Tuesday, August 30, 2005

Problems Ahead For Online Music Services

The record companies want to change download pricing to increase the cost of new/popular songs (maybe $1.49 per song) and lower the cost of some other songs. Reports suggest they are putting pressue on Apple to accept new pricing. The article has an interesting note:

A sore point for some music executives is the fact that Apple generates much more money selling iPod players than it does as a digital music retailer, leading to complaints that Jobs is profiting more from tracks downloaded to fill the 21 million iPods sold so far than are the labels that produced the recordings.

I don't know if I like the idea of $1.49 songs. I think I'll buy less music if the songs I want cost that much. I'm sympathetic to some of labels concerns, but then again, we're at the beginning of the cycle; I'm not planning to buy a new iPod ever year, but surely I'm going to buy new music...

Meanwhile, it looks like clouds are forming over the subscription based systems (Yahoo, RealNetworks and Napster) because of an impasse over license negotiations between the companies and music publishers over royalty negotiations.

The National Music Publishers' Association has asked for nearly 17 percent of subscription services' gross revenues, while the services have offered 6.9 percent instead. Seems like a bit of a difference.

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