Topic: RIAA aiming to Kill i Tunes?
- Oct 5, 2005 06:19pm by NRG - livin the art that is life !
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http://www.pcmag.com/article2/0,1895,1862166,00.asp
The New Music Download Battle
09.28.05
By John C. Dvorak
After finally discovering that money (lots of it) can be made from music
downloads, the RIAA and some of its members are rethinking the entire
concept, and the iTunes deal in particular. At least a few RIAA members
think that Apple is double-dipping, because it makes most of its money
selling the iPod and, well, that's not fair! So the music companies are
rethinking-uh, complaining about-the whole downloading model.
Let me make it clear. 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. Piracy also seems beaten by the security measures built into
the system. And they still complain. Now I'm getting suspicious.
The current complaint is that the 99-cent deal is no good. There should be a
variable-price model, whereby some very popular new songs should cost more.
I'm thinking they should cost less, and the hard-to-find collectibles should
cost more-but no. Jack up the prices for those songs the kids want and drive
them back to piracy, I guess.
Let me tell you what I think they are up to. The goal is to kill iTunes and
any online music service not directly owned by a label. The record companies
don't like these systems for a number of reasons, not the least of which is
that they work, proving that downloading music was a good idea from the
beginning. I'm sure that still irks them, since it represents a decade-old
"I told you so!"
I'm not convinced that the record companies' biggest concern is pride,
though. I think it's bookkeeping. Just look at the history of the recording
business and the numerous lawsuits and scandals involving various labels and
the artists who worked for them. The artists claimed-often successfully-that
the record companies didn't pay all the royalties that were due them. But to
prove these accusations required investigative auditing, an expensive
proposition.
It must have dawned on someone in the industry that they don't need a third
party between the record labels and the artists. The third party, in this
case Apple, will have computerized data-real and valid numbers-that is not
controlled by the record labels. Numbers that could easily be carted out in
a court case. Numbers that could show relative popularity and that may
equate to, say, album sales at Tower Records. Too many numbers, especially
in the hands of a third party, can't be good.
While it's arguable that the industry is cleaner than it has ever been
because of the deep-pocketed corporations that own most of the labels, there
are still skeletons in the closet. These companies don't need a third party
with independent numbers.
When iTunes began, I doubt that more than a few record industry executives
thought it would become a runaway success, dwarfing all other initiatives.
It seemed like a lark, almost an afterthought. I'm certain that most were
convinced it would be, at best, a middling, sketchy business they could
point to and say, "Look, we tried that idea, and it's not that big a deal."
When it began to rock, the checks in the mail were great and everyone was
surprised. Suddenly all sorts of other initiatives popped up, and someone
woke up and noticed that all these middlemen with computerized numbers were
surrounding the business. It wouldn't be as easy to screw over artists with
this independent accounting everywhere.
Record stores must have put further pressure on the industry. They must have
complained that they had supported the business longer than the computer
geeks had, so how about the record companies showing them some loyalty?
You're going to see a slow shifting of the way music is downloaded, even if
it means each label does it itself through some mechanism in which retail
stores get a cut. They will do whatever they have to do to get those
"numbers" back in-house, where third parties can't analyze them. In the
meantime, expect more complaining. I think the RIAA almost wishes they had
piracy to kick around instead.
It's no coincidence that all this moaning began just as Apple was rolling
out its service in Japan. It looks as if it will be a big hit there, too.
The battle over downloaded music is still under way.
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