iTunes a loss leader?

nc10 · #1 11-08-2003, 12:57 PM

All the publicity must be worth something, but it looks like Apple not making any money on iTunes..... Wonder how much the artists are getting. From the different articles I've read, apple keeps 35% of iTunes revenue, and 65% goes to the record companies. Most websites are speculating artists get 10-20% of that 65%. Doesn't look like we can expect prices to come down as more companies (like Napster, Dell), get into the business.

http://www.theregister.com/content/6/33850.html

frazzledspice · #2 11-09-2003, 12:02 PM

At $.99 a song, you'd be talking about roughly $11.88 for a customized burned CD with 12 tracks. You wouldn't get packaging, photos, lyrics, etc.

If you shop sales at Best Buy or Wal-Mart, you can get most CD's for $11.88 (and even less at CD Warehouse or Half.com.) I don't think that the market would support a charge of more than $.99 per song.

But if Apple isn't making money, it will stop providing the service. The RIAA needs companies that are able to make a profit providing the service at a cost the market will support (which I don't think could be more than $.99 a song.)

The only solution is for the RIAA to take less, and, at some point, it will realize that.

ms_n · #3 11-09-2003, 12:21 PM

Apple is my hero.

nc10 · #4 11-09-2003, 01:20 PM

Quote:

frazzledspice said

If you shop sales at Best Buy or Wal-Mart, you can get most CD's for $11.88 (and even less at CD Warehouse or Half.com.) ....

But if Apple isn't making money, it will stop providing the service. The RIAA needs companies that are able to make a profit providing the service at a cost the market will support (which I don't think could be more than $.99 a song.)

The only solution is for the RIAA to take less, and, at some point, it will realize that.

I hope thats true, but I'm not sure..... Walmart and Best Buy haven't been made money for years as they sold cd's for 11.88 (or 9.99, like you see a lot of lately). Note that that many record companies did drop wholesale and retail prices recently in a reaction to dropping sales. I'll bet the RIAA/record companies will need the same negative feed back (poor sales through online vendors) to drop online prices. If the economy continues to recover, and the law suits limit online file sharing, I'd be surprised if they dropped prices.

**Joubert**[$] · #5 11-09-2003, 04:40 PM

My understanding is that iTunes' main focus is to promote the use of portable MP3 players. Their iPod is one of the leading products. Remember also that with the Windows launch this month that tens of millions of Windows users who would never go to apple.com are now registered there.

Even if it were a loss leader (and I believe it will make some profit), the investment keeps Apple on the cutting edge and relevant.

Good move. And a better desktop audio player than RealPlayer, MusicMatch or anything Microsoft ever created.

nc10 · #6 11-09-2003, 07:27 PM

Quote:

Joubert said

My understanding is that iTunes' main focus is to promote the use of portable MP3 players......

I agree, the publicity must be worth something. But that wasn't my understanding until I read the article. I don't think many people realized that, even the analysts.

Quote:

Joubert said

Even if it were a loss leader (and I believe it will make some profit), the investment keeps Apple on the cutting edge and relevant.

Good move. And a better desktop audio player than RealPlayer, MusicMatch or anything Microsoft ever created.

Good move for Apple (hopefully), not so good for anyone who doesn't want to commit to the iTunes player and compatible devices (from what I can tell).

I haven't tried buying a tune from itunes yet. I did download the software and look around. Even looked for a few tunes that my daughter wanted (Creed, Evanescence, and Linkin Park), with no luck, so she's not impressed. From reading in between the lines, and a few articles, I get the impression that I won't be to transfer these songs to my mp3/wma player (an old Nomad II), or play the tunes with windows media player, sonique, winamp, or anyother media player I might prefer. The iTunes help does say you can create mp3's, so maybe I can do that.... I looked through a few epinions, but didn't really see any info that seemed to address compatibility with mp3 players or software media players.

(Anyone know the answer?, I guess I need to go buy something.)

I'm hope some other option that offers a more widely compatible format is successful, but, as Jobs pointed out in the article, most of the other vendors don't have something like iPOD sales to contribute. Dell will be an interesting competitor, they've got competively priced players (though not as "slick", & I've not read much about performance yet), a music service, and apparantly a knack for finding/negotiating better terms than anyone else.