Napster Business Model Not Generating Revenue 330
An anonymous reader writes "We all know that Apple generates revenue from iTMS via hardware sales. How the hell can pureplay music stores like Napster generate revenue enough to even stay alive? They don't. Is this the first indication of the bubble bursting? Is it time to figure out what to do when your Napster WMA files go unsupported after Napster 2 dies?"
unsupported? (Score:4, Interesting)
Re:unsupported? (Score:4, Informative)
Re:unsupported? (Score:4, Insightful)
Re:unsupported? (Score:4, Insightful)
Re:unsupported? (Score:5, Informative)
If that happens then your screwed anyway, even if Napster are still around and turning a healthy profit, something I'd personally like to see. Read the licence agreement [napster.com].
I quote: "If you have Purchased Tracks, it is your responsibility not to lose, destroy or damage them. Napster shall have no liability to you in the event of any such loss, destruction, or damage."
But since CD burners are mainstream now, and your allowed to burn each track to a CD up to five times, it's not too much to ask someone to take responsibility for looking after what they buy.
Re:unsupported? (Score:4, Informative)
Play the bass drums for DRM! (Score:5, Insightful)
Re:unsupported? (Score:4, Interesting)
So unless wma files need the occasional checkin to stay alive (like old divx discs used to do), then it's not really any different.
Re:unsupported? (Score:3, Interesting)
Re:unsupported? (Score:5, Informative)
Windows Media licenses can be permanent, time limited or limited by number of plays. From the files I've seen Napster licenses are permanent. So if Napster dies, your licenses still work.
But hey, lets not let facts enter into this <g>
Re:unsupported? (Score:5, Insightful)
Re:unsupported? (Score:5, Informative)
Re:Transferring DRM files (Score:4, Insightful)
Re:unsupported? (Score:5, Insightful)
Oh come on, haven't you learned how the system works yet? People who had albums had to rebuy them as cassettes to be legitimate. People who had cassettes had to rebuy the songs as CDs. People who have them as CDs have to rebuy them in lossy compressed DRM protected formats. When the next thing comes along, the RIAA will expect you to repurchase your entire collection in whatever format that will be.
Maybe they don't, but that's the problem with DRM (Score:5, Insightful)
Re:Maybe they don't, but that's the problem with D (Score:2)
Let's see
For instance take away Britneys/JLos/Justins looks and you ain't left with a whole lot else.
Archaeology (Score:4, Insightful)
He's not talking about some kid 3 or 4 generations down the line blasting Led Zeppelin in his bedroom. He's talking about scientists who may try to understand the long-since-fallen nation of the USA.
The vast majority of information regarding any time period tends to be tainted by the powers-that-be at the time (revisionist history) or lost due to sparsity. Should all of present day media be shackled with such short-lived technologies, then there would be nothing for those scientists to uncover that might paint a clearer picture of this era.
The problem with most of the perspectives of the "producers" and the politicians they manipulate is they assume the world of today will continue with only slight changes over time. History shows a much different perspective - ALL societies that have ever been before have fallen. Some spanned decades, some (as our present) evolved over centuries, some (Ancient Egypt comes to mind) endured for many thousands of years. All of them eventually fell (via war or other catastrophe) and after a period of disorder, or outright chaos, another social order built up in their place (with most of what was gone forever).
Considering the growing disparity between the wealthy and those in poverty today - and the increasing attempts to cement control by the former combined with the rapidly growing numbers in the latter, shows just how volatile our society is. How much longer until those once called Citizens, now called Consumers, are finally labeled with the inevitable Peasant. How long after that before the peasants revolt and destroy all that's been hoarded by the wealthy. There is absolutely no guarantee that the USA will maintain it's own social order, let alone the current "New World Order" as described by the first President Bush.
I don't wish to spark a left vs. right debate on today's social state. Despite what both conservatives and liberals claim are the causes and solutions to such ills, they do presently exist. The longer they persist, the longer the risk. I do not advocate any such uprising, I do not predict any such revolt, I simple mention that historically speaking - the risk exists. Should our present society fall into chaos, and most of what we've accomplished reduced to ashes and dust, only fragments of what once was will remain. If these fragments are useless due to DRM, there will be nothing truly left. That is what the original poster was asking - Why aren't archaeologists (and other scientists) speaking up about this risk?
Re:Maybe they don't, but that's the problem with D (Score:4, Insightful)
I listen to plenty of records that were recorded 20 years ago, even 50, and one or two that are pushing 100 (well, 80 - mostly early jazz). Much of the early jazz are transfers from the commerically produced end product. That's the point.
Re:Maybe they don't, but that's the problem with D (Score:5, Insightful)
(1) The medium is often all that's left, such as in the case of much of my early jazz. Back in the days when copyright was time-limited, often the masters would be lost. And with "ephemera", or material that just wasn't consistently popular, there isn't a financial incentive to ensure that this doesn't happen. That's why the like of the Prelinger archives [archive.org] are so important.
(2) I would like to buy my media once, and then use it forever (well, until my death). I have a large collection of LPs that I never listen to any more, and have re-bought many on CD. I don't want to repeat that. Avoiding it is possible now, particularly with digital media. The oldest files on my current laptop date from the mid-eighties - they started out on 5.25", moved to 3.5", a double-height 10mb Winchester, over many null modem cables, later CDRs, ethernet and WiFi, but they are still the same files! My music can now do the same - it's currently residing on a 670gb Shuttle box in my living room, but I'm sure that will not be it's final resting place.
DRM prevents all of this.
Why DRM is unacceptable (Score:2)
Most of them.
Re:Maybe they don't, but that's the problem with D (Score:3, Insightful)
-
Re:unsupported? (Score:5, Interesting)
Re:unsupported? (Score:2)
Now, they were involved in distributing music for free (let's not mince words, they did aid unlicensed distribution for whatever good or bad that was) and they managed to make money there. How? They sold napster branded products and used advertisements on their site. After all I think the RIAA makes music not just on the music they sell BUT ON THE BRANDED PRODUCTS that go with those artists!. What if napster sold Britney shor
Re:unsupported? (Score:2)
Tulip, the company who own the commodore name now have released a few small components for PCs, (one being a USB memory stick, nothing amazing) and I don't know a person who's seen mine who hasn't commented "it's commodore!". I actually bought mine because of the commodore logo and name, when all else was the same as any others.
And that's a name/logo that's been 'dead' fo
Just to kill... (Score:5, Funny)
Just to kill two birds with one stone, I'll probably load them on Zip Disks. That'll consolidate all my unused, overpriced media into one small place.
Re:Just to kill... (Score:2, Funny)
Figure this out (Score:5, Funny)
Yes, it is. Here's what you do: buy an iPod, use iTunes, and try to keep remembering that you should have just done that in the first place.
Re:Figure this out (Score:3, Funny)
Re:Figure this out (Score:5, Informative)
Worst case is you burn your stuff to disk and re-rip to mp3 or whatever the current DRM-free format is at the time (or use one of the shareware utilities that does the equivalent without the need for an actual disk), at the price of a small loss in quality.
Re:Figure this out (Score:3, Insightful)
Re:Figure this out (Score:4, Interesting)
Re:Figure this out (Score:2)
Like their MSN ISP service which was supposed to kill off AOL, or their gaming console business which was supposed to kill off Sony? Being in second place -- a distant second place -- is hardly dominating! :)
What has Microsoft dominated besides desktop OS and Office suites? Granted, they are two big markets, but Microsoft just can't decide to get into a market and be assured the market will roll over and le
Re:Figure this out (Score:5, Informative)
Re:Only dominates where it has a monopoly. (Score:2)
Re: Figure this out (Score:5, Informative)
Sure, hate iPods if you want, that's your prerogative. But don't hate 'em thinking they only play DRM-ed files, because that's simply not true. They're a good deal more open than most others, in fact -- AAC is an open standard (it's the audio layer of MPEG-4, just as MP3 is of MPEG-1; it's even from the same people), unlike WMA...
Re: Figure this out (Score:3, Interesting)
Re:Figure this out (Score:5, Interesting)
The problem with this statement is that it ignores the fact that Apple has a sustainable hardware business, and will continue to support (or be compelled to support) your AAC files for as long as they remain in business.
Napster, as an arm (wholly owned subsidiary?) of Roxio does not have such a clearly sustainable business. If it's a subsidiary of Roxio, can't Roxio just fold it up and walk away when the losses become unbearable? Even if Roxio were compelled to support Napster's WMA files (legally or otherwise) is Roxio itself really the most stable corporate parent?
For instance, Apple has already subsumed much of Roxio's core functionality (disk burning, red book audio, etcetera) into MacOS X. How long before Microsoft does the same thing, leading to dwindling sales for Roxio as they desperately cling to their business model? What happens to support for Napster WMAs then?
To top it all off, if Microsoft really does become a player in the digital music distribution game, Bill will have added incentive to subsume Roxio's core functionality in a bid to drive them (and thus Napster) out of business.
Pfft... (Score:5, Funny)
Re:Pfft... (Score:2)
Oh and patents [amazon.com] too.. don't forget those..
Re:Pfft... (Score:2, Funny)
Our mothers seconded the coolness vote, so there you go.
Re:Pfft... (Score:5, Insightful)
If you want to know why people feel so much anger over DRM, this pretty much says it all.
What justification is there for not disclosing the terms of sale until you've already sold?
D
Duh... (Score:5, Interesting)
Apple don't mind because they drive hardware sales with it, and the lossy business model will drive off competitors.
The questions for me are: how long can the music industry survive when it can't even make the Internet a cost-effective channel for distribution? And what will happen than?
Re:Duh... (Score:3, Informative)
No, it's not perfect, but it's what we've got.
Re:Duh... (Score:2, Interesting)
Re:Duh... (Score:3, Interesting)
without record labels or the RIAA, there would still be artists.
Without songwriters, there would not be artists. Without major publishers, there would not be songwriters because songwriters have no way of checking on their own whether their compositions violate copyright, as subconscious copying is actionable infringement. Bright Tunes Music v. Harrisongs Music, 420 F. Supp. 177 (SDNY 1976) [columbia.edu].
Re:Duh... (Score:3, Informative)
He would be unknown if not for his patrons, [madaboutbeethoven.com] who would be considered the closest equivalent to the record labels for his time.
FWIW, BMI and ASCAP are not publishers. They merely collect the funds owed to the songwriters by those who use and sell the music. [musicbootcamp.com]
Re:Duh... (Score:4, Interesting)
Re:For a While (Score:5, Insightful)
For an idea of how this will work, consider his contract with Disney over Pixar. Disney got 50% of revenues, got sequel rights, got merchandising rights and all sorts of other stuff.
When he signs a new distribition contract, odds are that the new distributor will get 10% of revenues, no sequel rights and merchandising rights split.
That's the difference between a venture capital investment that's basically a gamble on everyone's part, and the closest thing to a sure thing.
I'm sure his negotiations to renew iTunes Music Store contracts will be very similar, and he will get similar results: A bigger share of the pie in return for a proven success.
I don't think anyone has ever accused Steve Jobs of being a dummy.
Or a poor negotiator.
D
Re:For a While (Score:3, Interesting)
Re:For a While (Score:3, Insightful)
A better comparison might be between book publishers and Borders or Barnes & Noble. Getting a book prominently shown on those shelves can mean success; having it absent can mean failure. So of course those chains get the best terms.
Same with iTunes. If it becomes a distribution choke point for music, Jobs will do just fine when he renegotiates the contract.
D
Hold on... (Score:5, Interesting)
Re:Hold on... (Score:2, Insightful)
Re:Hold on... (Score:4, Insightful)
I don't think Wall Street will be nearly as patient with Napster as they have been with Amazon. Amazon is a huge business with huge revenues (not profits, not until recently) and a business model that requires huge infrastructure in order to support, not to mention buying, storing, moving, and shipping physical tangible goods.
Napster has none of these hurdles to surpass (and, in my estimation, none of the potential upside that Amazon has) and so it is unlikely that Wall Street will overlook more than a few more quarters of losses before they start pressuring Roxio to cut their losses.
That's my story, and I'm sticking to it.
Re:Hold on... (Score:4, Informative)
Building brand awareness, but that's not enough (Score:5, Interesting)
A feeling of deja-vue? (Score:2)
Now why do I have this feeling of deja vue?
Surprised? (Score:5, Interesting)
Besides look at Apple... They're Itunes service has caught on with the Non-Computer-Nerd as well because Apple has been able to market it as the Cool / Easy to use music service.
Hell even my mom could use I-tunes.
Just To Clarify... (Score:5, Insightful)
iTunes (small 'i', big 'T', no hyphen) is an application, one that runs on Windows and Mac OS X.
The iTunes Music Store (iTMS) is the web service. (Plenty of us use the former without the latter -- here in Europe, iTMS isn't even available...)
And, while I'm here, a related point that also causes confusion: the iTMS sells AAC files that have been wrapped in a FairPlay encryption wrapper. Plain AAC files are not encrypted or restricted in any way.
Right, now I've got that off my chest... Did anyone seriously think that people would be fooled by the Napster name? That they wouldn't realise it was a completely different service from a completely different company? I hate to rehash old jokes, but it does look rather like:
AAC is copyrighted and patented (Score:4, Informative)
the iTMS sells AAC files that have been wrapped in a FairPlay encryption wrapper. Plain AAC files are not encrypted or restricted in any way.
Plain AAC files have two copyrights and several patents on them. The two copyrights are the copyright in the musical work owned by a sheet music publisher and the copyright in the sound recording owned by a record label; they come into play whenever anybody redistributes a recording in AAC format phonorecords.
If you mean only technological restrictions, AAC has those as well. Without a decoder, you cannot play back AAC files, and it's a federal tort in the United States to distribute AAC encoders or decoders without paying the holders of patents that cover the methods that make up AAC.
Re: AAC is copyrighted and patented (Score:4, Informative)
The point is that so many people assume that all AAC files are as restricted as the FairPlay-wrapped ones from the iTMS, and I think it's important to know that's not the case. Yes, AAC is a patented format, but so is MP3. Yes, AAC needs a suitable decoder, but so does MP3. Both are the audio layers from MPEG specifications (MP3 from MPEG-1, AAC from MPEG-4), and both are from Dolby/Fraunhofer. Both are published international standards. You can create your own AAC files, and play them wherever there's an AAC decoder, just like MP3.
Re:correction and clarification (Score:3, Informative)
Nope; it's short for "MPEG Audio Layer 3", where the MPEG is the first version, later called MPEG-1. (References: mpeg.org [mpeg.org], Fraunhofer [fraunhofer.de].)
AAC was developed for MPEG-2, and improved for MPEG-4.
I'm a tad confused by this paragraph...
I was trying to put the restrictions on AAC into a context people would be familiar with. As you say, it's not treated exactly the same as MP3, but it's very close in most respects, as compared with WMA, FairPlay-pr
Re:Surprised? (Score:2)
Unprofitable for whom? (Score:5, Interesting)
Now, if the vendors can't break even, why doesn't a record company (or, say, the RIAA itself) buy an 'unprofitable' online vendor and continue merrily selling songs - sure, the service itself costs money to run, but 100% of the money goes to the label. Is doing this stuff so expensive that it actually costs them more than $1 to let you download a song?
I remember that Napster belonged to Bertelsmann/BMG before, but apparently not now. Hmm.
Re:Unprofitable for whom? (Score:3, Interesting)
In the end, they would much rather have somebody else take the loss. iTunes can survive, because Apple is using it to sell *more* iPods. The rest of the services don't have that indirect revenue coming in. And there i
A loss from what? (Score:5, Insightful)
Is it all the money they invested in creating the new software, paying up-front fees to labels, launch advertising, etc?
Its quite possible that they have only lost money due to once time investments, while they are making a profit on the actual selling of music. In which case, given a year they'll start turning a decent profit.
Why (Napster|iTunes|etc)? (Score:3, Insightful)
Go buy a used CD, tape off the radio, or take your $400 and see 40 local band shows instead. Free your mind.
Re:Why (Napster|iTunes|etc)? (Score:4, Interesting)
Re:Why (Napster|iTunes|etc)? (Score:2, Insightful)
Re:Why (Napster|iTunes|etc)? (Score:3, Funny)
I have a guitar and I know how to use it. Grab a conga and your friend who plays fiddle and meet me down at the park.
Everybody together now:
"Momma don't allow no guitar playin round here
Momma don't allow no guitar playin round here
Well I don't care what momma don't allow
Gonna play my guitar anyhow
Momma don't allow no guitar playin round here."
KFG
Oh nooo... (Score:3, Interesting)
When the large record producers no longer have a lock on distribution, when even independent artists
Because kids can't go into bars (Score:4, Insightful)
or take your $400 and see 40 local band shows instead
Many typical customers of iTunes Music Store or Roxio Napster would have to sit and wait for nine years in order to get tickets to a local band show. Twelve-year-old children control many of their parents' music purchase decisions, and venues friendly to local bands typically require all persons who enter the premises to be twenty-one years of age or older.
Nothing to buy there (Score:5, Insightful)
Aren't we being just a bit premature? (Score:5, Insightful)
And even if it does fail, that need not be indicative of the viability (or lack thereof) of the whole market. It might just be that they have a bad business model.
Apple's iTunes and iPod provide synergy with each other but iTunes limits itself to only those with iPods (or effectively does, since converting from AAC to MP3 to use with other players is a pain). Nice for them in the niche market, but a limiter in the absolute sense.
I think Napster2's problem, and what will limit iTunes even within the iPod market, is simply how much the stuff costs relative to physical media. I know that many people, myself included, aren't really willing to pay $10+ for only the bits when the (higher quality) physical media is similarly priced. That's just a bad deal, and that's why of the 700+ albums I have in MP3 format every single one of them came from a CD. If you want to give me less, you have to charge less; think $.50 a track, $5 an album. I'd do that.
I don't really think the WMA format is limiting them, seeing as the only player currently on the market that doesn't support that is the iPod (excepting, of course, the first generation MP3 players; they all did by the 2nd generation, quite a coup for Microsoft if you ask me). Though, honestly, I'd prefer not to use either AAC or WMA -- unless, again, they give me even more of a price break for providing the stuff in a locked format. At $.25 a track, $2.50 an album, I'd do that. At those prices I can afford to buy again to migrate.
But I don't see those prices coming down until the record industry screws up CD media to the point where most people won't buy it. Moreover, the record industry may kill their own online sales by offering CDs with both raw tracks and WMA encoded tracks, something they appear to be doing.
Niche market? (Score:3, Informative)
Seriously, I don't think the problem is the AAC, it's the DRM. And that is common between iTunes and the WMA stores.
Re:Aren't we being just a bit premature? (Score:4, Insightful)
It seems the norm here to assume what's true for me is true for everyone. On this point (value of bits vs value of full media) you are in the minority. For most people the mp3 (or aac) copy is just as good, particularly if the full media isn't around to compare to. The remaining issues are liner notes and instant gratification. The latter wins.
I'm also in the minority in that I'd rather pay (say) $14 for a CD (and rip it myself) than $10 for the compressed bits. It's my fear that the popularity of compressed formats may eventually make the uncompressed versions obsolete (from a market perspective) and unavailable.
But I do use iTunes. I use it to, for example, fill out "greatest hits" collections. If there are 3 tracks that should have made it to the greatest hits collection but didn't, and there's room, I'll burn a new disc with greatest hits plus three. In the value of media vs value of bits comparison here, it may be $3 vs $14-$42 (for 1-3 additional CDs).
Amy
Re:Aren't we being just a bit premature? (Score:3, Insightful)
You're forgetting the single largest segment of the music market -- those with no portable MP3 players at all. Some of the other services are certainly targeting that market. Apple's iTMS works perfectly fine for people who listen via iTu
It had to be said (Score:2, Interesting)
Offtopic? (Score:2)
Look at Microsoft (Score:5, Insightful)
Re:Look at Microsoft (Score:2)
iTMS (Score:5, Informative)
Re:iTMS (Score:5, Interesting)
We all remember this [time.com] article.
Re:iTMS (Score:2, Interesting)
Re:iTMS (Score:3, Interesting)
It takes labor to maintain the iTunes application program for Mac OS, the iTunes application program for Windows, the iTunes Music Store web application, and the parts of the iPod firmware that deal with compatibility with the iTunes Music Store.
What bubble? (Score:3, Insightful)
I'm sorry, but the way you
Anyways, getting back to the point. Not all business models are sustainable and are rarely thought out for the long term. Hence the
1. Stupid action
2. ???
3. Profit
jokes. So how about we idolize the players who are not in it to make the quick buck but to actually help progress society and technology?
Tom
How to make a fortune selling MP3s (Score:5, Interesting)
If i were the RIAA or one of its licensed resellers (e.g., Apple, Napster, Tower Records), i would provide people with their own personalized Internet radio station:
You launch the application, and they start streaming you some music. If you like it, you give it a thumbs-up. If you don't, you give it a thumbs-down (and probably skip to the next song). Pretty soon they've built up a profile for you and can search their database for other people with your tastes. You're discovering all sorts of new music that you never would have heard of.
But it's just a stream -- you can't save the songs and listen to them anytime you want. Unless you click "Buy this song", in which case the MP3 is saved to your hard drive. Perhaps you could even recommend songs to friends.
Maybe the radio station could be subscription-based, but i'd run it as a loss-leader.
There. That'll increase music sales tenfold. As a nice side-effect, little upstart bands could make it big (or simply make enough to support themselves) without having to get "discovered" by an "insider".
Re:How to make a fortune selling MP3s (Score:4, Informative)
Second, how will you ensure that this stream isn't diverted to somewhere else -- say, a hard drive? Once people start saving it, it's only a matter of time before their entire library is available on Kazaa. Programs such as StreamRipper32 [sourceforge.net] already make it trivial to save shoutcast radio streams to mp3 files; I imagine this effect will be duplicated fairly quickly to save these streams.
Re:How to make a fortune selling MP3s (Score:2)
Let them. There are already plenty of ways to steal music, and they'll never be stopped. You just have to accept this -- and understand that it doesn't preclude a successful business. Look at Apple.
If there were an easier, faster, higher-quality music service with personalized recommendations, i think people would choose it over Kazaa / etc even if it cost money.
Re:How to make a fortune selling MP3s (Score:2)
I'm motivated by laziness, not stinginess.
Re:How to make a fortune selling MP3s (Score:3, Interesting)
a) Can you specifically choose something to play? Or does the system "decide" what you like and feed you more of the same? Maybe keep track of the number of times a song has played.. and if it hits like, 20, pop up a notice "It seems you really like song X, would you like to purchase a high-quality copy?".. this brings me to
b) Streaming is all well and good, but it's fairly expensive to send out even a 128 kbit/sec (16 kB/sec) stream to hundr
iTunes (Score:5, Funny)
In a way, Apple might really hurt on-line music - they are funding themselves with iPod sales whilst breaking approximately even on music, so they don't really give a damn whether their pure music business model is competitive or realistic - it's a loss leader. Kinda makes it hard for others to break into the market, and makes it hard for anyone to buck the RIAA's royalty harness if Apple's gonna sit there and pump millions of dollars in royalties directly into the studio's veins. I feel a little more skepticism is in order, and a little less of people writing iT|\/|s or whatever the hell that stupid thing is.
I believe the difference in business model is this:
Napster
-------
1. Set up music system with unrealistic price structure due to being the RIAA's gimp
2. ???
3. Loss!
Apple
-----
1. Set up music system with unrealistic price structure due to being the RIAA's gimp but wear black turtleneck and pretend to be 'the good guy'
2. ???
3. Profit!
Re:iTunes (Score:3, Interesting)
since fairplay is a wrapper, tools can be created to extract the AAC file with no quality loss.
if you are a DRMless purist, sure, all the services suck, but if you see it with a hint of grey, iTunes is the best service out there, if for no other reasons that it uses a file format that is not owned by any one single company and it can be played on Windows and Mac OSX.
Re:iTunes (Score:3, Interesting)
The thing about Fairplay is that it's really, really easy to understand what's happening, and to authorize computers to play the music. WMA is so flexible that understanding which rights you have and which you don't can be complicated, e.g. I can stream song X, but can't download. I can burn song Y Z times, but can't transfer. I can transfer song A B times, but can only burn it Z times (you get the idea). With fairplay, I can burn a song an infinite number of times. I just
Funny thing about new businesses (Score:5, Insightful)
Very few new businesses (and this is a new business, because about all that was kept from the original Napster was the name) make a profit in their first two to three *years*. A great many of them take 5 years to show a profit.
So why is everyone acting so surprised that Napster isn't making a profit after mere months? Oh yeah...that's right...this is Slashdot...we don't let little things like "reality" get in the way of a hyping up a story where none really exisits...
Napster/iTunes economics (Score:4, Informative)
---
Date: Wed, 21 May 2003 09:29:24 -0700 (PDT)
Subject: Napster - any value in the brand?
I've been trying to figure out the breakdown on costs for iTunes, here's what I've got so far:
.99
.29 .70 publishing rights & other payments to labels
.24 .05 Credit card transaction base fee
.21 .03 Credit card % of value fee
.16 .05 Fraud / charge back cost
.14 .02 Media delivery (bandwidth cost)
.09 .05 Hardware / infrastructure costs
.04 .05 Salaries & overhead
Balance Cost
Even at 2,000,000 song sales, that's not a lot of remaining gross margin, like $80,000 over two weeks and I suspect it's declining as well.
The other way to look at this is that it's a loss-leader for iPods and other Apple hardware :-)
---
Over the summer Steve Jobs confirmed [theregister.co.uk] that iTunes is not currently and may never be a profitable service.
Napster is trying the university thing because it provides them with a fixed, recurring revenue stream. I wish them luck.
Don't buy the DRM crap (Score:2)
Let's look at a few facts.
1. There are bootleg MP3s of any popular song you want on the Internet.
2. Record companies will not give you MP3s.
Therefore, people download bootleg MP3s. Why can't the record companies just supply MP3s? Songs are going to be bootlegged no matter what they do, so why not let me buy the songs in MP3 format? I would do it. Just look at all the people downloading DRM music, there would be even more peopl
Editors please RTFA (Score:5, Informative)
Wow, a business loses money in its first three months of launch. News at 11. They also say:
While maybe we don't want to believe them and they won't reduce these costs, it seems pretty likely. So saying "they don't" make any money is patently ridiculous, we don't have anywhere near enough data or time invested.
1/8" mini-plug to the rescue (Score:5, Informative)
Sure, use the age-old trick of defeating the copy-protection on your files: Get a 1/8" stereo mini-plug, and use it to loop from your audio to your microphone in. Then re-record all your music in a format that isn't crippled. You could even write a program to automate the process, although it would take as long to convert your files as your files are long in play time, unfortunately. But such is the nature of the analog 'last 1/2"' (distance between your sound card's audio out and audio in) solution.
Re:It's not that great. (Probably a troll, but...) (Score:5, Informative)
Because then people could listen to a single song streamed over the net and copy it to disk using a utility like Wiretap [ambrosiasw.com]. If you could easily obtain a complete album in the time it takes to listen to it that would completely kill their business. Now, maybe 30 seconds isn't quite long enough, but it's not too bad and seems a reasonable compromise.
Secure Audio Path (Score:3, Interesting)
Because then people could listen to a single song streamed over the net and copy it to disk using a utility like Wiretap.
Some operating systems provide ways to disable audio capture shims such as Total Recorder and Wiretap. In those systems, the operating system publisher signs audio drivers with permission to play digitally restricted media; in order to get a signature, a driver has to shut off all cleartext digital outputs during playback of such media.
Search for "Secure Audio Path" for more inform