From: "Glenn Meadows" 

Their analysis is somewhat flawed.

I don't believe that Apple has ANY different payment level between major
and indies. It's the same, $.70/per song if sold on a track basis, and
$7.00 per full album purchase, no matter how many tracks (if over 10).  The
sales rule is the full sale price can be no more than $.99 per track times
the number of tracks, with a max of $9.99 per album.  Recently there have
been some rumblings about "super front line" pricing (higher for
major acts), plus there are always the "Budget" and "Back
Catalog" price levels, that are less for the full purchase, but still
99cents per track.

There is a new initiative to get people to "fill out their album
purchases", with a new "CMA" program (Complete My album). 
In this new program, purchasers who have selectively purchased a track or
more of an album, will be given full purchase price credit for the tracks
they've already purchased toward the purchase of the balance of the tracks
on that album.

That of course is going to bring a MAJOR nightmare to the content owner
(us) in royalties calculations.

For example, say both you and I have purchased 3 tracks from a 10 track
album, each purchasing 3 DIFFERENT tracks.  When those sales were reported,
we got a LINE item for that track that was sold, showing the total number
of times that track was sold, at 99 cents.  Simple, clean. In this NEW
model, there are effectively 7 additional tracks sold, but NOT at either
the normal album rate, or the track rate.  They can't report it as a
discounted sale of the album, without providing specific detail on WHICH
additional tracks were sold, because we have to account to the artists and
song writers at the SONG level of the sale.

We foresee an accounting nightmare looming in trying to accurately detail
which tracks at which prices were sold, unless they're going to list each
track multiple times at varying prices, which in turn makes accounting at
our end still a pain, where we have to list the same song multiple times
with the rate for each sale point.

This has just gone into effect, so we won't see the first sales/royalty
statements for the next 60 days.  Statements arrive at the end of the month
after the close of a month.  For May sales, we get payment/reports at end
of June.

One other side point on the prior comment.  V2, our Rock label is
distributed by Warner Brothers. They also handle all the Digital
distribution EXCEPT Apple.  Consistently, the iTunes sales are 95% of the
total digital sales for that label in the DRM world from the sales reports
we see. eMusic also has the V2 catalog, and they are 30% of what the Apple
revenues are.

--

Glenn M.
"Rich Gauszka"  wrote in
message news:4645dc2b$1{at}w3.nls.net...
> Apple has stated that the iTunes store operates around break-even but some
> analysts have questioned that
>
> http://www.appleinsider.com/articles/07/04/23/itunes_store_a_greater_cash_cro
p_than_apple_implies.html
>
> iTunes Store a greater cash crop than Apple implies?
>
> "For each $0.99 song, we estimate that Apple pays $0.70 to major labels,
> which own over 85 percent of the market, and $0.60 to $0.65 to independent
> labels, which drives an average price per song of approximately $0.69," he
> explained. On top of that, of course, are Apple's network fees,
> transaction fees, and general administrative expenses associated with
> operating the iTunes Store.
>
> Hargreaves calculated the network fees at $0.05 per song, which includes
> the delivery fee, and the hardware and software to facilitate delivery.
> "Operating expenses are likely less than $0.05 per song, based on the
> relatively small number of employees we believe work on iTunes," he wrote.
>
> Then, of course, there's the transaction fee -- or royalty paid to credit
> card companies each time a sale is processed -- which Hargreaves argues is
> "the primary reason iTunes profitability has not been higher
> historically." However, he notes hat Apple has recently adopted a number
> of measures to limit those fees, such as managing a weekly sweep of its
> credit card transactions, broadly distributing gift cards, and by
> encouraging larger transactions through services such as "Allowance."
>
> Therefore, the analyst believes the iPod maker is now forfeiting only
> around $0.10 per song per song to credit card firms, compared to as much
> as $0.25 per song when iTunes first launched. "Going forward, we expect
> Apple to continue improving its payment schemes to cut down on transaction
> fees and improve the profitability of iTunes," he added.
>
> Based on those cost estimates per song, Hargreaves arrived at the 10
> percent margin estimate. Applying that estimate to the $1.2 billion in
> revenue that iTunes is expected to generation in fiscal 2007, he believes
> the service will generate $0.09 to $0.14 in earnings-per-share for Apple.
>
> "Glenn Meadows"  wrote in message
> news:4645d59b$1{at}w3.nls.net...
>> Part of what that label exec is comparing, is not
"Apples" to "Oranges".
>>
>> The micro payments form Real are for RENTAL/SUBSCRIPTION downloads, NOT
>> sales.  We see the exact same, but in USD's.
>>
>> What the REAL situation is, is that virtually ALL of the other services
>> sell NOTHING!!!!!!! They're wastes of time and resources, as they have NO
>> MARKET SHARE!!!
>>
>> There are 2 services that are #1 and #2.  Apple, and eMusic.  Between the
>> two of them they provide 92+% of all online revenues, period.
>>
>> The rental/subscription model may have a bunch of people, but as far as
>> ANYONE making revenue from it, it's ONLY the services that are making the
>> money.
>>
>> This is true for SONY, WEA, MCA, EMI.  They make virtually NOTHING from
>> all of the other services that handle their content.
>>
>> eMusic is a non-factor for the big four, since at this point, they only
>> have contracts with DRM based services.
>>
>> And as a proportion of all music shared (limewire, etc), the total sold
>> number of tracks is probably only 10% of what's going on.
>>
>> --
>>
>> Glenn M.
>> "Rich Gauszka"  wrote
in message
>> news:46447de4{at}w3.nls.net...
>>>
>>> http://www.macworld.co.uk/news/index.cfm?RSS&newsID=17997
>>>
>>> Apple's iTunes service dominates online music retail, the latest figures
>>> from aggregator Digital Music Group (DMG) confirm.
>>>
>>> The figures emerge as UK labels have begun articulating their compaints
>>> at the level of payment they receive from online music services other
>>> than iTunes.
>>>
>>> Speaking on condition of anonymity, one independent label owner praised
>>> iTunes because the service hands over the most of the 79-pence per track
>>> sale price directly to the label - but is furious at the kind of revenue
>>> he's generating through other online services.
>>>
>>> The label head's comments don't consider the slice of income that's
>>> handed across to music publishers, but he's pretty clear that iTunes
>>> offers his acts the better deal.
>>>
>>> "For everything sold on iTunes, we get the majority of
the 70-79p per
>>> unit sale price," he said, then added: "But for
everything sold on the
>>> Ruckus Network we receive the princely sum of œ0.005 per unit. That's
>>> half a pence. My distributor then takes their 25 per cent off of that,
>>> leaving myself and the artists to dish up the remaining fractions of a
>>> penny between us."
>>>
>>> It's not much better through Real Networks, he informed - for sales
>>> through that service, his label receives a penny per track, he claimed.
>>> The thousand tracks sold so far have accrued œ10 to the label (to share
>>> with the artists) rather than, "the œ790 or so we'd have
got for the
>>> same amount of sales through iTunes."
>>>
>>> iTunes also drives business at international distributor of
>>> independently-owned music and video catalogues, DMG.
>>>
>>>
>>
>>
>
>

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