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Daniel Holter

Great points, Bruce.

And a great quote ... "Until the industry understands and respects the bond that music creates with fans, no price will be too low."

I'm as big an Apple fanboy as exists, but they're gonna have to get a lot of the details right on this rumored deal in order to make happy the musicians and producers who swear by the Mac.

The balance between ART and AAPL is a delicate one. It will be very interesting to see it play out, both as a stockholder and a lover of music. Forced to choose, though, I'd pick music. Easy.


In the all-you-can-eat model, what exactly is the role of A&R? How do you promote anything? Why bother?

Captain Wrong

How much are the artists actually getting under the current plan? Yes, I've seen the breakdown of what gets split with the labels and Apple, but how much of that do the artists actually get? Color me skeptical that the artists see much, if any, of that money anyway.

Bruce Houghton / Hypebot.com

Thanks everyone for your comments.

Captain, to me the point about the current iTunes is that at least at 60-65 cents to the label there is the potential of enough money to satisfy contracts and pay songwriters and and artists fairly (whether they get it or not is another story). But in the pay one price forever model how can there be enough to go around. And for example, what slice of a $20 life time fee does a small artist get. That current artist at least gets a little check every quarter for selling a few downloads.


There is currently a system in place to compensate sound recording owners and publishers for on-demand streaming (which is the same rate as for tethered downloads). If you assume this Apple proposal is not fair, then do you believe on-demand streaming is not fair.

As for the system for collecting and distributing the monies, that would have to be figured out. Just because the system is not in place does not mean the whole idea is bad for the industry.

Bruce Warila

Apple & Amazon should not be keeping any of the digital music pie. There are logical business reasons why both of these very profitable companies would benefit by returning 100% of the digital music "pie" back to labels and artists.

I guarantee that someone is going to put forward a model whereby the point of sale agent keeps 0%. Now that DRM is not an issue, any label or any business can be iPod compatible.

The days where companies like Apple can extract a percentage of a .99 cent sale are going to end. Apple no longer adds enough exclusive value to be keeping 30%.

Microsoft - step up to the plate and do the job for 0%.

I recently wrote a post on this (http://tinyurl.com/3awayn)

Adam Wexler

If memory serves me correctly, doesn't the music industry despise Apple already?

If they agree to this preposterous idea, it is further evidence that the record labels could care less about the art.

I don't know who I should be more angry with: Apple for trying to overextend themselves yet again (ala Starbucks) or the record labels with their 'whatever it takes' stance.

T. D.

To Glenn - your getting at Bruce's point: the performance royalty keeps getting paid, whereas the preloaded iPod is a one-time thing. Essentially Apple will be selling a massive number of tracks at a Sam's Club-type discount. If it loads an iPod with 1,000 songs but only pays the labels $20, that works out to TWO CENTS per song. That doesn't even come close to covering the mechanical to the songwriter. If it's only loaded with 100 songs, that still only works out to 20 cents per song.

My biggest concern with ad-supported and the like is that virtually all major label deals have a provision that prevents payment of any royalties which are not specifically attributable to the master. Lots of different variations on this clause but can lead to artists getting nothing in such deals.

Greg Rollett

This story is running wild on the web and is only a few hours old! As most commenters have noted, the real problem is with the monetary distribution. Should Apple be paid a % for hosting a service like iTunes, I think so, should it be the $.30 it typically gets, not so sure.

With the $20.00 model that Apple is rumored to be presenting, how will it be distributed between the labels that the user chooses to download iTunes tracks from.

Does Universal get a bigger chunk that Sony is I choose to take more tracks from Universal? Are indie labels weighted the same? Indie labels can make a killing off iTunes with TuneCore's new model. Getting $.71/cents a song is a whole lot more lucrative to them than a split of $20 with more people eating the pie.

I'm all for simplifying the mess that is out there with Digital Downloads, however Apple might be adding to the problem with this one.

I would start looking to capitalize on monetizing things other than the music in order to sustain your business.

Bruce Houghton / Hypebot.com

Great comments everyone. For me it is both about how can you divide this shrinking pie fairly and does it further de-value music.

READERS: I'd like to ask you to Digg, Stumble and/or link this story. The broader the discussion, the better.

Captain Wrong

@Bruce, yeah, I agree with your point 100%. I would hope people are getting paid under the current system. The money is there. But I keep thinking of the RIAA settlements and how that money, which one would think should be going to the artists, isn't. I'd like to think people are getting paid, but it's too easy to see this eaten by the artists as "promotional costs" much like record club sales.

As a musician, this is a huge issue to me. Glad someone is mentioning it.

eric hebert

I could see a monthly fee-based service possibly working - much like Rhapsody works. For 15 bucks a month I get to "listen" to whatever I want.

But it's not always convenient. if my internet connection sucks, then forget it. It's still worth it to me though for those times when I REALLY want to listen to the Black Crowe's first album that I don't have.

It actually gives me an opportunity to get into bands I otherwise may have never really listened to. Sure, I heard all the tracks from "Shake Your Moneymaker" all over the radio, but I never bought the damn album. But the otherday I got to listen to it, and who knows, I may actually buy or download the physical album soon.

Streaming services are just ONE REVENUE model for music, so suggesting that it wouldn't sustain the biz is stupid. Of course it's not. But it is an alternative to what is obviously not working out and it's nice to see Apple contemplating a different startegy (because iTunes is BS and we all know it)

Matt @ Kurb

Awesome post bruce! Bit of analysis, and watch the comments roll in! cheers


Based on what I've read, the idea for this stated at Universal Music Group by Doug Morris. In addition, the idea proposed by the labels is that the rights to use the music end after a year or two unless more money is paid. So really, it's just renting music for a longer period of time. Apple didn't come up with the idea; they are merely exploring the possibilities of it.

If you really think about it, Apple makes no money off a lifetime subscription, so why would they do it? Only if it makes sense in order to compete with other devices, such as Nokia, would this be considered.

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