I see that some people already get the Apple kind of idea about this, y'know how Apple says something, we come to a conclusion one way and Apple had a third option ready?
If Apple was forced to play its hand they wouldn't close the iTunes store, they would delegate it. putting the load on each artist and record label in the store. You setup your own servers (we'll show you how), upload your own music (continuing to follow our rules) and in return you get to reach billions by being privileged to use the iTunes branding and store face (while the actual "store" in legal terms belongs to you). It makes the process grass roots and takes Apple almost completely out of the picture eliminating the fee or making the uploaders handle it.
This is a little disengenuous. There are probably a million guys out there doing the electronica "background" thing that would have no qualms about licensing their music out. Moby just had a very large amount of talent and luck. There is no "magic key" to making it in the music business. You have to be extraordinarily talented, be in the right place at the right time and mostly just get a few key people to like you.
Wouldn't the "magic key" be "being in the right place at the right time"?
I know some musicians who are excellent, and they're always moving and looking for the opportunity to be in the right place at the right time.
Not an easy thing to do, especially when they end up in the right place and cannot get an opportunity to talk to who they were hoping to talk to.
This problem could be solved to everyone's satisfaction if the artists simply forgot about record companies and physical sales and dealed directly with Apple. Everyone has home studios these days anyway.
50c to the artist. 49c to Apple.
Artist only has to sell 1/5 the volume of tracks to make the same profit. Apple makes money.
I see that some people already get the Apple kind of idea about this, y'know how Apple says something, we come to a conclusion one way and Apple had a third option ready?
If Apple was forced to play its hand they wouldn't close the iTunes store, they would delegate it. putting the load on each artist and record label in the store. You setup your own servers (we'll show you how), upload your own music (continuing to follow our rules) and in return you get to reach billions by being privileged to use the iTunes branding and store face (while the actual "store" in legal terms belongs to you). It makes the process grass roots and takes Apple almost completely out of the picture eliminating the fee or making the uploaders handle it.
I think this is a nice idea, but unfortunately I don't think this will happen either. We have to remember that one of the purposes of these record labels are the market the artists' works. This is how they get exposure. Asking every artist to set up their own server would imply they would need to purchase their own hardware (if not done already for music creation), have access to high bandwidth internet (should their song suddenly become popular as have a few on the iTunes store, it would lead to a much greater outlay by artists; possibly discouraging them from promoting their content on the iTunes Music store. Record companies can get away with this because they have such infrastructure in place whereby they can collaborate with artists to make broadcast quality content and send it to retailers e.g. iTMS.
Also, the chances are that the artists have signed contracts with the recording companies by which they cannot directly work with retailers for a given period of time. (Whether they choose to follow this after the contract time is elapsed remains to be seen). This means no matter what, they can't immediately work with Apple to distribute directly without violating contract and thus upsetting the record companies.
I have my doubts as to the shut down of the iTMS. Especially in the US (although I am in the UK so this shouldn't make a difference). The reason being, like what was said earlier there is heavy iPhone integration with the iTunes store. Also, Apple generates millions of dollars in revenue from the iTunes Music store and shutting it down is like shooting yourself in the proverbial foot so to speak. Judging by the stance Apple has taken and knowing that Steve Jobs likes to be very hands on in all aspects of the company may have said to release this statement because they want to shock the regulators of the industry, the RIAA (or the other bodies I'm not familiar with) to say; look we're fed up with being bossed around, we're big now and if we shut down, there goes your income. period. Apple as far as I can recall is one of the biggest retailers of music in the US, they now have the clout to say these sorts of things and people will take notice. What it sounds like is Steve Jobs wants to take the hardline because he knows the 99 cents per track is what drives iTunes sales so heavily. Pushing the prices up just because the recording industry wants more revenue will hurt total revenue. We have to remember iTunes isn't the only place to get music, we have CD's still as well as other retailers, not to mention other "methods" (hints at torrents & P2P). The reason that iTunes is doing so well is because songs are cheap. Period.
2) You really don't understand what record labels provide? Recording studios are not cheap. Say what you will about home recording these days, but it still isn't close to matching a professional studio, with professional engineers and professional producers. The record company foots the bill up front for these things. The record companies market the albums, pitching and placing it on radio stations, etc. That's not cheap. Like I said, you can make the argument that record companies should go the way of the dinosaur, but its not because they're ripping artists off, that's an old wives tale, its because they're becoming less and less efficient at dealing with the state of the music industry today.
Just so everyone's clear on this, the record company more or less LOANS the money to the artist...the artist doesn't start making any money themselves until all of the fronted money has been paid back to the label. Granted, the label loses the money if the artist is a total bust and never makes the money...
1) Record labels are many things, but making piles of cash is not one fo them. To the people who think that the record labels are a big scam, no, they are making next to nothing right now. You can make the argument that they're inefficient at what they do, especially in this day and age, they're not ripping artists off. Record labels absorb losses on artists far more often than they make profits. They're just hoping that they find that oen big gold mine artist that can support all the other artists who cost the label more than they make.
Many companies do not want to turn a profit, they'd rather pay themselves that money than pay it in taxes. I've owned a few companies and at the end of the fiscal year we'd always invest that money, pay it in bonuses or buy new computers so that, on paper, it looks like we made little to no money, and if we can show a loss we'd get tax returns. These are typical corporate loop-holes, almost every tax preparer recommends that, that's why McCains claim that America's corporations are required to pay 30% in taxes is total BS, I've never worked at or owned a company that payed more than 12% in taxes.
Record companies make a butt load of money and are notorious for ripping off their golden geese, just watch the Documentary for Richie Rich.
Having your music played on a radio station is a two-way street... many record labels own radio stations and radio stations make their money from commercials and not from record companies.
Concerts, T shirts, etc turn big profits. And now with the lack of printed material, plastic packaging, and the risk of large quantities of inventory being wasted, is over. With the internet there is no more stock control, only bandwidth which is sold per GB.
Just so everyone's clear on this, the record company more or less LOANS the money to the artist...the artist doesn't start making any money themselves until all of the fronted money has been paid back to the label. Granted, the label loses the money if the artist is a total bust and never makes the money...
I'd like to add that the intensive background checks, concert attendance and groupie researches that goes into a band before it's signed up is MASSIVE, virtually eliminating the possibility of a loss.
People don't buy iPods because of the iTunes Music Store... they purchase content from the iTunes Music Store because they bought an iPod. It's not the other way around, never was, never will be.
Music for my iPod can NOW be purchased elsewhere, the need for the music section of iTMS is no longer relevant, since DRM is now going the way of the Dodo. The iTunes Music Store was originally created so iPod users had a place to buy digital music. At that time most popular digital music was only compatible with Windows and was subscription based.
The labels should eat up the cost increase to their artists, not Apple... they still need X amount of money to run the servers, pay for bandwidth, etc. It is after all in their best interest to do so, if Apple is threatening to pull the plug. Losing almost 2 billion songs a year in sales seems like a dumb move.
It's a magical barrier.. the dollar mark. I believe they'll loose millions of spontaneous sales if they take it above the dollar mark. And this has nothing to do with logic, I mean really, what's the 5-10 cents gonna do for each and every one of us? Practically nothing. It's just psychologically more motivating to buy at 99 cents. If it needs to be done, it will be done, and over time customers will become used to it.
Just so everyone's clear on this, the record company more or less LOANS the money to the artist...the artist doesn't start making any money themselves until all of the fronted money has been paid back to the label. Granted, the label loses the money if the artist is a total bust and never makes the money...
It should also be pointed out that a good majority of artists end up owing the record label money and the record label eventually has to write the loss off. It's not an actual loan and if the artists royalties haven't repaid the debt within some fixed amount of time, the artist no longer owes the record label any money.
I'd like to add that the intensive background checks, concert attendance and groupie researches that goes into a band before it's signed up is MASSIVE, virtually eliminating the possibility of a loss.
This is simply not true. Record companies lose lots of money all the time. Wilco, for one, cost their record label TONS of money. The band Whitestarr, despite having their own reality show, the front man being the son of a famous record exec and the front man dating mischa barton, has been a gigantic money pit. And these are just well known examples. Much more of a money drain are the tons of bands who you or I have never heard of,who got one advance, never came close to paying it back and then never made another record. Additionally, record labels lose a lot of money on concerts, because a record company can only recoup 50% of their money "loaned" on concerts.
Just like all of you, I'd love to believe that record companies are big evil empires that are sucking up all of the money from the poor, starving artists. The truth is they're nearly on the verge of bankruptcy, as they're institutionally ill-equipped to handle the change of the music business today.
Many companies do not want to turn a profit, they'd rather pay themselves that money than pay it in taxes. I've owned a few companies and at the end of the fiscal year we'd always invest that money, pay it in bonuses or buy new computers so that, on paper, it looks like we made little to no money, and if we can show a loss we'd get tax returns. These are typical corporate loop-holes, almost every tax preparer recommends that, that's why McCains claim that America's corporations are required to pay 30% in taxes is total BS, I've never worked at or owned a company that payed more than 12% in taxes.
Record companies make a butt load of money and are notorious for ripping off their golden geese, just watch the Documentary for Richie Rich.
Having your music played on a radio station is a two-way street... many record labels own radio stations and radio stations make their money from commercials and not from record companies.
Concerts, T shirts, etc turn big profits. And now with the lack of printed material, plastic packaging, and the risk of large quantities of inventory being wasted, is over. With the internet there is no more stock control, only bandwidth which is sold per GB.
I don't buy your theory one bit...
Sure, if you're stupid a record company will rip you off. But that really just doesn't happen all that much anymore. In the golden age of the record industry, it almost was like free money. But now there are more artists out there. Record companies make lots of money when they have maybe 5 artists on each of the major labels that account for 75% of sales. That way they don't have to worry about if their artist will be a success. They controlled who was a success. Today, no matter how pervasive you think P!nk or The Jonas Brothers might be, it doesn't even touch what it was like in the days of motown, Elvis, etc. At that time one artist might in a given year represent 10% of all records sold. This year no artist even comes close to 1%. There aren't really any golden geese left. There are a lot of artists that lose money, a very few who make a lot of money (but nowhere near, in real terms, what the golden geese of years past made) and a lot who more or less break even for the record company. This amounts to a huge investment spread over a ton of artists, with basically the same return as when they made a relatively small investment. There are more independent labels that are just happy to be in the business, not making a profit, more artists owned labels (which are started for more creative freedom, not because its a money-making business, as the Grateful Dead can attest to).
If your theory is correct, then show me where the CEOs are being disproportionately compensated, show me where the company is growing in value. Big time record execs make a lot of money, but its not like they're raking in billions, like some people here seem to be thinking. Its basically in line with what every other CEO of a similarly sized company is making.
The multimedia part of Apple's business- iPods, the iTunes music/movie store, AppleTV, and to some extent the iPhone- are an interconnected cash cow that they will never willingly shut down.
Worst case scenario is that you'll see the $0.99 price go away. Hopefully the DRM will go with it.
Perhaps it's wishful thinking, but it's not in Apple's personality to try to squish the creative effort in a product, such as cramp a long overdue hike in songwriter/artist royalties. Alternatively, Apple may be indirectly using this as a device to apply pressure to the record labels themselves. Consider the 3 roles of a record label:
1. Create product
2. Promote
3. Distribute
The digital music revolution has more or less nuked and rebuilt #3, while making #1 1000% easier than it used to be. Promotion remains the black magic it always was. Apple has positioned itself as a digital distributor.
Now with CD sales dropping like crazy, Apple is in a power position to say "no" to record labels because you can't get the genie back in the bottle - people will just pirate MP3s instead of buying CDs, not out of criminality but convenience. Ok, to the point...
the point is...
Apple says "nuh uh" to raising prices. Label ponders how it's going to sell music without a ubiquitous distribution channel like iTunes, and in that pondering considers (angrily) eating the cost.
I'd prefer this reality to the one where Apple says "nah, just keep eating dirt Artist" with all due respect to the real psychological effect of $0.99 a track. Sticking it to the already suffering labels isn't exactly kind, but they made their own bed.
I'm really disappointed that Apple is taking this stance. Of all people, I thought Jobs would be standing up for the artists. I wonder how likely it is that artists will want to show up for Steve's keynotes now.
Comments
If Apple was forced to play its hand they wouldn't close the iTunes store, they would delegate it. putting the load on each artist and record label in the store. You setup your own servers (we'll show you how), upload your own music (continuing to follow our rules) and in return you get to reach billions by being privileged to use the iTunes branding and store face (while the actual "store" in legal terms belongs to you). It makes the process grass roots and takes Apple almost completely out of the picture eliminating the fee or making the uploaders handle it.
Greed Can and May Kill The Goose That Laid The Golden Egg.
This is a little disengenuous. There are probably a million guys out there doing the electronica "background" thing that would have no qualms about licensing their music out. Moby just had a very large amount of talent and luck. There is no "magic key" to making it in the music business. You have to be extraordinarily talented, be in the right place at the right time and mostly just get a few key people to like you.
Wouldn't the "magic key" be "being in the right place at the right time"?
I know some musicians who are excellent, and they're always moving and looking for the opportunity to be in the right place at the right time.
Not an easy thing to do, especially when they end up in the right place and cannot get an opportunity to talk to who they were hoping to talk to.
50c to the artist. 49c to Apple.
Artist only has to sell 1/5 the volume of tracks to make the same profit. Apple makes money.
I see that some people already get the Apple kind of idea about this, y'know how Apple says something, we come to a conclusion one way and Apple had a third option ready?
If Apple was forced to play its hand they wouldn't close the iTunes store, they would delegate it. putting the load on each artist and record label in the store. You setup your own servers (we'll show you how), upload your own music (continuing to follow our rules) and in return you get to reach billions by being privileged to use the iTunes branding and store face (while the actual "store" in legal terms belongs to you). It makes the process grass roots and takes Apple almost completely out of the picture eliminating the fee or making the uploaders handle it.
I think this is a nice idea, but unfortunately I don't think this will happen either. We have to remember that one of the purposes of these record labels are the market the artists' works. This is how they get exposure. Asking every artist to set up their own server would imply they would need to purchase their own hardware (if not done already for music creation), have access to high bandwidth internet (should their song suddenly become popular as have a few on the iTunes store, it would lead to a much greater outlay by artists; possibly discouraging them from promoting their content on the iTunes Music store. Record companies can get away with this because they have such infrastructure in place whereby they can collaborate with artists to make broadcast quality content and send it to retailers e.g. iTMS.
Also, the chances are that the artists have signed contracts with the recording companies by which they cannot directly work with retailers for a given period of time. (Whether they choose to follow this after the contract time is elapsed remains to be seen). This means no matter what, they can't immediately work with Apple to distribute directly without violating contract and thus upsetting the record companies.
I have my doubts as to the shut down of the iTMS. Especially in the US (although I am in the UK so this shouldn't make a difference). The reason being, like what was said earlier there is heavy iPhone integration with the iTunes store. Also, Apple generates millions of dollars in revenue from the iTunes Music store and shutting it down is like shooting yourself in the proverbial foot so to speak. Judging by the stance Apple has taken and knowing that Steve Jobs likes to be very hands on in all aspects of the company may have said to release this statement because they want to shock the regulators of the industry, the RIAA (or the other bodies I'm not familiar with) to say; look we're fed up with being bossed around, we're big now and if we shut down, there goes your income. period. Apple as far as I can recall is one of the biggest retailers of music in the US, they now have the clout to say these sorts of things and people will take notice. What it sounds like is Steve Jobs wants to take the hardline because he knows the 99 cents per track is what drives iTunes sales so heavily. Pushing the prices up just because the recording industry wants more revenue will hurt total revenue. We have to remember iTunes isn't the only place to get music, we have CD's still as well as other retailers, not to mention other "methods" (hints at torrents & P2P). The reason that iTunes is doing so well is because songs are cheap. Period.
2) You really don't understand what record labels provide? Recording studios are not cheap. Say what you will about home recording these days, but it still isn't close to matching a professional studio, with professional engineers and professional producers. The record company foots the bill up front for these things. The record companies market the albums, pitching and placing it on radio stations, etc. That's not cheap. Like I said, you can make the argument that record companies should go the way of the dinosaur, but its not because they're ripping artists off, that's an old wives tale, its because they're becoming less and less efficient at dealing with the state of the music industry today.
Just so everyone's clear on this, the record company more or less LOANS the money to the artist...the artist doesn't start making any money themselves until all of the fronted money has been paid back to the label. Granted, the label loses the money if the artist is a total bust and never makes the money...
1) Record labels are many things, but making piles of cash is not one fo them. To the people who think that the record labels are a big scam, no, they are making next to nothing right now. You can make the argument that they're inefficient at what they do, especially in this day and age, they're not ripping artists off. Record labels absorb losses on artists far more often than they make profits. They're just hoping that they find that oen big gold mine artist that can support all the other artists who cost the label more than they make.
Many companies do not want to turn a profit, they'd rather pay themselves that money than pay it in taxes. I've owned a few companies and at the end of the fiscal year we'd always invest that money, pay it in bonuses or buy new computers so that, on paper, it looks like we made little to no money, and if we can show a loss we'd get tax returns. These are typical corporate loop-holes, almost every tax preparer recommends that, that's why McCains claim that America's corporations are required to pay 30% in taxes is total BS, I've never worked at or owned a company that payed more than 12% in taxes.
Record companies make a butt load of money and are notorious for ripping off their golden geese, just watch the Documentary for Richie Rich.
Having your music played on a radio station is a two-way street... many record labels own radio stations and radio stations make their money from commercials and not from record companies.
Concerts, T shirts, etc turn big profits. And now with the lack of printed material, plastic packaging, and the risk of large quantities of inventory being wasted, is over. With the internet there is no more stock control, only bandwidth which is sold per GB.
I don't buy your theory one bit...
Just so everyone's clear on this, the record company more or less LOANS the money to the artist...the artist doesn't start making any money themselves until all of the fronted money has been paid back to the label. Granted, the label loses the money if the artist is a total bust and never makes the money...
I'd like to add that the intensive background checks, concert attendance and groupie researches that goes into a band before it's signed up is MASSIVE, virtually eliminating the possibility of a loss.
Music for my iPod can NOW be purchased elsewhere, the need for the music section of iTMS is no longer relevant, since DRM is now going the way of the Dodo. The iTunes Music Store was originally created so iPod users had a place to buy digital music. At that time most popular digital music was only compatible with Windows and was subscription based.
The labels should eat up the cost increase to their artists, not Apple... they still need X amount of money to run the servers, pay for bandwidth, etc. It is after all in their best interest to do so, if Apple is threatening to pull the plug. Losing almost 2 billion songs a year in sales seems like a dumb move.
...At that time most popular digital music was only compatible with Windows and was subscription based.
Correction:
At that time most popular digital music was shared/pirated through Napster and worked with Windows and Mac using the MP3 file format.
It's a magical barrier.. the dollar mark. I believe they'll loose millions of spontaneous sales if they take it above the dollar mark. And this has nothing to do with logic, I mean really, what's the 5-10 cents gonna do for each and every one of us? Practically nothing. It's just psychologically more motivating to buy at 99 cents. If it needs to be done, it will be done, and over time customers will become used to it.
Btw, is this US only or is it world wide?
I think it matters far less when not using cash.
Just so everyone's clear on this, the record company more or less LOANS the money to the artist...the artist doesn't start making any money themselves until all of the fronted money has been paid back to the label. Granted, the label loses the money if the artist is a total bust and never makes the money...
It should also be pointed out that a good majority of artists end up owing the record label money and the record label eventually has to write the loss off. It's not an actual loan and if the artists royalties haven't repaid the debt within some fixed amount of time, the artist no longer owes the record label any money.
I'd like to add that the intensive background checks, concert attendance and groupie researches that goes into a band before it's signed up is MASSIVE, virtually eliminating the possibility of a loss.
This is simply not true. Record companies lose lots of money all the time. Wilco, for one, cost their record label TONS of money. The band Whitestarr, despite having their own reality show, the front man being the son of a famous record exec and the front man dating mischa barton, has been a gigantic money pit. And these are just well known examples. Much more of a money drain are the tons of bands who you or I have never heard of,who got one advance, never came close to paying it back and then never made another record. Additionally, record labels lose a lot of money on concerts, because a record company can only recoup 50% of their money "loaned" on concerts.
Just like all of you, I'd love to believe that record companies are big evil empires that are sucking up all of the money from the poor, starving artists. The truth is they're nearly on the verge of bankruptcy, as they're institutionally ill-equipped to handle the change of the music business today.
Many companies do not want to turn a profit, they'd rather pay themselves that money than pay it in taxes. I've owned a few companies and at the end of the fiscal year we'd always invest that money, pay it in bonuses or buy new computers so that, on paper, it looks like we made little to no money, and if we can show a loss we'd get tax returns. These are typical corporate loop-holes, almost every tax preparer recommends that, that's why McCains claim that America's corporations are required to pay 30% in taxes is total BS, I've never worked at or owned a company that payed more than 12% in taxes.
Record companies make a butt load of money and are notorious for ripping off their golden geese, just watch the Documentary for Richie Rich.
Having your music played on a radio station is a two-way street... many record labels own radio stations and radio stations make their money from commercials and not from record companies.
Concerts, T shirts, etc turn big profits. And now with the lack of printed material, plastic packaging, and the risk of large quantities of inventory being wasted, is over. With the internet there is no more stock control, only bandwidth which is sold per GB.
I don't buy your theory one bit...
Sure, if you're stupid a record company will rip you off. But that really just doesn't happen all that much anymore. In the golden age of the record industry, it almost was like free money. But now there are more artists out there. Record companies make lots of money when they have maybe 5 artists on each of the major labels that account for 75% of sales. That way they don't have to worry about if their artist will be a success. They controlled who was a success. Today, no matter how pervasive you think P!nk or The Jonas Brothers might be, it doesn't even touch what it was like in the days of motown, Elvis, etc. At that time one artist might in a given year represent 10% of all records sold. This year no artist even comes close to 1%. There aren't really any golden geese left. There are a lot of artists that lose money, a very few who make a lot of money (but nowhere near, in real terms, what the golden geese of years past made) and a lot who more or less break even for the record company. This amounts to a huge investment spread over a ton of artists, with basically the same return as when they made a relatively small investment. There are more independent labels that are just happy to be in the business, not making a profit, more artists owned labels (which are started for more creative freedom, not because its a money-making business, as the Grateful Dead can attest to).
If your theory is correct, then show me where the CEOs are being disproportionately compensated, show me where the company is growing in value. Big time record execs make a lot of money, but its not like they're raking in billions, like some people here seem to be thinking. Its basically in line with what every other CEO of a similarly sized company is making.
...If your theory is correct, then show me where the CEOs are being disproportionately compensated, show me where the company is growing in value...
Maaan, you think I have time for this? I'm just a blogger. Alright checkout the following links:
1-
2
3
4
5
6
7
**links were removed by large corporate conspirators**
Worst case scenario is that you'll see the $0.99 price go away. Hopefully the DRM will go with it.
1. Create product
2. Promote
3. Distribute
The digital music revolution has more or less nuked and rebuilt #3, while making #1 1000% easier than it used to be. Promotion remains the black magic it always was. Apple has positioned itself as a digital distributor.
Now with CD sales dropping like crazy, Apple is in a power position to say "no" to record labels because you can't get the genie back in the bottle - people will just pirate MP3s instead of buying CDs, not out of criminality but convenience. Ok, to the point...
the point is...
Apple says "nuh uh" to raising prices. Label ponders how it's going to sell music without a ubiquitous distribution channel like iTunes, and in that pondering considers (angrily) eating the cost.
I'd prefer this reality to the one where Apple says "nah, just keep eating dirt Artist" with all due respect to the real psychological effect of $0.99 a track. Sticking it to the already suffering labels isn't exactly kind, but they made their own bed.