The iTunes Conspiracy

iTunes is currently the top dog in the music business. Apple sells millions of songs every day to millions of customers. This is far more then any online and most likely any physical store in the world. But the question becomes, is all that trickling down to the artists in the way it should? Well, according to a recent piece from the Huffington Post, its probably not.

As you probably know, when an artist signs with a record label, the also sign away a lot of the rights to the profits. In return though, they get distribution and professional help.  Now, in general, there are two types of ways that distribution can happen

  • Selling copies: Selling actual physical CDs to a store somewhere, this typically earns an artist 10-15%.
  • Selling a license: This is when a record company sells a store or another company the license to reproduce music and sell. An artist typically earns around 50 percent.

Now the problem comes when you try to figure out what sales from iTunes and other online retailers count as. If an artist signed their contract in the last 10 years or so, chances are online music sales are specifically provided for in that contract. However, for contracts older then that, there is nothing about internet music sellers. Internet music sellers didnt exist then!

There where two court rulings (you can see more in the article), one in 1998 and one in 2003. They decided that online sales in those contracts that had no provisions for such sales should count as licenses. The nice guy over at Huffington did some calculations. He calculated that the amount of unpaid royalties from just iTunes sales could be up to 2.15 billion dollars. Thats a lot of money.

And look at it this way. If this happens, new artists will likely demand it for their contracts as well. This could shake up the entire music industry as we know it.

I think it would be great to see musicians making more money. I think that an industry where the creator of the content only receives 15 percent in some cases is not a very good industry. People need to be rewarded for their efforts.

I highly suggest you read the article from Huffington Post. It goes much more in depth then I do here.