Tuesday, July 08, 2003

NOBODY'S GETTING RICH? BUT THAT'S EXACTLY THE POINT: Billboard have done some sums on Apple's ninety-nine cent downloads, and complains that "nobody's getting rich." Well, not perhaps in the sense of taking home enough cash to afford the lawyers needed to make the BMG/Warner merger go through, but let's do some number crunching of our own. The Billboard figures reckon " on a typical 99 cent download sale, it is clear that all parties have thin margins. On average, the label is taking home 47 cents per track before accounting for production, marketing, promotion and other costs; the service provider is grossing 34 cents per track before technology, processing and distribution costs; and the artist takes 10 cents before paying out to producers and other collaborators. The publisher/songwriter share is 8 cents. That's assuming the label is selling tracks at a 65 cent wholesale rate and that the artist is receiving an album royalty rate with no deductions applied.
Right. The labels are making forty seven cents a track - admittedlty, that's not all profit. But every time someone logs into iTunes, downloads Born To Run, forty seven cents wings its way into the label's account. Yes, there are production, marketing and promotional costs to be borne, but even so - we doubt if it takes forty seven cents worth of adverts and polishing for every single download. And since everything on iTunes has already had a full and varied life beyond the service, the level of profits on these downloads works out even higher. And remember - that's forty seven cents on every tune. So, on a single's worth of downloads would be one dollar forty four. And that's not bad work when there's no distribution and storage and packaging to be coughed up.

Meanwhile, the performes are taking ten cents per download. There's been five million downloads already (and rising) - thats half a million bucks has gone to people making music from their talent. Not much, but how much cash had people been making from the illegal downloads? For a brand-new service, a quick half mill isn't bad, is it? Maybe it's time we stopped looking to music to make a few (mainly executives) rich, and started to embrace this as a way that lots of people (mostly musicians) can make a living.


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