  LinklistPremium
join:2002-03-03
Longport, NJ
kudos:5 |  Apple threatens to close iTunes if musicians get more money
On Thursday, the Copyright Royalty Board (CRB) in Washington, D.C., is scheduled to vote on a request by the National Music Publishers Association to increase the royalties paid to its members for online music sales. Artists are currently paid a royalty of nine cents and want the CRB to increase it to 15 cents.
The move is opposed by the Recording Industry Association of America and the Digital Media Association, a trade group of online music retailers that includes AOL, Apple, MusicNet, Napster, RealNetworks and Yahoo.
But what really caught people's attention was Cue's suggestion that a royalty increase might cause Apple to shut down the iTunes Store.
If the CRB raises the royalty rates, Cue said, Apple would be faced with two options: Increase the retail cost of music tracks, which in turn would reduce sales; or absorb the cost of the royalty increase, which would erode the company's profit margin.
"Apple has repeatedly made clear," Cue warned, "that it is in this business to make money, and most likely would not continue to operate iTunes if it were no longer possible to do so profitably."
Most analysts think Apple is unlikely to summarily shut down the iTunes Store. The online store handles 85 percent of the world's digital-music sales, or 2.5 billion tracks. Moreover, the store plays a tremendously important role in driving sales of Apple's iconic music hardware, the iPod, and now its music/app devices, the iPhone and iPod Touch.
Nonetheless, the threat to pull the plug gives Apple a sizable bargaining chip. Whether it is one that the CRB thinks is valuable will be seen this week.
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|  |  KrKHeavy Artillery For The Little GuyPremium
join:2000-01-17
Tulsa, OK | Re: Apple threatens to close iTunes if musicians get more money This says it all:
"Apple has repeatedly made clear," Cue warned, "that it is in this business to make money, and most likely would not continue to operate iTunes if it were no longer possible to do so profitably."
Apple's implying that a royalty increase means they can't operate iTunes profitably, and would think about shuttering it. They are bluffing. Obviously, Apple could merely pass along the royalties and therefore the site would remain profitable. It's just they don't want to go over the pyschological price point of .99c. It's a marketing thing. Below $1 = cheap, above $1 = not so cheap in the public's mind.
So, yeah, passing costs along might slow sales down somewhat... but the key is it would still make money. As Apple said, they're in it to make money. Closing iTunes down would actually cost them a huge revenue stream, and therefore, they won't do it. It's just a bluff to make the CRB back down.
In my opinion artists should get MORE and the RIAA should get LESS. Of the .99 cents Apple charges, obviously .09 cents go to the artists.... How much goes to the RIAA and to Apple? That's the key here. I'm guessing Apple probably makes the smaller share, and the RIAA pockets the rest, but I don't know for sure.
Apple should tell the RIAA they need to reduce THEIR cut to allow the CRB increase to go through.
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| | | KearnstdElf WizardPremium
join:2002-01-22
Mullica Hill, NJ | Re: Apple threatens to close iTunes if musicians get more money said by KrK:This says it all: "Apple has repeatedly made clear," Cue warned, "that it is in this business to make money, and most likely would not continue to operate iTunes if it were no longer possible to do so profitably."Apple's implying that a royalty increase means they can't operate iTunes profitably, and would think about shuttering it. They are bluffing. Obviously, Apple could merely pass along the royalties and therefore the site would remain profitable. It's just they don't want to go over the pyschological price point of .99c. It's a marketing thing. Below $1 = cheap, above $1 = not so cheap in the public's mind. So, yeah, passing costs along might slow sales down somewhat... but the key is it would still make money. As Apple said, they're in it to make money. Closing iTunes down would actually cost them a huge revenue stream, and therefore, they won't do it. It's just a bluff to make the CRB back down. In my opinion artists should get MORE and the RIAA should get LESS. Of the .99 cents Apple charges, obviously .09 cents go to the artists.... How much goes to the RIAA and to Apple? That's the key here. I'm guessing Apple probably makes the smaller share, and the RIAA pockets the rest, but I don't know for sure. Apple should tell the RIAA they need to reduce THEIR cut to allow the CRB increase to go through. of course its a bluff but they can use the fear of "omg evil pirate bay" to make the industry dance to its tune. which imo is kind of a good thing to see someone atleast can grab the totally incapable of adapting music industry by the balls.
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|  RadioDocYeah, like it matters.Premium,ExMod 2000-03
join:2000-05-11
La Grange, IL
kudos:2 | No loss. There are much better sources out there for legal music. Amazon is kicking their asses.
As for Apple's bluff, it is just that. Their iPod business would die almost immediately.
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| | |  Vchat20Landing is the REAL challengePremium
join:2003-09-16
Columbus, OH | Re: Apple threatens to close iTunes if musicians get more money said by RadioDoc:As for Apple's bluff, it is just that. Their iPod business would die almost immediately. BINGO! And we know just how much of Apple's profit comes from the full line of iPods. I'd hazard a guess near 80% or more tbh. They'd be committing financial suicide if they really went through and killed off the iTunes music store.
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I swear, some people should have pace-makers installed to free up the resources. Breathing and heart beat taxes their whole system, all of their brain cells wasted on life support.-two bit brains, and the second bit is wasted on parity! ~head_spaz | |
| | | |  BF69Premium
join:2004-07-28
Camden, TN | Re: Apple threatens to close iTunes if musicians get more money said by Vchat20:said by RadioDoc:As for Apple's bluff, it is just that. Their iPod business would die almost immediately. BINGO! And we know just how much of Apple's profit comes from the full line of iPods. I'd hazard a guess near 80% or more tbh. They'd be committing financial suicide if they really went through and killed off the iTunes music store. Doesn't the Ipod play MP3s? If so I'm not sure how they kill thier Ipod? Expensive than most other MP3s? sure, but so are Macs and people stupidly buy into that BS. So even without Itunes I would assume Apple would sell plenty of Ipods to the ingorant masses who think because it's an Ipod it's worth 2-3X the cost.
But also call BS because even if Apple's profit margin was 1¢ per song well that's still profit isn't it? Now I read wher Apple sys that 70% of their music revenue goes to the record companies so that's 70 out of 99 cents. So they make 29 cents profit. This would be reduced to 23 cents under this new deal. So so they give up on 23 cents profit per song? Ok so they would just say no to $100-$150 million a year in profit? very unlikely. | |
| | | | | Vchat20Landing is the REAL challengePremium
join:2003-09-16
Columbus, OH | Re: Apple threatens to close iTunes if musicians get more money Yes it plays mp3's. But tell me how much of the general public average joes would be completely lost if they couldn't load their ipods with stuff from the music store? Last I checked, itunes didn't make it horribly easy or intuitive to load your own mp3's onto the thing.
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I swear, some people should have pace-makers installed to free up the resources. Breathing and heart beat taxes their whole system, all of their brain cells wasted on life support.-two bit brains, and the second bit is wasted on parity! ~head_spaz | |
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| | | | | | RadioDocYeah, like it matters.Premium,ExMod 2000-03
join:2000-05-11
La Grange, IL
kudos:2 | Re: Apple threatens to close iTunes if musicians get more money CRB probably saw the writing on the wall, since Internet radio's Congressional action finally got some traction. I doubt Apple's barking had anything to do with it considering the laughable "threat".
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Toolmaster of La Grange. | |
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