The following table illustrates the plight of the record companies since the inception of the iPod and iTunes in 2001.
The $.99 of a song are typically distributed as follows*:
Artist Royalty $0.10
Mechanicals To Songwr. $.045
Mechanicals To Publisher$.045
1. Buyer shifts to Apple iTunes deprived the labels of any distribution income online.
2. The majors had completely owned the distribution of their products in the physical world, but the loss of distribution revenue online was, at 33 cents to the dollar, catastrophic.
3. As consumers began buying songs rather than albums, the negative repercussions of this loss of income reverberated, and were compounded, in the physical realm.
4. Finally, the data shows that the 50/50 label-artists split advocated by many as fair never materialized in the new digital marketplace after 2003. Apple, as well as the labels, maintained the status quo.
*Kusek, D., “The Future of Music”, Online Course, berklemusic.com. To the best of my knowledge, Kusek’s data is unchallenged and goes back, at least, to 2006.
By Peter Alhadeff