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10/04/2005 06:00:23 PM · #1 |
"Apple sells a song on iTunes for 99 cents. Apple pays for the Net connection and the costs of running a huge server farm. It also pays for development costs and the design and maintenance of the Web site. Then it pays the record companies 70 cents for each song it sells for 99 cents. For their check, the record companies do not have to do any manufacturing, distribution, or pay any spiffs. And they don't have to deal with returns."
Click Here for above article
And this still isn't enough...they want more. Mind you...they want more $$$ per song than you'd get buying a CD with a hard-copy, fancy art, and collectibility.
Oh...and let's not even get into how much of that $0.77 actually goes to the artist. Now mind you...seeing as Apple is doing all of the work and providing actuall hard currency figures the most expenditure RIAA has is to in fact cut and mail the checks. $0.75 of that $0.77 cents should be going straight to the artists. The $0.02 remaining per sale is easily able to cover the "check" mailing costs on a quarterly or annual basis.
So please...tell me a reason why I should care that RIAA gripes about 14 yr olds stealing. That's like stealing an ice cream truck and then calling the cops because a kid walked off with a snow cone without paying. Just to put it all into perspective.
Oh, and by the way, if you did not know the total cost of manufacturing and delivering a CD is less than $1. RIAA likes to comment on recording and advertising costs, however, all of those costs are in fact "billed" to the artist's account and come out of their profits. Excepting your mega-stars, few bands see much profits from their albums. In fact, many well known bands receive a small signing bonus per album $2,000-$20,000 and an allotment of CDs to sell at their gigs. Many make nearly all their profits off of concert sales and receive nada from the rest of their CD sales.
Now, these same labels conglomerates are in unison (against all monopolistic accords and laws) demanding more money from Apple's "iTunes"...or threatening to cut them off. (Wait...all 5 major companies...sure sounds like price-fixing and extortion to me). Not only that....but they now want a share of the proceeds of Apple's iPods. All this for doing absolutely nada, zip, zero, no work whatsoever.
It'd be like having to pay the National Oil Changing Assoc. fees anytime you paid someone to change your oil. And even having to pay them if you changed the oil yourself. And if that wasn't enough they demand that all oil companies give them a proceed of the oil sales. Such is ludicrous.....
And guess what folks....it's coming to an end. RIAA has for the most part won battle upon battle by legal lobbying. However, in taking on Apple they have gone against a company that has a viable business model, alternative sources of income, and a multi-billion dollar cash reserve that can allow them to face off to RIAA in court.
My prediction is that Apple will soon start signing artists directly to iTunes. Why not? They will pay the artist $0.50 directly. (Which is way more than they currently ever see.) And Apple will keep $0.50 cents instead of a mere $0.23 doubling their profits. And unlike RIAA who keeps all the books hidden from the artists Apple has hard statistics on downloads.
How long until artists jump onto a much more lucrative business model and simply release their music through iTunes. Instead of dealing with an industry reknown for being a mobster like entity repeatedly and unceasingly caught stealing profits from artists and consumers alike?
Good by CDs and hello "Good Buy"...
No more CDs with 2 good tracks and the rest junk. Simply buy the two good tracks and that's that!
- The Saj
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10/05/2005 01:08:09 PM · #2 |
Oh yeah, let's not forget ring tones. Which are in fact a "private performance" but some how RIAA convinced lawmakers it was eligible to collect royalties.
Even if you declare it a public performance. The old programmable midi-tones where you could put the notes in yourself to create a song were not recordings. They were programs that "performed" said song. Therefore, RIAA still was ineligable to collect royalties. (As ASCAP/SESAC/BMI collect performance royalties.)
Now....you have to pay $2+ for a ringtone of a song you already own. You receive no license. If you phone dies you lose all your purchases. Please tell me why I should be concerned about RIAA? When they provide me the licenses for my 70 lost ringtones than I will care about 12 yrs old stealing from them. When I purchased the ringtones it was under the understanding that I would be able to re-download them if I upgraded my phone or it was damaged. Then about two years later the policy is changed and I am out $100.
Message edited by author 2005-10-05 13:08:17. |
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10/05/2005 01:16:01 PM · #3 |
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10/05/2005 01:39:04 PM · #4 |
| Saj, I am LITERALLY sitting about 150 feet away from WB Records and I'm looking right at their offices. I'm giving them a big fat finger just for you! :-) |
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10/05/2005 01:40:08 PM · #5 |
| Now they have to come up with some method to allow writters to sell their books like MP3's online.. |
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10/05/2005 01:42:00 PM · #6 |
Originally posted by tristalisk:
Now they have to come up with some method to allow writters to sell their books like MP3's online.. |
It's here already ... print-on-demand. I'm pretty sure there's at least one site where people can list their own works, but I don't have time right now to search for the link, sorry ... : ( |
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10/05/2005 01:43:59 PM · #7 |
Originally posted by Telehubbie:
Saj, I am LITERALLY sitting about 150 feet away from WB Records and I'm looking right at their offices. I'm giving them a big fat finger just for you! :-) |
ROTFL.... |
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10/05/2005 01:58:22 PM · #8 |
| I understand it happens in the art world also. If I put prints in a gallery I pay for the prints the framing(wow thats higher than the prints) and then have to split the sale 50/50. Wich is a profit of about 3-5% per print. |
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10/11/2005 03:53:10 PM · #9 |
Originally posted by BigR:
I understand it happens in the art world also. If I put prints in a gallery I pay for the prints the framing(wow thats higher than the prints) and then have to split the sale 50/50. Wich is a profit of about 3-5% per print. |
That's fine, and in this case Apple's "iTunes" is the art gallery. Now let me ask if you've ever heard of this case.
An artist hang's his painting in a gallery. It sells. The artist get's 3%. The gallery gets 23%. The "painted images association of america" (PIAA) gets 77% even though they did not create the painting, nor display it, nor buy the paints. |
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10/11/2005 04:12:37 PM · #10 |
artists' royalties for sales are computed as a percentage of the record's suggested retail list price (SLRP). The SLRP is an approximation of the price charged by retailers, usually about $16.98 for a new release for a mega artist (note that this is just a suggested price for retailers -- you know you've seen CDs priced lower than this). Most artists get paid between 10 and 14 percent of the SLRP. But wait! First the record label deducts a packaging cost -- usually 25 percent for CDs -- since, in theory, artists are being paid for the music and not the packaging, but really it's just a false way to pay the artists less. So now it looks like this:
$16.98 SLRP
-$4.25 25% packaging deduction
$12.73 royalty base price
But wait! There's ANOTHER deduction. Most major labels also hold money in reserve to cover "breakage". This a ridiculous, antiquated deduction that goes back to the days when vinyl records could actually break during shipping, but it still exists. Now our formula looks like this:
$16.98 SLRP for a CD
-$4.25 25% packaging deduction
$12.73 royalty base price
-$1.27 10% breakage deduction
$11.46 new royalty base price
But WAIT. There's ANOTHER DEDUCTION. Despite the fact that CDs have been around for about twenty years, they're still considered a "new technology" in many major label contracts. And because new technologies imply some sort of "risk" to the labels, they feel like it's within their right to hold some more of an artists' sale royalties. The standard "new technologies" deduction is 25%, so that makes our formula look like this:
$16.98 SLRP for a CD
-$4.25 25% packaging deduction
$12.73 royalty base price
-$1.27 10% breakage deduction
$11.46 new royalty base price
-$2.87 25% new technologies deduction
$8.58 new royalty base price
So now the artist gets 10 to 14 percent of this price -- or somewhere between $0.86 and $1.20 -- per retail sale. And, of course, artists only get this money AFTER they've recouped the costs of making the album which, in many cases, never happens at all. [note: This is a simplified version of things using averaged figures and not dealing with other common deductions like "free goods" and "reserves". For a more nuanced explanation we suggest you read Donald Passman's All You Need To Know about the Music Business].
The question is: how does the contracted royalty rate jibe with the iTunes model? Unlike traditional retail sales with the iTunes Store there is:
* No overstock
* No breakage
* No returns
* No packaging costs
...thus making all of those ridiculous deductions listed above even more pointless.
So, in theory, musicians signed to major labels should be getting 100 percent of their 10 to 14 percent royalty rate since all of those antiquated deductions are totally illogical. But even at that price, these standard contracted rates seem dismally low. If the same contract terms apply to digital sales as terrestrial sales, at the $9.99 retail price for albums on iTunes, an artist would get somewhere between $1.00 and $1.40 per sale. For a 99 cent single download, an artist would get 10 to 14 cents.
from //www.futureofmusic.org/itunes2.cfm |
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