Universal Music Group Seeks Music Tax from Apple
December 1, 2006 3:27 PM
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Analysts expect more music studios to follow
Apple may have to pay royalties in 2007 for every iPod shipped in 2007 if Universal Music Group successfully negotiates an agreement with Apple. Earlier this year,
Universal had struck a deal with Microsoft and its Zune portable music player
. Microsoft would pay royalty fees for every song downloaded by a user and every Zune player sold. Similar to a tax, this contract was definitely a big win for Universal and the music industry.
Now, Universal is indicating that it
wants to have the same contract setup with Apple
too. According to Universal's chief executive Doug Morris, he is already communicating with Apple about the possibility of an agreement. Analysts are uncertain about Apple's decision but based on the outcome Universal had with industry giant Microsoft, it is likely that the situation between Universal and Apple will be coming out the same.
report, Morris said "it would be a nice idea. We have a negotiation coming up not too far. I don't see why we wouldn't do that... but maybe not in the same way. The Zune (deal) was an amazingly interesting exercise, to end up with a piece of technology."
It will be certainly interesting to see the outcome that Universal has with Apple, considering that Apple leads the number spot for portable music players. The iPod is such a staple of the portable music industry scene that it was certainly difficult for Universal to ignore. Other major music studios and labels may end up seeking similar negotiations
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RE: double taxation?
12/1/2006 5:26:45 PM
Yes, iTunes pays about 70C of the 99C per song as royalties. If you're independant and sell through them you need to go through a company like CDBaby.com but they only keep 9% of the 70C paid out by Apple. Larger record companies like Universal are only giving a few percent of the royalties to their artists unlike the 91% that independant artists can get. With the rediculously high percentages they keep for basically being a facilitator of distributing someone with talent, there is no way that any company selling playing devices should be paying them anything for player sales. Record companies can complain all they want about people stealing music but their real problem is that people aren't forced to buy a full album worth of filler just to get one good song.
RE: double taxation?
12/1/2006 6:27:43 PM
This is actually one of the great things about the iTunes stores. Musicians who sell their songs directly through them get a lot more money.
There was a great example I read about the other day. A song featured on Smallville was really really popular, but nobody could find it anywhere. The singer/songwriter was a no-name British artist with no-contract, still working on an album to pitch to record companies.
But faced with the overwhelming response to his song on Smallville he put it up as a single for sale on iTunes, and made something like $200k off of it right away!.
I'm hoping more artists decide to stay away from record companies and remain independent.
I, and many other people, will have far fewer complaints about buying music if we know that the majority of the money is still going to the musician.
Ah, the beauty of the internet.
"Nowadays you can buy a CPU cheaper than the CPU fan." -- Unnamed AMD executive
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