Record Industry Surrenders to iTunes

Apparently iTunes and the iPod hold a major stake in the future of music. In just a few years, the iTunes Music Store has become the most powerful and popular music retailer in the world. How powerful? Apple has enough clout to tell the greedy big four music companies (Universal, Warner, SonyBMG and EMI) how much they should charge for music.

Apple has been battling with music companies for months now. The music industry as a whole wants to raise prices on iTunes. They feel $0.99 per song is too low. Some music companies were even thinking about no longer supplying music to iTunes in protest.

But according to an article on CNET, the record companies make more money by selling songs on iTunes, than from CD sales.

Here’s a breakdown of the cost of an average CD:

$0.17 Musicians’ unions
$0.80 Packaging/manufacturing
$0.82 Publishing royalties
$0.80 Retail profit
$0.90 Distribution
$1.60 Artists’ royalties
$1.70 Label profit
$2.40 Marketing/promotion
$2.91 Label overhead
$3.89 Retail overhead

When the record companies sell a song via iTunes, several fees are no longer necessary including: distribution, retail overhead and packaging/manufacturing.

So why are the record companies trying to RAISE prices on iTunes? Greedy bastards!