Slashdot Log In
Looming Royalty Decision Threatens iTunes Store, Apple Hints
Posted by
timothy
on Thu Oct 02, 2008 02:34 PM
from the but-each-penny-is-only-wafer-thin dept.
from the but-each-penny-is-only-wafer-thin dept.
eldavojohn writes "You may recall us discussing some legislation about online music. More decisions are being made that may affect how much money Apple must impart to labels and musicians. Right now, it's 9 cents a track — which adds up, when you sell 2.4 billion tracks each year. The Copyright Royalty Board is asking for 15 cents a track (66% increase) and Apple isn't going to agree."
Reader scorp1us points out a similar article at CNN; both stories mention that Apple has intimated such a change might cause a complete shutdown of the iTunes Music Store.
Update: 10/02 21:03 GMT by T : According to CNet, the rate has been officially frozen at 9.1 cents per track.
Related Stories
[+]
Politics: Two Bills of Interest Advancing In Congress 129 comments
pgn674 writes "While the Emergency Economic Stabilization Act of 2008 failed to pass in the House of Representatives, two other bills of interest to this community are currently moving through the US lawmaking process. One is the Broadband Data Improvement Act, which Communications Workers of America claims will help us towards bringing high-speed Internet access to all Americans. It will have the FCC increase their granularity in reporting the Internet accessibility of an area in the US, and redefine broadband measurements. It has passed through the House and the Senate, and differences in the passed versions are currently being resolved. The other bill is the Webcaster Settlement Act of 2008. Pandora is excited for this one as it will give them time to negotiate with SoundExchange (i.e. the RIAA) for new, more affordable royalty rates. The bill is currently in the Senate, and is expected to pass with ease."
This discussion has been archived.
No new comments can be posted.
The Fine Print: The following comments are owned by whoever posted them. We are not responsible for them in any way.
Full
Abbreviated
Hidden
Loading... please wait.
I Wanted More Anti-DRM Spin on This (Score:5, Interesting)
Apple has intimated such a change might cause a complete shutdown of the iTunes Music Store.
More importantly, what of the client software that interacts with the store? You know, the program that allows you to burn/listen/store "your" music?
As the user who submitted this article, I would like to point out that they removed my DRM fear mongering from my original submission. As a geek it's my duty to squeal like a stuck pig when troubles a brewin' and I think there's a rude awakening looming for a whole ton of iTunes users.
Essentially, I'm guessing the RIAA will pressure Apple into releasing or updating their client software to not decrypt the DRM'd songs (non iTunes Plus tracks) until the user coughs up the additional six cents. Hell, I have no way of knowing that this isn't already implemented in iTunes and Apple need only stop delivering the other half of keys to the clients to decrypt a user's data.
And that's why DRM has failed, continues to fail and will always fail. Nobody read the EULA/TOS of iTunes and nobody understands that when you're "buying" the song for a dollar, you're not buying anything but the right to listen to that song for some undetermined amount of time. Here's a simple case: What happens to "your songs" when you die?
Burn them to discs or convert them to an open format anyway you know possible, folks. That's the only advice I have--especially with this on the horizon. Buy Apple players, Amazon MP3s and look no further than the GPL for your software.
Re:I Wanted More Anti-DRM Spin on This (Score:4, Insightful)
Anyone that buys DRM music deserves the backlash. I am one of those annoying guys that told everyone he knew to not use the legal music stores, not because I like to steal, but because they would surely find themselves unable to listen to the music they purchased. This has already happened to my cousin to bought through the walmart service, then had to reinstall her computer, then replaced her computer, and had all sorts of issues getting the rights to play her music again. I think she got that resolved, but you shouldn't even have to go through all that.
I only listen to music not related to the RIAA and have done so for many years now. I find that I still find many songs I think are great and love to listen to, and never have to worry about being screwed over. And yes, I do buy CDs and songs, fairly often even.
Parent
What, even eMusic? (Score:5, Insightful)
I am one of those annoying guys that told everyone he knew to not use the legal music stores
What, even ones like eMusic that don't ship DRMed music and never shipped DRMed music?
That's not just annoying, that's irresponsible.
Parent
Re:What, even eMusic? (Score:4, Insightful)
Parent
Re:What, even eMusic? (Score:5, Interesting)
I buy things from iTunes knowing the risks of DRM specifically because it pisses off the RIAA and MPAA that they have to deal with Apple.
It amuses me NBC caved and put their TV back on iTunes because they lost so much revenue.
Am I wasting my money? Yeah probably. But lots of people also pay $10 to go to a movie for an hour and a half. I pay $2 an hour so seems like a half price entertainment deal, and I get to re-watch mine until something happens.
Parent
Re:What, even eMusic? (Score:5, Informative)
Aside from emusic which rules for indie picks - with amazonmp3 out there, I can't understand why anyone would buy any drm music period any more.
Let me clear this up for you:
"Please note that Amazon MP3 is currently only available to US customers."
Parent
Re: (Score:3, Funny)
Re: (Score:3, Insightful)
Too bad the Apple has hardwired its authentication system to its ability to sell music...
It's not like they could just stop selling music while keeping the authentication running. That'd be silly. That'd only happen if they sold other things than just music. Like applications or movies.
Why would this apply to already purchased music? (Score:5, Insightful)
Essentially, I'm guessing the RIAA will pressure Apple into releasing or updating their client software to not decrypt the DRM'd songs (non iTunes Plus tracks) until the user coughs up the additional six cents.
Why on earth would this apply to songs you've already bought? This is an additional royalty for new songs, making them cost 1.05 or making Apple push back on the labels to take the extra royalty out of their share...
Yes, you definitely need to turn "Rip Mix Burn" around to "Mix Burn Rip" and get CDR backups of all your iTunes music ANYWAY.
But at least iTunes DRM is "honor system" level... I mean, really, it gets downloaded unencrypted and the DRM is applied by the local client. And they haven't made any attempt to close the digital hole. Imagine how much it would suck if the labels had gotten everything they wanted from Apple like they have from Microsoft?
Parent
Re:Why would this apply to already purchased music (Score:4, Interesting)
I'm honestly a bit confused by all this - Record companies seem to have no problem paying artists less than the statutory royalties via one-sided contracts. Apple has contracts with the record companies saying they get x per track/album sold.
Near as I can tell, this bill will just change the "default" royalties.
A direct contract with the copyright holder (nearly always the record company) tends to bypass this sort of thing.
Parent
Re: (Score:3, Interesting)
"Essentially, I'm guessing the RIAA will pressure Apple into releasing or updating their client software to not decrypt the DRM'd songs (non iTunes Plus tracks) until the user coughs up the additional six cents."
I'm assuming that's because what you said was unfounded, but more importantly completely ridiculous. You can't retroactively revoke access to something that was already sold when using the product doesn't rely on your services. And
Re:I Wanted More Anti-DRM Spin on This (Score:5, Informative)
I'm assuming that's because what you said was unfounded, but more importantly completely ridiculous.
Yeah, completely ridiculous. Alright, here's the TOS [apple.com]:
d. You acknowledge that some aspects of the Service, Products, and administering of the Usage Rules entails the ongoing involvement of Apple. Accordingly, in the event that Apple changes any part of the Service or discontinues the Service, which Apple may do at its election, you acknowledge that you may no longer be able to use Products to the same extent as prior to such change or discontinuation, and that Apple shall have no liability to you in such case.
But it's completely ridiculous that I start to talk about them electing to discontinue your right to use the product. Completely.
Couple that with the fact that Apple pulled the $1 pricing scheme out of it's ass as well as the RIAA being a legion of lawyers and I think we've got ourselves the perfect storm. Of course, that's just completely ridiculous.
You can't retroactively revoke access to something that was already sold ...
Nothing was sold. Something was "licensed" temporarily to you in the very loosest sense of the word. By saying "sold" are you saying I now own the rights to the music I buy on iTunes? No, it follows the TOS which I pointed out is full of red alarms.
Parent
Re:I Wanted More Anti-DRM Spin on This (Score:5, Insightful)
That's why I pirate.
Services that sell physical media have quantities of bad-ware and other anti-user software.
Services that sell online media promise nothing, including playing tomorrow.
Piraters guarantee good quality product that will 10 years from now. They also happen to be free.
Media corps, give me a good reason why I should put MY money through a shredder and buy locked down, limited term, no liability media. If not, fuck off torrents, IRC, and sneakernet work great for me.
Parent
Re: (Score:3)
So I assume you buy CDs without "bad-ware and other anti-user software" when available? Or are you just a hypocrite?
Re: (Score:3, Insightful)
There are a number of places to buy non-DRM'd music, in both physical and digital form. Why don't you try those?
Re:I Wanted More Anti-DRM Spin on This (Score:5, Informative)
Essentially, I'm guessing the RIAA will pressure Apple into releasing or updating their client software to not decrypt the DRM'd songs (non iTunes Plus tracks) until the user coughs up the additional six cents.
Um, what? Are you trying to spin it such that people who bought the songs at 0.99 would have to pay another 0.06 in order to continue playing songs that they already licensed? That's not going to happen. Aside from violating the existing license, it would trigger a massive lawsuit against apple. The license for the existing songs has been paid, the terms can't be changed.
Parent
Re:I Wanted More Anti-DRM Spin on This (Score:5, Informative)
Sorry for previous post, in my mind I totally hit preview instead of submit.
As someone who has actually RTFA, Apple didn't hint that this change would shut down the iTMS - they said flat out that IF they ABSORBED the higher cost, THEN THAT would be so detrimental they'd have to shut down - and that there was NO WAY THAT THEY WOULD DO THAT.
Expert fear mongering, indeed. Allow me to accurately paraphrase for you.
1. Apple said that they wouldn't absorb additional costs - it was ridiculous to the point of causing an iTMS shutdown.
2. Apple said that shutting down iTMS is ridiculous.
3. The iTMS Terms of Sale is on the web. I'll post the link for those can read: http://www.apple.com/legal/itunes/us/sales.html [apple.com]
4. Ditto for their Terms of Service: http://www.apple.com/legal/itunes/us/service.html [apple.com]
5. NO WHERE DOES IT STATE THAT YOUR MUSIC PURCHASES ARE GOOD FOR "some undetermined amount of time."
6. iTMS TOS is governed by the laws of the State of California, USA
7. It strains reasonable imagination to the breaking point that any California court would uphold the insane scenario you present.
8. Your DRM fear mongering seems to completely overlook Apple's historical stance on DRM. From the fossil record:
From http://www.apple.com/hotnews/thoughtsonmusic/ [apple.com]
Perhaps those unhappy with the current situation should redirect their energies towards persuading the music companies to sell their music DRM-free. For Europeans, two and a half of the big four music companies are located right in their backyard. The largest, Universal, is 100% owned by Vivendi, a French company. EMI is a British company, and Sony BMG is 50% owned by Bertelsmann, a German company. Convincing them to license their music to Apple and others DRM-free will create a truly interoperable music marketplace. Apple will embrace this wholeheartedly.
9. iTMS content continues to play when one has no connection to the internet.
10. Point 9, above is an excellent simulation of the iTMS going out of business - there would be no internet connection to iTMS, your music would continue to play.
You, sir, are a total fucking idiot.
Parent
Re: (Score:3, Informative)
10. Point 9, above is an excellent simulation of the iTMS going out of business - there would be no internet connection to iTMS, your music would continue to play.
Afaict the situation would be that you could still play it on machines already authorised but not on any new machines. You would then be faced with a choice of spending a lot of time and losing quality burning and re-ripping (which only works for music afaict not some of the other stuff itunes sells), using a drm crack (legally dubious and assumes
Re:I Wanted More Anti-DRM Spin on This (Score:4, Interesting)
Point taken.
I find that, despite the bait I may be setting for myself, the iTMS content is sufficiently downgraded in the first place by its low sampling. On a good audio system, you can hear the difference.
I've spent a few decades of my life writing DSP software and teaching DSP techniques and Fourier and LaPlace math. I already lament sampling and have no choice but to agree that you're right. Fuzzily, however, few people seem to own decent audio equipment, many seem to flame being able to hear a difference, so to those people, the argument is lost - they wouldn't hear it. The others will more likely accept the new artifacts as different - technically inferior - but inferior_a is roughly equal to inferior_b. One would oversample the CD output (creating more digital artifacts) and then downsample the copy in an attempt to lose the new artifacts. There's no basis to belief that this creates lossless transfers, but does up the odds a bit in the user's favor.
Another guy insisted that Apple would free us from DRM if they went under, but I find no citation for that as of yet.
Please don't get me wrong - DRM is evil. IMO, Apple's DRM is the least evil - much like being preferred to be shot by a .22 instead of a .357 - it's still a freaking gunshot wound!
My retort was focused on the fact that the sky is not falling and a single-shot .22 is not an A-10 attack.
Parent
Re:I Wanted More Anti-DRM Spin on This (Score:4, Informative)
Way to put everything but the relevant bit in bold. The statement pertains specifically to services and products that "entail the ongoing involvement of Apple", which music does not.
Parent
Re: (Score:3, Informative)
Listening to purchased music requires an authorized player, and authorizing a player requires the iTS, so playing purchased music certainly entails the ongoing involvement of Apple if you don't want to use the same computer your whole life.
FWIW I agree that Apple probably won't leave their customers high and dry in this. I was merely disagreeing with tholomyes's assertion that "music does not [entail the ongoing involvement of Apple]". Playing music on your already authorized machine does not. Playing music
Re: (Score:3, Informative)
Um... because you're fearmongering?
Try this: Buy an iTMS DRM track. Play it to verify it works. Disconnect the computer from the internet. Continue to verify that it works.
See that? No DRM server.
Re: (Score:3, Interesting)
This has nothing to do with Apple closing the Apple music store however. Their DRM servers will still be up and running (for movies, TV shows, games, etc) so this issue is simply FUD.
Re:I Wanted More Anti-DRM Spin on This (Score:5, Interesting)
I am sure the labels realize this and are fearful Apple might actually pull it off.
Parent
Re:I Wanted More Anti-DRM Spin on This (Score:5, Insightful)
[citation needed] x 2
Parent
Re: (Score:3, Insightful)
Complete Shutdown of iTunes Music Store? (Score:5, Interesting)
Yeah, right.
Call their bluff, require 15 cents.
iTunes Music Store isn't going anywhere.
If anything, prices will go up a dime. (Yes, for a 6 cent increase.)
Re: (Score:3, Insightful)
Problem is (Score:4, Interesting)
That $1 is a magic mental limit. You go over that, many people will no longer be willing to buy tunes. May seem silly but that's how it works. There are various mental limits when it comes to prices like that. There's been research done to suggest that if iTunes songs went up even to $1.10 it would result in a massive drop sales.
Parent
Re: (Score:3, Interesting)
You are correct but there isn't anything magical about it it's called perceived value you study it in microeconomics.
http://en.wikipedia.org/wiki/Customer_perceived_value [wikipedia.org]
Re:Problem is (Score:5, Insightful)
By "magical" he means there is no logic involved, and people are idiots.
Parent
Re: (Score:3, Insightful)
Any place that sells unprotected MP3s. Apple is far from the only source for media that will work with the iPod. Apple is also quite aware that most people are capable of entering "http://www.piratebay.org" in their browsers, and more importantly, they know the labels are quite aware of that. Apple had no problem going to the mat with Universal/NBC, and I don't see them blinking here either, especially given the fact that NBC came crawl
Amazing... (Score:4, Insightful)
Re:Amazing... (Score:5, Interesting)
Hmm good point. My band's music is on iTunes, as well as that of tons of other bands I know, who are completely independent. We got our stuff onto iTunes through TuneCore who charge a pretty nominal yearly fee. No record label involved. They also don't take any cut of royalties sent from Apple. So, if any of that $0.99 is going to anyone other than either Apple or my band, somethin is screwed up there :P
Parent
Re: (Score:3, Insightful)
Re:Amazing... (Score:5, Interesting)
Yeah. There's this organisation in my country that goes around collecting money from restaurants etc.
http://www.ppm.org.my/v2/downloads/quoteEN.jpg [ppm.org.my]
I wonder what happens if a restaurant only plays music that I compose (I'm not a member and the last I checked I am not getting any money or royalties from them).
I also wonder where the royalties are really going and what the pie slices look like ;).
Parent
A complex game (Score:5, Insightful)
Apple is playing chicken with the Music Industry, and IMHO, rightfully so. The record companies should eat the increase in the royalty instead of passing it on to the consumer. They provide little value for the huge portion of the income they get already.
Price breakdown (Score:5, Insightful)
Apple pays an estimated 70 cents of every dollar it collects per song to the record companies responsible for each track. The record companies turn over nine cents to the music publishers who control the copyrights to these tunes.
So why can't the record companies absorb the extra 6 cents? Oh wait. They're greedy bastards...
Good (Score:5, Insightful)
Re: (Score:3, Insightful)
Now they're willing to drop a whole channel that makes them a ton of money in order to hit back at the music industry's greed when most vendors would just bend over and take it.
Well, close. I think what you meant was that they are willing to say that they are willing to drop a whole channel. Now maybe they actually will if it comes down to it, but I doubt it. Would you throw away 8% of your revenues just to make a point?
Sweet! (Score:4, Funny)
Finally! Then we can all go back to sharing music like we were intended to in the first place.
Someone makes Apple look saintly (Score:5, Insightful)
Apple is evil [today.com], but the music business is evil [rocknerd.co.uk] and stupid [rocknerd.co.uk]. If you were going to pick someone to make Apple look good, you couldn't pick better villains.
Do the record companies realise they're competing with free? Apple realise this. Raising the prices will drive away customers who do have another option. No-one buys music because it's the only way to get it, anyone who buys music these days does so because they want to.
BitTorrent: because fuck you, Hollywood!
Please, please, please let this happen. (Score:3, Funny)
70 Cents? (Score:4, Insightful)
They would be dumb to do this (Score:3, Interesting)
And by "they" I mean both parties, Apple and the music industry.
On one hand, I understand Apple's stance. The recording industry would be stupid if they made moves that could shut down what has so far been the most popular online music store to date. In my opinion, it is pretty F-ing stupid to try and pass a royalty hike at this point and time.
My thinking is this: Apple is doing all the hard work of running the store, and the record industry is profiting off of this additional sales stream. If they pass the royalty hike, they might not get their increased royalty revenues - likely, they'll get NO MONEY AT ALL if Apple goes through with its bluff of shutting down iTunes. Which is better, earning several million dollars a year in revenues from iTunes, or none at all? Stop being so greedy already.
On the other hand, how wise would it be for Apple to kill off part of what makes the iPod so popular? I'm a iPod owner who has never bought a track from iTunes, but obviously there are a LOT of people out there who use it. I don't think it would be so smart for Apple to shut such a service down... I wonder if their iPod sales would suffer as a result.
Not a problem (Score:4, Funny)
Admittedly digital music is a luxury. But the economy is doing so well that people won't mind spending a little more on their music. Oh, wait ...
Apple Records Inc (Score:3, Insightful)
The fact that music labels don't (or perhaps don't want to) see what they might be doing by forcing Apples hand here is just amazing. What's to stop Apple from getting into the record label business to support iTunes? Like they couldn't sign a thousand acts tomorrow if they promised them prime promotion in the iTunes Music Store? They might not be able to get the big names right away, because of existing contracts or just general reluctance from artists, and they would certainly lose most if not all of their back-catalog, but Apple absolutely does have the kind of capital necessary to pull this off, and a huge built-in market that is essentially tied to their wildly popular distribution mechanism.
Losing big name artists from major labels would certainly hurt iTunes sales, but again, Apple certainly has the kind of cash necessary to subsidize an iTunes record label until it found it's footing (and until major artists realized how much iTunes sales really meant to them in this day and age). 100 million iPods aren't just going to disappear overnight, people will still turn to iTunes for their music. So long as they could keep setting the trend with their iPod line, it's hard to believe that an iTunes label would not eventually start scoring major artists, or perhaps start creating their own major artists from little known artists/bands eager to sign with the iTunes label.
Even the BBC don't get it (Score:4, Insightful)
I think this is unlikely to happen, but if it does then the P2P networks will get rather more traffic, thereby providing even more proof that the publishing industry just doesn't understand what's happening. Every time they try to throw their weight around like this, it make them weaker and the darknet stronger.
Be that as it may, there is an inaccuracy in the BBC's reporting on this. They say:
"Apple pays an estimated 70% of digital music revenue to record companies which in turn pass on a percentage to artists [my emphasis]. It is that percentage that is expected to be changed on Thursday."
Actually, I think the National Music Publishers' Association pays this percentage to songwriters and composers of works via the publishers that the NMPA represents. And (surprise!) the publishers cream off between 3 to 15%. In many cases the composers are not the same as the artists that perform the works, and many will in fact be dead (the money goes to their relatives, estates or licensees, or nowhere if these cannot be found).
But who cares? The way the money works in music is - to say the least - opaque. With the exception of a tiny minority of super-stars like Cliff Richard and Simply Red, when you listen to your favourite band, you are listening to indentured servants. What will happen when we realise that the copyright system overall is completely iniquitous? In 1994 (MMC, 1996 [firstmonday.org]), 10 UK composers received more than £100,000 (from performing and mechanical royalties). How many people working in the UK music industry that year who were not composers earned more than £100,000?
I'm betting that it was rather more than 10.
Re: (Score:3, Insightful)
Wow, you cite Allofmp3.com as an example? You do realize it's like...totally illegal, right? Sure it's cheap to sell something if you don't have to buy it in the first place? Speaking of which, I've got a great bridge you might be interested in...
I don't understand the whining about a $1 mp3. I can understand complaining about lossless to a degree. I can understand complaining about DRM. But $1? That's less than a can of coke, a swig of beer, less than a big mac, etc etc.
Then again it seems that most people
Re: (Score:3, Insightful)
Man, I would love to just see how all the Apple customers react if iTMS got shut down, and they began to lose access to their purchased music (I would presume the music would continue to work on devices for which the songs had already been authorized, so it wouldn't be catastrophic, but still). I suppose if worse comes to worse, they could at least burn their music to CD's, since iTunes does allow that (will that work if the Apple servers were shut down?). Once ripped to CD, they could re-rip to MP3, but th