Apple throws music pricing gauntlet down in front of Copyright Royalty Board
By Leslie Poston
Apple responded to news that the music industry was attempting to get the Copyright Royalty Board to increase royalties from digital music by throwing down the gauntlet that they would close the iTunes store rather than gauge customers. The music industry would like the consumer to pay more than the industry standard of 99 cents a song - much more in some cases, and Apple’s VP of iTunes has made it clear Apple is not interested in playing ball.
Apple’s VP of iTunes, Eddie Cue, went so far as to write a letter to the Times of London regarding the copyright increase issue, saying “If [iTunes] was forced to absorb any increase in the … royalty rate, 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 it clear 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.”
Many people around the Internet and the industry don’t think Apple will go through with it. Like I said on the MacJunkies podcast earlier today, I hope that they do. I also hope that other music giants like Amazon follow their lead and do the same thing. Online music is a significant percentage of music sales these days, and I don’t think the industry understands anything besides cold hard cash. Perhaps wholesale abandonment by online retail giants is just what the doctor ordered, in tandem with the continuing decline of CD sales.
The increase could cost consumers as much as 15 additional cents per track, plus additional back end costs. Apple already demonstrated that the market was unwilling to pay more than 99 cents per track when they tried offering DRM free music at a higher cost. It didn’t take long before the music was all the same price again. If Apple, with its massive iPod market share, ubiquitous iTunes and cult-like following can’t make it happen, what makes the industry think consumers would be willing to pony up on their say so? It is my hope that this time the music industry is in for a rude surprise and doesn’t get their way.
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October 2nd, 2008
99 cents is too much money. The price should be lowered to 25 or 50 cents at the most per track.
When buying a CD on digital download, one does not get the physical CD, or the artwork associated with the original CD.
Digital download saves the companies the cost of making the CD, distributing the CD, the case and artwork.
The savings should be passed along to the consumer.