November 07, 2003

One More Piece of Evidence Against the RIAA

iTunes doesn't make Apple any money

Summary: Apple's not making money off of iTunes Music Store. Why? The RIAA is taking most of the 99 cents.

Think about this: 99 cents for a track, and you can't make money off of it because the RIAA charges a good portion of that.

Now, think about this: why would Apple go into a deal so that they could not make money? Why would the RIAA, for that matter, go into this deal and make it so that no one except them could make money?

Apple first: Jobs says it's a loss leader, and that he's taking the route to sell more iPods. Eh -- OK, but it's a little iffy. I suspect that Jobs is more concentrating on getting the first-mover position on this, and as such is doing it without any profit 'cause it'll help sell their equipment.

Now the RIAA: they don't want this to work, and are doing so only so that a) they can legally cover their buts for some reason, or b) they can make some money quick and then cut. You don't kill your cash cow if you plan on having the milk later, so it's likely the RIAA don't believe that Apple can make money doing this. But I also might suspect that they're in a stronger legal position if they have a legal service that is out there, doing what the illegal services are doing.

Should be an interesting run around the block for both of them.

Posted by Ted Stevko at November 7, 2003 09:51 PM | TrackBack