
What about the other online retailers? The article makes it sound like Apple will be the only one affected by this. They'll have to raise their prices too and are they willing to do so? To say that this will leave a gap is nonsense—it'd be more of a black hole. If Apple can't play with that increase how are the smaller [read-rest] of the retailers stay in business? People are either going to go to subscription based models with increased fees or go back to the ole days and buy those round plastic thingies.




By Darkskypoet on 10/2/2008 1:38:34 PM , Rating: 2
No, instead I'd start signing artists. If I am on track to ship ~ 2.4 billion tracks, I'd be signing artists and simply start taking away the various record companies golden geese. Then I keep the raise in royalties, while offering a slightly higher (or substantially, depends on wiggle room here) payback to the artists. Considering if its an artist from another label, and I already legally bound to pay 65-75% of revenue per track to them, why not pull the artists in as their contracts expire for 45-50 % of track revenue to the artist? They can't be seeing even close to that per CD never mind per track. In fact, I am quite surprised they haven't been slowly doing this for a while.

Consoles have game exclusives, iTunes should as well. The only stumbling stone I could see from this is some sort of agreement that Apple wouldn't do this in return for being able to be a distributor for all of these other labels.

However, that being said; if the royalty rate is mandated, something tells me that the record companies have no choice as to who distributes their music, as long as 'fees' are paid. Anyone know anything about this part of the current 'deal'?




By Cybertoxic on 10/2/2008 3:31:07 PM , Rating: 2
No matter how you look at it, consumers will bear the brunt of any price increase. As such, illegal downloads will be even more compelling to those who are partial to such activities. So much for increased revenues...




By phxfreddy on 10/2/2008 3:33:06 PM , Rating: 2
I vaguely could understand letting electric utilities being regulated by a gov't board.

But music? This crap is by no means essential to modern living. This priveledged group only wants to be able to dictate terms.

Incredible. Might as well start putting O-Stikas on everything. Its not going to get any better.

No wonder no one supports the bail out. They see this sort of thing.




And Apple Stock...
By phazers on 10/2/2008 5:00:01 PM , Rating: 2
Falls to just a dime over $100, down almost $100 from the high posted last Christmas week. I'd bet El Jobso ain't too happy that his portfolio is worth half of what it was 9 months ago...




Itunes
By TheFace on 10/2/2008 5:29:25 PM , Rating: 2
I just redownloaded Itunes, as I reformatted my computer to Vista x64, and it won't play any music. Now, I understand that there could be other things that may cause this, but..
My sound works. The music will play under Windows media player. I downloaded Itunes for Vista x64. Itunes itself works (the store, shows all my music, genius feature recommends music), but it won't play a tune.




Greedy?
By oxymojoe on 10/2/2008 5:58:06 PM , Rating: 2
It would appear to me that Jobs & Co. are saying "be happy with what we give you, or get nothing at all."

While Apple is most certainly in the position to negotiate, the statement is somewhat reminiscent of a petulant child used to getting his way.

Don't shut the whole thing down because it's not going your way Steve.




Public backlash
By ilkhan on 10/2/2008 7:19:47 PM , Rating: 2
quote:
there's liable to be public backlash against the labels.

Um...theres been a public backlash against the labels for almost a DECADE now.

Shutting down iTS is a reasonable way to counter this. I bet losing the 70 cents per track iTS sells would put a noticeable dent in their collective wallet.




Update: No increase.
By Anonymous Freak on 10/2/2008 10:50:35 PM , Rating: 2
Mirror mirror on the wall
By Frallan on 10/6/2008 8:46:19 AM , Rating: 2
What will happen to internet and all?

Well it doesn't take a magic mirror to figure out what would happen if this bill goes through and Apple does pull the plug on ITs (which I believe is Not an idle threat).

I forsee 2 major changes.

1) anonymizers and darknet usage will skyrocket.
2) the big labels go down the drain even faster - bc a new business model will arise.




F*** The Music Industry
By UppityMatt on 10/2/2008 10:52:56 AM , Rating: 1
quote:
And the record labels, suffering from 20 percent lower cd sales in 2007, are likely equally unwilling to swallow the loss.

quote:
Apple current controls 85 percent of the online music market and is set to sell 2.4 billion tracks this year, according to Piper Jaffray.


So CD Sales are down...yet digital sales are up. Anyone else feel like the Music Industry's loss isn't quite as bad as they are making it out to be....especially in our current economic situation. Hell lots of companies sales are down. I am so fed up with the Music Industry...think this is the last straw.




If this goes through
By Staples on 10/2/2008 1:13:07 PM , Rating: 1
Then maybe the RIAA will have more money to go after the people on DT who think that stealing music is just fine. While I like neither entity in this case, it is the pirates who anger me a lot more than the RIAA.

I never thought I would agree with an anti RIAA article on DT but I do with this one. From what I get from this article, their royalties are probably somewhere around 20 cents of right now.




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