iTunes To Shut Down?
With royalty fees set to receive a substantial 66% increase tomorrow (9 cents > 15 cents), iTunes slash Apple are now threatening to shut down the iTunes Store due to profits potentially turning into substantial losses…
In April 2007 the company’s vice president for iTunes, Eddy Cue, submitted testimony to the Board at the Library of Congress surrounding all these royalty hikes.
“If iTS (iTunes Store) were forced to absorb any increase in the mechanical royalty rates, 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 clear that it is in this business to make money, and would most likely not continue to operate iTS if it were no longer possible to do so profitably,” said Mr Cue.
Continued in a BBC article, The National Music Publishers’ Association has asked for the royalty rake increase and has said it believes everyone will benefit because the digital music market is growing.
“I think we established a case for an increase in the royalties,” said David Israelite, president of the NMPA.
The Recording Industry Association of America (or the RIAA) said sales of digital songs and albums rose 46% last year to $1.2bn.
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38 Comments on "iTunes To Shut Down?"
Supporter
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5. writes:
They should have gone with a profit sharing scheme. This would mean it's a % out of their profits and it can never put them under. I am glad itunes will close, but the effects of this will screw over many other online businesses, like independent radio stations, stores, streaming sites, etc. With the economy the way it is, i'm surprised this went through.
Member
6. writes:
Yes - Itunes is encoded in MP4 and you have to authorize someone's computer just to play an album..it is crazy! All the tracks are password protected. In other words, I can play the songs on my computer because i purchased the tracks/album..however..if I burn the cd and take it to a friend's house..it will ask for my password before they can play the album. I like Itunes, but yes, something radical needs to be done.
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Writer, Reviewer
9. writes:
iTunes is not that hot anyway. Lousy bit-rates and DRM (which they supposedly have discontinued). Anyone who is not savvy enough to figure out bit-torrenting deserves to get low bit-rate, DRM music. Darn right legalizing it would pump a ton of money into the economy, not to mention save me money because people would probably get more product for a cheaper price.
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13. writes:
they should shut iTunes down. That'll turn EVERYONE into pirates!! Smart move, industry. You give this much power and ability to a company like Apple, and now they're going to, inadvertently, force millions of snotty kids to SoulSeek. God Bless America. Sarcasm.
Member
15. writes:
Crawford,
Great point man. The music industry's complete lack of foresight is why they're in this situation to begin with. When P2P and digital media took over did they take advantage of it? Nope, instead they backed Metallica (always a bright idea ya know?) and helped shut down the centralized means of pirating. And after that all hell broke loose with other p2p programs and now bittorrent and rapidshare, they can only thank themselves.
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19. writes:
Although iTunes Store is not necessarily the favorite music source of everybody, it's not the collapse of Apple's music provider on which we should be focused. A royalty fee increase of this size(66%!) will have a dramatic effect on the prices of digital music. Pirating is illegal and it should be. It hurts the industry by making it much more difficult for artists(and all those involved with the packaging, advertising, and production of the music) to turn a profit from record sales. If they increase the price(which WILL happen, because businesses never pay taxes -or royalty fees- in the sense that the increase in the price of operation will be passed down to the costumer), they will inadvertently turn customers off and further exascerbate the pirating problem which is already too large. The result is a music industry furthered damaged and a less attractive career path for 'would-be' artists.
"The Recording Industry Association of America (or the RIAA) said sales of digital songs and albums rose 46% last year to $1.2bn." Why can't they just leave well enough alone?
Member
20. writes:
^Money, pretty much.
Recording techniques are becoming increasingly cheaper as the technology for recording becomes cheaper and more available. Mass production of the CDS and packaging is not that expensive either. It's possible for local artists to find production places that will mass produce 1000 disks for $1400, which is only $1.40 per cd. Yet recording execs need their 7 figure incomes while the artists they have signed to their labels are attempting to tour their asses off to break even with all their label debt.
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21. writes:
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25. writes:
Lol, they just need to make it legal again, in my opinion. If I can hear music from a band that I've never heard before and I like it, I'll buy the CD and go to the concerts. When it was legal I learned about soo many new bands and the number of CDs that I bought actually increased, not decreased. But that's just me.
Now playing: Rush - "2112"
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29. writes:
thats right it sucks that i tunes might shut down
but they did bring it up them self i think
the whole music sceene is going down as long as there aer people around who download and copy music think people who download are not really intrested in the music sceene
just a few cheap a$$ persons
you should not down load i think
get your a$$ out of the chair and go to the music store and do buy a cd thats th only way
music will be saved cause and bands will be more and longer around
and than maybe a ticket to a concert will be cheaper as well
right now that the only way bands make money
and even i do not download
its as well the mistake of the record companys the did let it go to far
downloading sucks
Member
30. writes:
I like the idea of going to the store to get a cd, because I still buy cd's but the argument for anyone who doesn't like cd's could easily be - Why would I get my a$$ out of the chair, when it will cost me $15 for a cd and at least $3 in gas to get to the store, when I could go to an online store and get one for 9.99 or less?
Plus, for me to find the cd's that I like here are really difficult. Have you ever tried looking for Dimension Zero cd's in Iowa? Then try and find them for under $10.
Its about accessability, and the computer is in just about everyone's home.
The music industry has really blown the opportunity that they've been given here. They could easily be feeding more bands out there at cheaper prices and really be capturing a larger audience. Because you wouldn't have all of the large overhead costs or inventory costs of holding all the cd cases. You're only holding cost is website maintenance and music royalties. Honestly, a label like Sony could easily post their own site and have songs available for under .50 and easily make a killing.
Its similar to the oil industry, only instead of not driving our car's and reducing demand while increasing supply, people will just stop paying, and then what is the music industry to do? The supply is still there, but the demand has shifted.
Member
31. writes:
i dont know what to think. the record companies are the ones that will lose money, not the artists. artists only make 60 cents off of every cd sold. they make theyre money in touring and merch. at the same time i dont think its right people shouldnt have to pay anything for theyre music. it shouldnt be free ya know.
nowadays it almost seems stupid to sign a record contract though. i mean you can go buy pro tools and record a high quality cd in your basement. then with the internet you could promote your music yourself ya know. they only reason to sign a deal now is to promote your stuff better.
32. writes:
I was just about to say taht post 31... the artists generally don't care about peopel buying to stealing albums because the bulk of their money is made from live shows and merch. I support the bands by downloading the music and if I dig em I go see them and buy a shirt. The music indistry has added so many middle men that if the bands did nothing but sat in a studio recording then they would make slightly above minimun wage, and that is if they were shellin out albums that at least go gold.
Member
33. writes:
post #2, that, and prostitution...
Okay, everyone here can agree on the marijuana issue (i.e. decriminalize it). But that would not be enough. You know which of the oldest professions would really boost the economy? Thats right, prostitution. Now, yes, on a moral point, its wrong. However, on a strictly economical level, prostitution, if taxed, would really save us a lot of trouble. Plus, if prostitutes were under a union, they could be screened and tested to avoid spread of disease, as well as regulation #1: customers wear condoms/the woman wears a diaphragm.
Member
34. writes:
The weed thing will happen withing the century if America doesn't collapse by then. The legalized prostitution however.....unfortunately is but wishful thinking. Haaa! But to the subject at hand. Is itunes officially shutting down? If so, could someone recommend me a bit-torrent website? I'm a little....technologically inadequate. Apparently buying merch and seeing your favorite artists live are the best ways to help these financially struggling musicians, while cd purchases solely benefit the record labels. Unless a band sells xxxxxx amount of units. Or so i'm told, either way both these sorces deserve my income. Pirates are awesome! But not the music kind.
Supporter
35. writes:
Well, the royalty rate is going to be staying at 9.1 cents for the next five years so there isn't going to be a problem. Everyone in the business was just hoping that the rate wouldn't go down or else there would be serious problems for everybody. Rumors were that they were trying for 15.1, luckily it didn't drop but who would have to take a loss if it were raised to 15.1? The artists? Record Companies? iTunes? As we all know, iTunes most likely wouldn't take a loss on this. It's hard to figure out what would happen because someone has to lose. We all would rather the artists wouldn't lose but we'll have to see what happens in the future.
The funny thing about the article is whoever originally wrote it, who put it all over the internet, took a quote from something that was said over a year ago. It's amazing how people just try to spin things to make them seem worse than they actually are. Not surprised though.
iTunes is not shutting down and it won't be any time soon.
Member
37. writes:
Necropolis, I know exactly what you mean (I'm from Iowa, too). I have to order just about everything I listen to online because there's only one record store around here that sells anything good, and even then it's like searching for a needle in a haystack trying to find it (they mostly sell total crap CDs, but occasionally they get a few good ones in).
Member
38. writes:
Couldn't agree more with post 25. It meant I spent less money on bands relying on their reputation to sell CDs and it meant I spent more money on bands I never would have taken the chance on if I couldn't listen to a couple samples. Yeah that was a shot at you Lars!
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1. RedrumSyndrum writes:
that is pretty crazy