Originally Posted by al_bundy
the 10% is due to the fact that most itunes music is put there by the labels the artists contract with and the artists get a little of the revenue. even with indie artists and labels on itunes they usually go through another company that manages the itunes part of the business.
for the app the artist might receive 70% of the price a person pays, but he or she still has to write the app or pay someone to write the app and pay the costs of the server infrastructure, etc. in the end it will probably be around 10% as well after all the bills are paid.
you have to be naive to believe that someone should keep close to 100% of revenue in any business venture. i don't think there has ever been a line of business where net income was anywhere close to 100% of revenues. if it was possible to write music and keep close to 100% of revenues then Madonna and all the top artists of the last 30 years would have ditched the labels a long time ago
I'll compare business props with you, anytime... I have worked for Mom & Pops, small companies, and major corporations (Hoffman Electronics, Bell & Howell, Lockheed, IBM) and started several businesses-- one was a corporation, started in 1978, that owned computer stores (including the 5th computer store in Silicon Valley). I sold my shares in 1989, and retired at age 50.
Our satisfied business customers included: Apple, IBM, Daimler Benz (ger) , EMI Thorne (UK), Xerox, Fairchild/Schlumberger, SRI, Lawrence Livermore Labs, Stanford, Intel, Verbatim, Piper Jaffery, US Army College at Ft.Leavenworth (across the wide Missouri)... We had customers from Sindelfingen to Guatemala City to Guam to Taipei.
Our satisfied personal customer list was a who's who of the industry, including the likes of: Woz, Mike Scott, John Sculley, Regis McKenna, Reid Anderson (founder of Anderson/Jacobson and Verbatim), Charles Schwab, John Draper, Rock Promoter Bill Graham, Andy Hertzfeld, Bill Atkinson, Dave Winer, Ted Nugent, Guy Kawasaki, Peter Jennings (MicroChess & VisiCalc)... Oh yeah, Steve Jobs visited our Sunnyvale store but never really bought anything
This was the period of time where, the computer industry evolved from hobbyist, home-personal, small business, large business. And it changed from a high-margin specialty business to a low-margin commodity business... We survived through the best and worst of times and outlived the "ComputerLands, BusinessLands, MicroAges, ByteShops", and all the others).
Our business plan for the computer stores targeted the home and business sectors (before there even was a business sector).
Our corporate objectives:
1) make a fair profit and return to our shareholders
2) offer superior products and the best customer service and support
3) have fun
As to the particular proposition of selling songs:
-- the recording industry is changing, evolving, and the "labels" are losing their monopoly
-- An iphone app to sell music content could be contracted for, say, $25,000 (one time charge)*
-- A Web site/app could be written for about the same (one time charge)*
-- Servers-web hosting starts at $10/month, and up-- based (mainly) on storage, bandwidth, shared/dedicated hosting
-- An electronic aggregator could prorate the costs (especially one-time charges) over multiple Indies, and lower the entry threshold
-- I could see a successful relationship with a sliding scale where the Indie's take would be 30-60% of the sales price, based on volume.
* I know, I have done both -- these estimates are conservative (high), BTW.
Without belaboring the point, the Madonnas, and the current top artists, are contractually locked-in to the current system with all its warts!
That does not mean that it will always be that way!
Tom Watson, Sr, then IBM chairman, was alleged to have said in 1958: "I think there is a world market for about five computers."