iTunes Music Store and Downhill Battle

Downhill Battle brilliantly critiques the financial model of the iTunes Music Store, noting that they’ve blown a great opportunity — they could have leveraged internet distribution to give the artist a much larger cut of every song sold. Instead, iTMS is just another iteration of “the man” abusing the artist. The site challenges iTMS to post the artists’ cut for each song right there in the UI. Similar discussion going on here.

First of all, Apple gets 3 times as much money as musicians from each sale. Apple takes a 35% cut from every song and every album sold, a huge amount considering how little they have to do. Record labels receive the other 65% of each sale.

Interestingly, Apple recently removed the claim that iTunes is “fair to the artists” from their web site. Downhill Battle claims this change as their victory.

And yet, Apple is losing money on ITMS, according to CNET.

My take: The solution proposed by Downhill Battle (download from free services, then donate money directly to the artist) puts wayyyy too much faith in humanity (reminds me of libertarianism’s fatal flaw – sounds ideal on paper, but no way could it ever work). Hate to sound so negative, but really — what percentage of people are going to have a download festival on Kazza and then go donate money to the artist through a separate channel? Bzzzzzt. Ain’t going to happen.

Music: The Fall :: No Bulbs 3

9 Replies to “iTunes Music Store and Downhill Battle”

  1. It’d be great to give the artists a bigger cut, but given the revenue stream Apple needed to build/design a distribution structure, and then get the mear agreement of the record companies to agree… there isn’t any money left for the artists. I don’t think the onus is on Apple here, again it falls back to the labels.

    Its a vicious cycle.

  2. I think the now that apple has opened the door, we’ll start seeing more independent labels without the RIAA’s capital able to launch their artists.

    The little guys now have a distribution channel.

    That’s going to help the artists more in the end.

  3. Scot wrote:
    reminds me of libertarianism’s fatal flaw – sounds ideal on paper, but no way could it ever work

    Yeah, that’s my problem with some of the more “extreme” Libertarian positions (e.g. sell all gov’t owned land because private owners will always take better care of it. *Suuuuure*, what would Yellowstone Nat’l Park be like in that case ?) However, I do think some Libertarian ideas, like repealing laws against victimless crimes, are worth looking into…

    I guess I’m sort of a P.J. O’Rourke / Dave Barry Libertarian ;)

  4. David, agreed. I also like the one about how public schools should be defunded because private citizens will step up to the plate and volunteer their time to create an even better educational system, or systems.

    I do agree with Libertarians on the basic idea of personal responsibility. But I also believe we’re all in this together and have to look out for one another. We are all society’s shepherds.

  5. There’s a Rolling Stone interview with Steve Jobs about iTunes music.

    David Bowie predicted that, because of the Internet and piracy, copyright is going to be dead in ten years. Do you agree?

    No. If copyright dies, if patents die, if the protection of intellectual property is eroded, then people will stop investing. That hurts everyone. People need to have the incentive so that if they invest and succeed, they can make a fair profit. But on another level entirely, it’s just wrong to steal. Or let’s put it this way: It is corrosive to one’s character to steal. We want to provide a legal alternative.

  6. Independents can sign up with the iTMS — is the direct email path to pursue, or they can align with CD-Baby (at very favorable rates).

    If you’re a self-labeled artist, you get — 65% of the sale. If you’re a CD-Baby aligned artist, you get — 65% of the sale minus a small cut for CD-Baby (which I think was in the vicinity of 10% of the label-cut, when they initially posted things).

    Now, compare those rates with what the RIAA-aligned artists get, anywhere, and tell me which deals really favor the artists, and which don’t.

    Copyright rights-holders are the ones getting the money for music sales — and this should be just fine — except that the past several decades have had a primary system where those rights are handed over to the label by the artist, for what we now know to be a pittance, but which looked like good deals at the time….

    Things are changing, now, faster than one might think, but more slowly than one might hope. Individual, independent artists *can* find listeners, but not through traditional broadcasters (which are still thoroughly influenced by the big labels) — and by finding listeners, they can make sales — again, not through the traditional sales outlets, but through the Internet….

    Copyright and patent law are good things — they attempted to strike a balance between the needs and rights of the individual producer, and the needs and rights of the greater community. For several decades, these laws have been changed, however, tipping the balance in favor of the individual (who has largely morphed from persons to corporations/businesses). The balance needs to shift in the other direction. At the same time, Patent Examiners must be educated and expert in the areas with which they are charged — and the revenues produced by the Patent Office should be used to fund this education and compensation, rather than being seen as a General Accounts cash cow.

    Enough ranting for now…

    Ted Thibodeau Jr
    Technical Evangelist
    OpenLink Software

  7. Awesome clue: It is possible to play copyrighted music without possessing a copy. “If” Pi can not be copyright protected, neither can music. Ponder it until you get it, or wait! Read Pythagoras. Read the lyrics to “Pocket Calculator”.

  8. Must we not forget, it is under copyright law that artist only recive a set royalty rate which is the industry standard. Higher negotiated rates are made acording to the number of people it brings. It’s an economy of scale. The more you sell, the higher the percentage the band can recive because they make up the cost alot quicker.

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