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Network Connection

By Dr. Philip Baczewski, Associate Director of Academic Computing

Online Music Revisited*

It's been almost a year since Apple launched its iTunes Music Store which offers the download of songs for $.99 each. In the intervening time, Apple has sold millions of music tracks and has brought Windows users into the fold by releasing a Windows version of iTunes. One would think that this development is a harbinger of things to come in the music world, and we have seen competition spring up in the reanimated Napster service (with CD burning "Toast" software company Roxio playing Dr. Frankenstein) and Musicmatch. Add to that intimations by Microsoft that they'll jump into the online music business and an Apple OEM deal with HP to produce HP branded iPods and you'd think it's a brave new musical world.

When you assume ...

One might think that, but if one did, one would be wrong. Rather than spawning competition and driving music prices down, recent indications are that the opposite trend is in force. An article posted on the British online Journal, "The Register," indicated that the music industry is pushing for higher prices for downloaded music tracks. The article posits that the major record labels would like to see $1.25 to $2.99 per song as the download price. The Register's article might be colored by the fact that they refer to the record industry as "pigopolists" but the general trend is born out by at least one other source as well. The "Arizona Republic's" AZCentral Website hosts an article apparently originally run in the "Wall Street Journal" which corroborates the $1.25 to $2.99 desired price point and also shows that in some cases, it is cheaper to buy and album on the physical CD than it is to download it from the online services.

Too much money?

You'd think that Apple was making too much money on all those downloads, but you'd be wrong. Turning to "The Register" again, we see a November article which quotes Steve Jobs as stating that most of that money goes to the music companies. So, why is Apple in the music business? Well, to sell iPods, of course. Apple, after all is a hardware company and all that fancy software just goes to push those high-priced (but admittedly high quality) Apple products out the door. An article posted in October on CNet's news site confirms that Apple is not trying to make money on the music store but using it to sell iPods.

Now, before I start to get hate mail from the cult of Apple, let me be clear in the fact that I am not criticizing Apple (the cult of Apple does not allow criticism of any sort). I like Apple products and use them on a daily basis. But what appeared a year ago as a nice compromise to the download-free-but-get -sued-by-the-RIAA predicament turns out to be a situation heavily weighted in favor of those RIAA music companies.

The iTunes music store provides a list of the top ten song downloads and the top ten album downloads of the day. It would be interesting if some day the top ten were all from independent musicians who produced their own work without being shackled via contract to a major record label. This would put Apple in the position of taking over a role traditionally filled by those record labels, that is, the promotion and distribution of the music. For example [blatant plug], former ACS staffer Eriq Neale's CD "Sacrificing Toasters to Alien Poets" is available on iTunes. I don't see anywhere on Apple's Website how this is accomplished if you are an independent musician, but Eriq apparently figured it out. Having vicariously lived through and made a small contribution to the production of that album, I'd like nothing more than to see it be number one on Apple's download list, but I don't see that scenario as likely.

Apple needs the RIAA more than they need Apple. As long as the RIAA can sue people and keep a stranglehold on the distribution of the most popular music, Apple's online service is just extra cash in their pocket. Apple needs that engine of popular music to keep chugging so that they can attract people to the idea of an iPod. If all Apple offered on the iTunes Music Store was independent music you'd never heard of, it would be a lot less likely that you would rationalize the expense of that iPod (even though you can load tracks "ripped" from your legally purchased CDs into your iPod, the iTMS makes things much more convenient).

Business as usual

So, it seems like it's music business as usual. The revolution has yet to begin. If, however, enough already popular groups or artists realize that they might not need their record label for promoting and distributing their music, the whole music world could be turned upside down. Getting free of record contracts is not always easy, however, as is evidenced by the struggle between Warner Brothers and "The Artist Formerly [still?] known as Prince." But if Eric Clapton, Britney Spears, Barry Manilow, Patti Smith, and Yo-Yo Ma all decided to release their next albums exclusively via the iTunes music store, you'd have some mad record companies and I can imagine them pulling out of their deal with Apple. But that's all speculation right now. Until that day, our Britney dollars will just have to continue to line some record company executive's pockets.


An Historical Snapshot

For a look at previous Network Connection articles on these topics see below.

2000

2001

2002

2003