Apple Threatens to Close iTunes Store Over Possible Royalty Hikes

[Wie Gehts]

Buy music? People still buy music? I've never been to the itunes store. Don't think I ever will either. Why? Because I can already stream a half billion internet stations in every genre that I'm sick of music.....and I'm a bloody musician. If the amount of music available suddenly dropped by 90% there'd still be way too much music.
Audio books....now thats an interesting change of pace!

 

[ou lumberjack]

yeeeaaah riiiiight

 

[Plasmali]

Agree to the hike, go DRM free, give us Apple Lossless option!

I realize most people download music for use on their ipods and listen with their earbuds, but there are many of us that connect them to mid to high end systems, and 128 kbps does not cut it, and 256 kbps doesn't either.

Apple should go DRM free across the board and have the 128 kbps download as a loss leader if they wish, then offer the option to download Apple Lossless at extra cost... and fatter margins.

Give customers the option to upgrade their library, or selected songs to lossless for the difference.

And don't tell me to buy the CD... because in most cases their are only a few songs worth buying on any given album.

Apple just needs to look at it as an opportunity to make more GM dollars.

 

[Plutonius]

Apple should go DRM free across the board and have the 128 kbps download as a loss leader if they wish, then offer the option to download Apple Lossless at extra cost... and fatter margins.

Argh.... As it's been stated many times before, the labels will not let Apple sell DRM free music.

 

[mambodancer]

It is more than just iTunes...

Maybe it's time they got an introduction.

If Apple is going to play to game then their are numerous competitors out there that are willing to step in.

And since Apple is going to close the Apple Store they are going to have to take off all DRM and make the iPhone and iPod compatible with other vendors.

Apple is playing a big game right now as they've done for the past 2 years.

Call their Bluff. Let them shut down iTunes. I have alway been against jail breaking my phone but I'll do it in a heart beat if Apple is going play the cards on the table.

I don't think very many people realize what's actually at stack here. This affects all online digital music stores including Amazon, Microsoft, Apple and others as well as all internet streaming music sources like Pandora. In fact, companies like the latter have said if this legislation passes the way the music industry would like it to, then most if not all internet radio sites would be forced to close down overnight and be responsible for paying hugh royalties.

Here's an excerpt from an email I received from Pandora:

"Hi, it's Tim from Pandora;

After a yearlong negotiation, Pandora, SoundExchange and the RIAA are finally optimistic about reaching an agreement on royalties that would save Pandora and Internet radio. But just as we've gotten close, large traditional broadcast radio companies have launched a covert lobbying campaign to sabotage our progress.

Yesterday, Congressman Jay Inslee, and several co-sponsors, introduced legislation to give us the extra time we need but the National Association of Broadcasters (NAB), which represents radio broadcasters such as Clear Channel, has begun intensively pressuring lawmakers to kill the bill. We have just days to keep this from collapsing.

This is a blatant attempt by large radio companies to suffocate the webcasting industry that is just beginning to offer an alternative to their monopoly of the airwaves.

Please call your Congressperson right now and ask them to support H.R. 7084, the Webcaster Settlement Act of 2008 - and to not capitulate to pressure from the NAB. Congress is currently working extended hours, so even calls this evening and over the weekend should get answered.

If the phone is busy, please try again until you get through. These calls really do make a difference."

I believe, but could be wrong, that this is the same bill Apple is responding too.

 

[Pooshka]

I do not care about the iTunes Store because I never used it and never will.
Could care less about the iTunes Store.

That means you do care.

So do you care or do you not?

If not, then you could NOT care (any) less.

 

[MagnusVonMagnum]

Songs from iTunes have been $.99 a long time. It isn't unreasonable to see Apple increase the cost for a song to offset the increase in royalties.

If they would make them all DRM free, that would increase the likelihood I'd accept a rate increase. As it is, I won't buy ANY non-DRM free music from Apple unless it's a music video and then only because I can't find any other sources other than DVDs. Yes, you can blame it on the music industry, but I don't believe Apple is pushing very hard to get them to cave considering they are selling DRM-free to competitors. They're good at suing (e.g. Psystar), why don't they sue to get equal access? I don't think they want equal access, to be honest because it means people who have invested in iTunes tracks have to buy iPods and not competing hardware and if there's no way to convert most of their music collection, they'll continue to have to buy iPods or be forced to buy (or otherwise obtain) those songs all over again.

 

[TRS-80]

yeah, right

Apple wouldn't close the iTunes store even if they had to double the price. I'd like to see their bluff called and artists make a teeny bit more money for their work.

 

[D-Love]

Not the record companies:

Thanks for the correction. I thought it was all one and the same. Either way though we're getting screwed, as is Apple.

 

[xDYLANx]

iTunes is the number one music distributor for two reasons. Cheap albums, and convenience. I don't buy music from iTunes anymore...but it would be a sad thing to see gone. There is no doubt at all that iPods and iTunes raised the Apple user percentage by a whole hell of a lot. It would be insane to make people pay 2 bucks per song.

 

[mambodancer]

Why so hard?

Argh.... As it's been stated many times before, the labels will not let Apple sell DRM free music.

Why is it so hard for people to get there heads around the licensing dilemma the Apple and every other company have to deal with.

People, for the last time, DRM is on iTunes not because of Apple, but because of the agreements they have had to sign with the companies they license the music from. If the same music is available elsewhere non-DRM it is because those companies have a different agreement with them than does Apple and is likely the result of those recording companies, networks and studios wanting to lessen Apples influence in the price and availability of media. These companies still do not want you or I to download. They want us to buy a CD or DVD. They still do not get it, to all of our frustrations.

 

[JPS2008]

As someone who has been a VP of a very large independent label in the past, and currently runs my own small boutique label, (Both with iTunes distribution), none of this makes any cents. The current $.091 per track is a compulsory mechanical license that the RECORD COMPANY pays to the SONGWRITER. If that goes up to $.15, no where in that agreement does apple have to change a thing. I still get my ~$.70 or whatever per track as the label, and its my responsibility to pay what the law required. It cuts into MY Profit margin, not the retail outlet, not the distribution company, and not the artist.

As a label I'm faced with three options.
1) Raise the price of my product (Which I can't do on iTunes, but the big 3 may join forces and force it. At which point you're going to see songs increase in price more to the order of 10 or 15 cents, because itunes will want a bigger cut, credit card processing costs go up, etc.
2) Eat the loss, and budget accordingly in the future
3) Negotiate individual mechanical rates with my songwriters.

Negotiate an agreement where Apple agrees to raise the price to $1.10 per track in return for all DRM-free tracks from the record companies. Problem solved.

 

[usarioclave]

It's not immature

Immature and an obvious Steve Job's quote. I didn't say the market wouldn't stand for it. I said Apple said they will close the Apple Store for iTunes and we all know that's BS.

It's amusing that the word "immature" as a pejorative is being applied to anyone in the music industry. Immature pretty much is normal behavior in the industry.

Apple won't close iTMS? How about this:

"Apple will never switch to Intel Processors."

Doh!

If Apple is losing money, it will leave the business. In fact, it may better in the long run if Apple spun the iTMS off into its own company. I'm sure dealing with record labels is sucking valuable executive attention that would be better spent inventing high-margin products like the iPhone, iPod, etc.

 

[Marlor]

Negotiate an agreement where Apple agrees to raise the price to $1.10 per track in return for all DRM-free tracks from the record companies. Problem solved.

Why would the record companies agree to that?

They wouldn't receive any more money if the royalty increase went ahead (the money goes to NMPA, not the labels). If Apple wanted all DRM-free tracks, they would have to actually offer something to the labels in return for them agreeing to it... which would mean another price increase on top of the royalty-induced hike.

 

[Saladinos]

I would gladly pay more than $0.99 per song if I knew that the artists were getting more. But I don't particularly care to pad the pockets of record companies and other music industry execs any further.

It all goes to Simon Cowell anyway.

This is such a bluff. Apple aren't good at playing politics. Yes, if you're going to lie, lie big. Make it believable, though.

If Apple is losing money, it will leave the business. In fact, it may better in the long run if Apple spun the iTMS off into its own company. I'm sure dealing with record labels is sucking valuable executive attention that would be better spent inventing high-margin products like the iPhone, iPod, etc.

Yea, because those products benefit in no way from the store or those negotiations, right? Executives don't invent products. Not even Steve Jobs. Saying that an executive invents products is like saying George Bush discovered America.

 

[inkswamp]

Am I the only one wondering why we've all jumped to the conclusion that this translates to closing the store?

Apple has repeatedly made it clear that it is in this business to make money, and most likely would not continue to operate the iTunes music store if it were no longer possible to do so profitably.

That sounds to me like they more likely mean selling it off to a third party. They don't use the words "shut down," just that they would not continue to operate it. Apple would be insane to shut it down when they could likely sell it. Who doesn't think they wouldn't turn a serious profit off that?

 

[digitalbiker]

Apple wouldn't close the iTunes store even if they had to double the price. I'd like to see their bluff called and artists make a teeny bit more money for their work.

You want a bet! You don't know how stubborn and determined Steve Jobs can be! If you don't play by his rules he'll just take his toys and go home.

Apple doesn't need the itunes store. They make very little money from it and the ipod has already been established as the digital music device of choice. Apple can still have itunes they just won't sell music anymore.

 

[Quillz]

all these greedy musicians!!! screw them all

So true, how dare musicians get paid for their work. You're a greedy pig, too. You should be working for free.

 

[bki122689]

You want a bet! You don't know how stubborn and determined Steve Jobs can be! If you don't play by his rules he'll just take his toys and go home.

Apple doesn't need the itunes store. They make very little money from it and the ipod has already been established as the digital music device of choice. Apple can still have itunes they just won't sell music anymore.

True, but itunes does establish a medium for the music market. Most ipod users download music from p2p software such as limewire. But what about for the ones who do buy music legally from itunes. I got friends who do that. that would just be a loss for apple. In all i don't this itunes will be shut down. Apple is not the type of company to be pushed around and settled with.

 

[chequepoint]

The only thing that this ruling is going to really effect is internet radio.
The argument is that the publishing companies want a flat fee for the song to be streamed online, and the record labels want an additional flat fee for the recording of the song to be streamed online. Right now these things are currently negotiated as percentages of total business per outlet. Flat rates will drive nearly ever established model out of business.

In addition, labels are now demanding to be paid a rate comparable to what the publishing companies currently get for radio broadcasts, and the publishing companies want to be paid what the record labels currently get for satellite radio broadcasts.

Finally, mechanical licenses are currently being handled for digital sales as if they are CDs, so they want to clarify the language, and negotiate separate rates for downloads, physical product, and ringtones. BUT these rates only affect the labels, not the retailers.

People like to attach apples name to things to generate additional media attention. This is a non apple issue.

All that said, if any of you had any idea of the costs involved in producing a quality recording, then promoting it... you'd understand that music should be at least $2 a track. Those of you that refuse to patronize the arts, yet complain about the quality of music are the problem, not the solution. When an artist is forced to make a record on a fraction of the budget that it should be, artist compromise happens, and the consumer loses.

 

[bananas]

National Music Publishers' Association: "Give us more. 9% is not enough, we want 15%"

Apple: "If you don't like your millions, maybe we should stop doing this business, bye."

Closing iTunes Music Store would probably hurt Apple, but I'm sure they could do that. It wouldn't matter to me too much. I prefer CDs anyway (they are lossless and you get a physical backup)

 

[SeaFox]

Cue wrote. "Apple has repeatedly made it clear that it is in this business to make money, and most likely would not continue to operate [the iTunes music store] if it were no longer possible to do so profitably."

You know, call me crazy but I seem to recall Apple saying the exact opposite when the iTMS first opened. They operated it because it drove purchasing of iPods up, not to make money from it.

 

[bobonumber1]

yeah i agree that the record labels should be absorbing the price increase since their production costs are cut by not having to produce the physical product

 

[madmax_2069]

If this bill passes and if the online music stores start shutting down, then the National Music Publishers are going to find out they just shot themself in the foot. for one it will be one less way for them to make money. and two the percentage of people that will start downloading music illegaly will skyrocket. are they trying to stop illegal music downloads or help it grow. looks to me they are going to help it grow by a huge margin if this bill passes and the online music stores dont want to raise the price per song to make even and shut down.

yes the artist needs to make money for what they worked on but this isnt over that. its over the National Music Publishers to make more money for themselfs and not to hand over the extra money to the artist, in a way they are screwing us and the artist if you look at it.

the reason they want you to buy a CD or DVD is cause they make allot more money off of them. but not everyone wants to be made to buy a CD just get a single song they like.

people need to step up and try to get this bill thrown out simple as that.

You know, call me crazy but I seem to recall Apple saying the exact opposite when the iTMS first opened. They operated it because it drove purchasing of iPods up, not to make money from it.

yea that is the reason that Apple made iTMS, they make the money from every iPod sold which makes up for the music sold almost a loss on iTMS. and iTMS drove the sales of the iPod which is how Apple makes it money from iTMS.

 

[Manic Mouse]

I really hate music labels. They make me want to pirate music. They're holding Apple back from offering iTunes Plus across the board, they're demanding more money. Honestly, why do they make it HARDER to get music legally (at least good quality DRM free music) than download a torrent?

Do I pay for a lower quality, DRMed to the hilt track or simply download a better one for free off bittorrent? It's no wonder there's a music piracy problem.

If they would, just once, factor the consumer into the equation rather than simply being money grabbing bastards maybe the music industry would be in better shape. I'm sure the artists would agree with that sentiment too.