NEWS The online music boom is to become the next dot-com bust, according to new figures, with record labels taking the vast majority of the profits from the burgeoning industry.
Only four per cent of the money made from selling music online ever goes to the song shop owner, statistics obtained by the The Independent show, with the record labels making a far greater share of the cash than they ever did with traditional formats like CDs.
For every song sold via Apple's iTunes which costs 99¢, says The Independent, Jobs and friends get 4¢, music publishers get 8¢ and copyright holders - that's record labels more often than not - get a hefty sum: a whopping 62¢.
Apple never claimed it was likely to get rich off iTunes - it launched the service to promote sales of its money-spinning iPod, which certainly worked, as millions them have flown off the shelves since launch and snagged the company around 70 per cent of the market in digital music players.
Unsurprisingly, though, for download sites that don't tie users to a particular music player, such as Apple, or don't have a big corporate coffers, such as Coke's download offshoot, MyCokeMusic, it's a pretty unprofitable business.
And that could mean, like the dot-com boom and bust before it, that the recent spate of bandwagon-chasers could end up shutting their virtual doors before too long.
Comments
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1. anonymous
It does not take a LOT of intelligence to see the BIG PICTURE.
Apple makes the PROFIT from the PLAYER and not from the iTunes. They is why they are reluctant to open the iPod to other sound FORMATs.
Whereas, none of the other "wantabees" have any realistic business model in mind other than staying in sight of Apple. Sigh! They are going to BLEED themselves to death by not seeing the big picture.
The music will continue to shoot itself in the foot by demanding unrealistic royalities, but it won't matter to Apple if they can continue to make their technology the "cutting edge."
2. Music Fan
This just makes the justification for using p2p download sites all the more visible. Why give all that money to the rip off record companies, when you can download music, including ITunes for free! The more this goes on the more the industry will have to look at is pricing!
3. anonymous
When will you lot get your facts right. The iPod IS open to other sound formats. It supports for following audio formats: AAC (16 to 320 Kbps), MP3 (32 to 320 Kbps), MP3 VBR, Audible, AIFF, Apple Lossless and WAV.
4. anonymous
So the music business, which claims to have accepted the new pay-to-download sites, is taking so much of the cash that the sites will die & users will be forced to return to the illegal sites once more - at which point the music business gets NO royalties!
Here's a thought - take a smaller percentage & the sites will stay open & you will continue to get paid!
Talk about dumb!
5. Charles Wood
Rip of Britain works because of the layers in the system. Almost all American companies sell direct at a lower price. In the UK most force the sale through another layer.
This still works digitally because there is a limited supply, that is the groups selling, and the sources, are a cartel of a few memebers. This is actually illegal in the UK, EU and America and the fair trades people should be able to do something about it.
Copyright protects those who are rich and can afford the litigation....
6. anonymous
Maybe my maths is a little off but...
Aple 4c, Publishers 8c, Copyright holders 62c - I make that about 25c light - so where did that evaporate to?
7. Daz
Maybe our friend from Missouri should read the article with care - then he/she will realise that the article states that Apple is primarily interested in using iTunes to push the iPod which is where the real money lies.
Also, Missouri is a U.S. state, not a country and as an "educator", he/she should check the spelling and grammar of a post first !
8. Zakala
Surprise, surprise, the record companies make even bigger profits from the artist with online music (and how many cents per unit do the artists get?). What a great marketing model - no pressing costs, no distribution costs and no middle distributors. The big five must be wetting themselves with laughter, especially as the indies were initially excluded.
Once they've finally blanket prosecuted the file sharers out of existence, not that I'm condoning that, they can start on those pesky people that release music on their own.
Another grey day for the independant artist.
9. adrian biffen
Never mind whether Missouri is a country or a state, I blame silicon.com. Why do you lable the field "Location" when we are creating posts and then display it with a label of "Country"?