Record Industry Pushes Apple to Raise iTunes Prices

[L. Bird]

Repost from Whochat Forum:

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http://www.technewsworld.com/story/49727.html

Record Industry Pushes Apple to Raise iTunes Prices

By Jennifer LeClaire

"Record labels make about 70 cents per download, and that's more profit than 
they make selling CDs. If digital download costs are going up, the recording 
industry must be using a different Internet than the rest of us."

The recording industry wants a bigger slice of the digital download pie. 
Some labels are pushing Apple to change the 99 US cents pricing model it 
pioneered when it launched iTunes three years ago.

Apple has sold more than 1 billion songs since then, helping labels pad 
their declining CD sales. More than 350 million digital songs were sold in 
the U.S. alone last year, according to U.S. SoundScan. That's 1 1/2 times as 
many as were sold in 2004.

Apple's iTunes has the lion's share of the market -- about 80 percent, 
according to the company -- with Napster and RealNetworks' Rhapsody among 
those competing for the remaining share with a subscription-based pricing 
model.

"I hope that every customer, artist and music company executive takes a 
moment today to reflect on what we've achieved together during the past 
three years," said Steve Jobs, Apple's CEO. "Over one billion songs have now 
been legally purchased and downloaded around the globe, representing a major 
force against music piracy and the future of music distribution as we move 
from CDs to the Internet."

It seems the music companies have done plenty of reflecting. The record 
labels agreed to Apple's one-price-fits-all model three years ago. However, 
when Apple's license expires, the labels are expected to push for higher 
prices, especially for new releases.

Apple was not immediately available for comment on its licensing deals. 
Recording Industry Association of America (RIAA) spokesperson Amanda Hunter 
did not return calls seeking comment on the issue.

Record labels, though, have spoken out publicly in the past. Warner Music 
Group CEO Edgar Bronfman Jr. last fall suggested that Apple should not have 
a one-price-fits-all strategy. An emboldened Bronfman even suggested that 
Apple should give the labels a cut of iPod sales. Meanwhile, EMI Group CEO 
Alain Levy lobbied for higher prices for best-selling bands and discounts 
for lesser-known artists.

Record labels make about 70 cents per download, and that's more profit than 
they make selling CDs, according to Jobs. "So if they want to raise the 
prices, it just means they're getting a little greedy," Jobs said at the 
Apple Expo in Paris in September.

The recording industry's response reeks of "greed and ingratitude," agreed 
Envisioneering Group Director Richard Doherty.

"I would ask any of those labels to show a balance sheet that reveals what 
the artists have gotten of that money," Doherty told MacNewsWorld. "I would 
challenge the studios to open their balance sheets and show where they are 
losing money on this."

If there is anything in relation to digital downloads that concerns RIAA 
more than pricing, it's piracy. The association continues its push 
anti-piracy efforts around the globe. The question is, would raising 
download prices spur a movement back to illegal downloads? Or are consumers 
willing to pay more?

"The general feeling from our consumer interviews is that the market can't 
tolerate -- or need it have to -- a 100 percent premium, or even a 60 
percent premium. The fact is, Apple Computer makes less money on the 
downloads than any of the labels it is dealing with, and even less than some 
of the credit card clearing companies," Doherty said. "If digital download 
costs are going up, the recording industry must be using a different 
Internet than the rest of us."