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Wednesday, October 01, 2008
APPLE... WORST COMPANY IN THE WORLD!!! 

I'll steal a page from Keith Olberman as I link to this CNN article on Apple's threat to shut down its iTunes movie store over a dispute over artist royalty rates.

From the piece by Devin Leonard:

The Copyright Royalty Board in Washington, D.C. is expected to rule Thursday on a request by the National Music Publishers' Association to increase royalty rates paid to its members on songs purchased from online music stores like iTunes. The publishers association wants rates raised from 9 cents to 15 cents a track - a 66% hike.

Apple (AAPL, Fortune 500) declined to discuss the board's pending decision or its previous threat to shut down iTunes. But it adamantly opposes the publishers' request. In a statement submitted to the board last year, iTunes vice president Eddy Cue said Apple might close its download store rather than raise its 99 cents a song price or absorb the higher royalty costs.

"If the [iTunes music store] was forced to absorb any increase in the ... royalty rate, the result would be to significantly increase the likelihood of the store operating at a financial loss - which is no alternative at all," Cue wrote. "Apple has repeatedly made it clear that it is in this business to make money, and most likely would not continue to operate [the iTunes music store] if it were no longer possible to do so profitably."


This is a joke. Apple's bluff is a preposterous piece of brinksmanship that seeks to short circuit an attempt to boost digital royalties for artists while not acknowledging the massive hardware profits the company reaps from iPod sales. Go after the record companies (or match Amazon's .89 cent downloads and add the .06 to that) but don't draw a line on the sand right at the spot where artists might see more money.


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# posted by Scott Macaulay @ 10/01/2008 11:26:00 PM
Comments (15)

 
They didn't say: "The artist should not get more money" with this, but that the more money should not come from the Guys who sell the stuff, but from them who manage the money they get for a lot of money...

George
# posted by Blogger George P.Schnyder @ 10/02/2008 2:21 AM  

 
Who should be making money selling songs? The artist? Yes, of course. Apple, who sells the songs, has created the technology, software, and infrastructure to make the transactions happen? I would think so. The record companies, who at this point do nothing for the artist, who only want to play middleman when there is an ever increasing lack of need for them?

The labels should be taking the hit. Not the artist and not Apple.
# posted by Anonymous Blad_Rnr @ 10/02/2008 10:13 AM  

 
The threat was to shut the iTunes Music Store and some how you made the leap that this was because they didn't want to pay for movies? Clearly you are looking for page hits and have chosen today to leave your logic and intelligence at home to play with your dog.
# posted by Anonymous Anonymous @ 10/02/2008 10:24 AM  

 
I think also as a consumer, I don't want to pay these artists anymore. I won't steal music, but I just won't buy music either.

Secondly barriers to entry in the music market is non existent as long as you have non DRM files.

What the artists want and what is not being said is for the artists to both increase their royalty rates but also Apple's iTunes store and expertise in selling more music for them. Apple should do whatever it thinks is in its best interest, not the artists or the music companies.
# posted by Anonymous Mohan @ 10/02/2008 10:59 AM  

 
The original quote from Eddie Cue was from over a year ago. This is how Fear, Uncertainty, Doubt is spread. Someone grabs the fact that the group are meeting today to decide rates and then drags out a year OLD quote and presents it as news. Dreadful, dreadful, dreadful reporting.
# posted by Anonymous rattyuk @ 10/02/2008 11:12 AM  

 
It really boggle the mind,
what Apple is doing is to make music downloads cheaper for the consumers, and for this thankless task they got hammered.
# posted by Blogger PK @ 10/02/2008 11:56 AM  

 
See my next post. On second read and given the timeline of Eddie Cue's remarks, I'll admit that the Fortune story could be vastly overblown. To the Anonymous poster, however, I never said that this applied to filmmakers. I am assuming, however, that issues of how royalty is calculated for music in the digital space are of interest to filmmakers as well.
# posted by Blogger Scott Macaulay @ 10/02/2008 12:10 PM  

 
My issue was the focus on artist royalty rates. Cheaper for consumers is a good thing. Properly remunerative for artists is also a good thing. I oppose drawing the line in the sand over the specific issue of artist royalties, which is only one part of the pricing structure.
# posted by Blogger Scott Macaulay @ 10/02/2008 12:20 PM  

 
Knowing the quote you reported as "news" was over a year old; knowing that the quote was not made in the context of the MNPA; and admitting that the Fortune story was probably overblown; wouldn't it be prudent to retitle this blog "SCOTT MACAULAY... WORST BLOGGER IN THE WORLD"?
# posted by Anonymous Anonymous @ 10/02/2008 1:34 PM  

 
Hey Anonymous, actually, I didn't report this as news. Fortune/CNN did, and I linked to their article which was widely circulating around the web. Read the original post more carefully. My statement was that Apple was engaging in a "preposterous piece of brinksmanship" by threatening to shut down the store, especially given the profits that are produced by the sale of hardware designed to work with the store. This opinion applies whether the original statement was issued a year ago or yesterday.
# posted by Blogger Scott Macaulay @ 10/02/2008 2:37 PM  

 
Scott,

You did report Apple as "WORST COMPANY IN THE WORLD" only this morning based upon news that you now admit to be a year old. You made the headline - you are responsible for it. Blaming Fortune/CNN is pretty lame. Blaming Eddie Cue for insisting that a business unit he was in charge of that is part of a public company must operate profitably is just as lame. Because if YOU would read the article and quotes carefully - that is exactly what he did say. You and you alone are in charge of your blatantly inaccurate headline. You and you alone can and should have the decency to correct it.
# posted by Anonymous Anonymous @ 10/02/2008 3:45 PM  

 
Hey Anonymous,

This thread is getting pretty silly.

To spell it out for you... there is a top-rated show that's on MSNBC every night called "Countdown." The host, Keith Olbermann, has a daily feature called "Worst Person in the World." In it he satirically dubs one person in the news for this honor based on something boneheaded they did that day. A wide variety of people are bestowed this appellation. Both John McCain and Barack Obama have been nominated for it. In my original post I even referenced Keith Olbermann, which was my nod to the reader that I was appropriating his terminology and that my tongue was partially in cheek.

I'm sorry that this bit of business flew right by you, but, trust me, this is not an obscure reference.

As for your issues with my reporting, I hope you are posting comments on the hundreds of other business and technology websites that have reported this, including Fortune/CNN. Of course, a public company has to operate profitably. The question is who to blame for price increases. I recommend this article from the Guardian entitled "Don't fall for iTunes bluster." (http://www.guardian.co.uk/technology/blog/2008/oct/02/digitalmusic.apple) Here's its ending:

"Cut back to the basics: out of the 99 cents charged for an iTunes download in America, songwriters currently get 9 cents, Apple takes 29 cents and the record labels take another 61 cents.

Look at those numbers. Why does anyone think the artists are getting the best part of this deal?"

For the record, I am writing this on a Mac, we design our magazine on Macs, and we have an article in the current issue that deals quite a bit with Final Cut Pro. I obviously don't believe Apple's the worst company in the world. But I do believe our readers are savvy enough to recognize humorous hyperbole and pop-cultural references when they read them.
# posted by Blogger Scott Macaulay @ 10/02/2008 4:05 PM  

 
I came to your website to read and understand why someone would use a headline such as this. Read the story and now wonder: How could a writer use such a headline indicating that we should throw the baby (Apple) out with the bath water. You should be ashamed of yourself for using such an alarmist, narrow-minded headline. Quite pitiful.
# posted by Anonymous Anonymous @ 10/02/2008 4:58 PM  

 
Don't know if you are the same Anonymous as the above person, but I think I explained the headline pretty well in the response above. (Ironically, "throwing the baby out with the bathwater" is what Apple threatened to do with regards to this issue.)

Anyway, this thread has run its course. Further comments about Apple's iTunes strategy can be posted in the blog post above.
# posted by Blogger Scott Macaulay @ 10/02/2008 5:02 PM  

 
Scott, the artist are getting the deal that they signed up for. If they don't like it they should not sign their rights over to the music companies. They do that voluntarily for two reasons, a) they don't want to do the work of marketing their music and b) they pass on the risk of selling the music to others.

They get an advance or whatever they agreed to with the music companies. They don't deserve our sympathy or our money. They can go hungry or quit, I don't really care, there will be other artists. Its not a problem.
# posted by Anonymous Mohan @ 10/02/2008 9:55 PM  


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