An interesting report out of MacRumors this evening, regarding how Apple reportedly calculates the amount of royalties owed to music labels from tracks users listen to through its cloud-based iTunes Match service. According to the report, iTunes Match is largely considered a cash cow for copyright holders.
The reason? – TuneCore president Jeff Price explained today that, before the cloud, users could play tracks from their libraries as many times as they wanted. The trouble is, neither the musician or the label got paid for the (re)-playing of these tracks.
Sure, both would still receive a royalty from the initial purchase of the track, but that is hardly going to cover the amount of times that individual track is likely going to be played throughout someone’s lifetime.
With iTunes Match, however, things are slightly different. This is because users who are subscribed to the annual subscription service are essentially renting their music – (let’s not forget, the music remains on Apple’s own servers unless a user requests a track to be locally downloaded).
With this in mind, the report notes that Apple can now track how many times an individual song is played by a user, thus allowing it to pay out royalties for every time that song is played in iTunes, or via an iOS device. This, Price notes, is like creating money “out of thin air” for copyright holders.
Apple charges consumers a fee of $25 a year to subscribe to the iMatch service. Once a consumer pays the fee for the service, iTunes will scour the consumer’s computers or iPhone or iPads, and make all of the songs already on these devices available for the subscriber to re-download or stream on demand. If the song is in the iTunes music store, then the subscriber does not need to upload the song.
Each and every time the consumer either re-downloads or streams a song he or she already has, copyright holders get paid.
Responding to early criticism of iTunes Match, with some calling the service an “amnesty” for users who blatantly steal music, Price noted that the service is – (in his eyes) – no such thing.
“Some people have talked about iMatch being an “amnesty” for those who steal music. It’s not. There is no “amnesty” being granted to anyone by Apple or the record labels,” Price wrote. “Some people have expressed concern that if they have an illegally obtained song, Apple will report their data to the RIAA so the RIAA can track you down and sue you. No, they won’t, could not legally, and never would — (you kidding me?!).”
Summing up, Price then compared iTunes Match to other streaming music services available today, such as Pandora Radio and Spotify, for which he highlighted that users who take advantage of these services are simply paying a fee to listen to a collection of music curated by said services.
In the case of iTunes Match, however, he highlights that people are essentially paying to have access to their own music libraries — (Granted, with iTunes Match you can have your entire music library with you at all times.)
Pandora or Spotify customers are “paying a fee to listen to Spotify’s music collection.” iTunes Match customers are “paying a fee to have access to [their] own music collection.”
While all this might seem like common sense to some, tonight’s report really does highlight that iTunes Match has already cemented itself as being largely more profitable than the previous one-time download, no-could involved, method … and with Apple reportedly taking as much as 30% of all revenue made from the service, it appears Apple may be onto a winner here, too.[via MacRumors]