Apple seems to be making a small profit on their iTunes Music Store and a much larger profit on iPod sales. I've been curious about the competitors before Microsoft and Sony enter the market it a big way (I think Sony will do poorly, but that is another posting)
So in the last quarter:
RealNetworks $4.6 M loss (net)
Napster $8.1 M loss (operating)
Loudeye $2.8 M loss (net)
MusicNet $1.0 M loss (net)
10-Qs share corporate worries, but RealNetwork's borders on the paranoid.
Real is currently running a 49 cent per track promotion. "limited time" ... The largest component of online music is the licensing back to the content owner. In the case of the major labels this is in the neighborhood of 70 cents a track. Apple is probably clearing a few cents per track, everyone else is loosing. Real is apparently prepared to absorb at least a fifty cents a track. The dotbomb days all over again.
How many of these guys are going to be around next year at this time?
The only way to seriously drop beneath a buck a track is to negotiate new deals with the majors and, perhaps, offer much better prices for indies where the bureaucratic inefficiencies are much smaller. In theory you could give an indie twenty five cents a track (going right to their pocket), which would be a better deal than a label would offer. This would allow 50 to 60 cent tracks --- if that makes sense. The public may be perfectly happy with tracks for a buck.
The big companies make a great profit from online business and this is something normal because they have great influence on the people who trust the company and buy.
Posted by: Cara Fletcher | August 31, 2007 at 12:05