Posted this on the Billion countdown Thread:

[forums.macresource.com]

Found the answer (on a Anti-Apple/iTunes site):

Apple says iTunes is "better than free" because it's "fair to the artists and record labels." That's simply not true. 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. Of this, major label artists will end up with only 8 to 14 cents per song, depending on their contract. Many of them will never even see this paltry share because they have to pay for producers and recording costs, both of which can be enormous. Until the musician "recoups" these costs, when you buy an iTunes song, the label gives them nothing. (Sources: major label musician's cut Apple's cut For a thorough explanation of how recouping screws musicians, see Confessions of a Record Producer by Moses Avalon)

[www.downhillbattle.org]

and here (See The Major Flow Of Money Part):

[www.futureofmusic.org]


So 35% is Apple's cut while Musicians make 8-14% so the Record Labels make about 50%. It's not a perfect system but better than the old model of selling records.

Any Musicians want to elaborate on the topic?

Is Apple and the iTMS a better system?





Edited 2 time(s). Last edit at 02/23/2006 12:09AM by ArtP.

The artists get screwed by the record cos whether Apple is a part of the equation or not.

And Apple has costs related to running iTunes, which supposedly effectively nullifies any profits. According to Apple, they either lose money or barely break even. They claim iTunes is a loss leader that drives iPod sales, although they said that at the beginning and I imagine the economies of scale has evened that out since.

[www.negativland.com]

thats all fine and dandy -- but what would the artist get if someone buys their CD at amazon?

8-14%? or more? or less?

not trying to be an apple apologist -- but last time i checked, apple wasnt a "non-profit" company -- you could sub anyones name for "apple" and get the same statement

musicians get screwed perhaps -- but those that do make it dont seem really poor to me...

"Of this, major label artists will end up with only 8 to 14 cents per song, depending on their contract."

Depending on their contract, that nobody forced them to sign. I'm guessing that artists with integrity such as Ani Difranco are making much more per song, and are pretty happy with iTunes.

I used to work for a Indie Label back in the late 80's and did regional promotion for some Major Labels back in the early to mid 90's.

Looking from the perspective from the "Dark Ages", the iTMS is a little like what Radio has become, a vehicle for promoting Artists (that also happens to sell the music). I often look at certain playlists on the web, see a new song from an Artist and go to the iTMS to HEAR IT.

I may or may not buy it from Apple (sometimes buy from local retail on Vinyl Single if available and applicable, -Club DJ long story).

If I buy a whole CD from my local mom and pop retailer at $15-16, the artist still probably will never see any more profits.

I am more likely to buy a single song from the iTMS at .99¢ so the chance of him seeing money from the Record Labels recoupable costs and/or any Advance money are much greater.

Again look at the Record Companies 50% take and the things they deduct:

$16.98 SLRP
-$4.25 25% packaging deduction
$12.73 royalty base price


$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


$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 out of that 8-14% of $8.58 Royalty Base price, you still have Promotional costs and Advance money before the artist sees a dime.

I think Apple has a brilliant plan.

"...a huge amount considering how little they have to do." Uh huh.

That's business. That's the music business. Artists know that going in. Many moons ago...artists used to not make much money...then they did...and they still do, but others make even more money off of them and their work too...so there lies the complaints.

For what Apple is doing to virtually every artist, unknown and known...the music industry, in general...and their implementation of their business model...35% is more than fair to me - perhaps not quite enough. It's the record companies that are where the real problems (and greed) are at.

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Maybe all these artists that oppose iTunes can come together, and defeat Apple just like they stood up to Ticketmaster----HA!

I for ONE believe Apple needs to adjust their pricing.

Not every audio clip is worth 99 cents and some are worth more.

And, they should be able to improve their own internal efficiencies and reduce their overhead, too.

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SteveJobs Wrote:
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> And, they should be able to improve their own
> internal efficiencies and reduce their overhead,
> too.

Let's take a look at iTunes (iTunes + iTMS) costs:

Development - Probably a constant or slowly increasing over time
Servers - Big initial investment, constant ongoing costs with replacing and adding new servers
Storage - Big initial investment, constant ongoing costs with replacing failed components and adding new space
Bandwidth - Increases over time. At 1mil songs/day, I would estimate their AVERAGE bandwidth to be around .6 Gbps with spikes 3-4 times that during the day.
Marketing - Annualized, it would probably be constant over time

Where do you see their costs dropping? This is not like computing hardware where each hardware revision lets you optimize a little more, making it cheaper. The economies of an ASP differ from your average business.

- Shadow



Edited 1 time(s). Last edit at 02/23/2006 06:42AM by shadow.

"...a huge amount considering how little they have to do."

Most people would probably say the same thing about these "artists".

- Shadow

[www.lapoltlaw.com]

Article by Christopher Breen . . .


cheers

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Bill
Flagler Beach, FL 32136

Carpe Vino!

Fermentation may have been a greater discovery than fire.
— David Rains Wallace

shadow Wrote:
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> Most people would probably say the same thing
> about these "artists".


Yep, I don't feel sorry for artists nor teachers (nor...) who complain about what they make. If they don't like it, don't do it! They choose to be part of that system.

WHiiP Wrote:
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> >
> Article by Christopher Breen . . .
>

Password protected.

Can you give us some insight on the iTunes Royalties doc. ???

Atlas Shrugged.

my music is on iTunes. Apple USA pays $.70 a song; CD Baby (my online retailer who provides the digi files to Apple) takes a 9% cut, I get the rest.

I am pretty dang happy about this.

as an indie artist, i own my masters and publishing. i make a larger piece of the pie for doing this. artists that work with the major labels get a smaller piece of everything. that's the nature of the business. if you're going to crap about Apple, you're simply unaware of how the money breaks down in general. it's all a question of trade offs.

the money i've made from iTunes and others services has been welcome gravy.

christopher breen is an idiot for one thing. that's from people that I know that work(ed) with him.

I don't have time to tell Apple how to lower their costs, but there are tried and true methods for doing so. Every company and infrastructure can and do lower their operating costs-some physically, some by accounting methods.

But, that's minor to my point. I think they should RAISE PRICES.

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regardless of how small the cut is or may be across the industry, everyone is making millions.

And that includes talentless turds across the board in "music" (if that is what so much of it can even be referred to as).

The state of the 'talent' in the industry is the worst it's ever been.

Even as useless as the "urban cowboy" days of radio in the late 70s were....and that was truly a horrible time for music, that time was a creative motherlode compared to now.