'iPod tax' coming to Japan?

NYT via CNET ^ | October 10, 2005, 11:24 AM PDT | Martin Fackler

[martin_fierro]

'iPod tax' coming to Japan?

In the United States, recording labels want a bigger slice of Apple Computer's success in digital music by seeking higher prices on downloaded songs. Japan's music industry has a different idea: putting a fee on iPods.

The industry has asked the Japanese government to charge a royalty, to be added to the retail price of portable digital music players like Apple's iPod, which has been explosively popular here. Money earned from the fee, which will be probably be 2 percent to 5 percent of the retail price, would go to recording companies, songwriters and artists as compensation for revenue lost from home copying.

< -- SNIP -- >

[martin_fierro]

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[Hodar]

This is another example of biting the hand that feeds you. MP3's were being freely distributed; people making CD's of songs they wanted; and the Record and Tape Industry screamed (and rightfully so) about their material being mass distributed without royalties.

So, Apple creates (operative word here, creates) a website that sells 'virtual' data; and the Record Industry begins to gather money with NO EFFORT on their part whatsoever. No tracking, no advertizing, no inventory, no distribution, no promotions. Heck, Apple even managed the site for them.

But, this still isn't good enough. No, now they want MORE money per song; and Apple and other sites hold the companies to their contracts.

Now, these record companies want to 'tax' the very group that provided them with Billions of unclaimed dollars. It appears the very basic ideas of creativity, (why didn't the record companies start an internet music store?), commercialism (with the exception of Sony, no record company has YET to market their own MP3 player), and free enterprize (charge too much, people will simply share the music freely amongst themselves).

There are so many lessons that COULD have been learned; yet have not apparently been grasped yet. Beta tapes of movies used to run $60-100/movie. The price dropped, and instead of dubbing a copy, people PURCHASED the movie. Now with $20 I can either buy a New movie release; but I still can't buy the Beatles White Album. Why not? Haven't the Record companies recouped their money from the Beatles? If CD's weren't price fixed (which is illegal, and the record companies have already lost at least one class action suit on this one), if the prices weren't artifically high; and if the songs today had 1% of the talent exhibited 30 years ago; things may be different today.

[weegee]

The industry has asked the Japanese government to charge a royalty, to be added to the retail price of portable digital music players like Apple's iPod, which has been explosively popular here. Money earned from the fee, which will be probably be 2 percent to 5 percent of the retail price, would go to recording companies, songwriters and artists as compensation for revenue lost from home copying.

Of course some represented artists would never see a dime of this money. What a corporate ripoff. These collection agencies DO know how to take in the money though.

[SamAdams76]

At least the movie industry wised up.

I also remember when VHS/Beta videotapes costed between $60-100 per title. This was back in the mid-1980s. I remember wanting to buy my father The Godfather on videotape and it was over a hundred dollars! (I got him socks and underwear instead.)

Now this was during a time when the movie industry thought that videotapes were going to put them out of business. And indeed, many of us bought blank VHS cassettes and taped movies off HBO. I ended up taping about thirty movies this way.

But suddenly the movie industry got a clue and decided that if they couldn't beat them, why not join them? So they dropped the price of pre-recorded videotapes (soon to be followed by DVDs) to where normal people could afford them and suddenly they started selling them in the millions.

How successful was this? It was so successful that box-office bombs turned into profitable hits when released on VHS/DVD for about $10 a pop. It was so successful that box-office hits DOUBLED their revenues overnight on the very first day of VHS/DVD release!

And what about all those movies that we taped off HBO? They are gathering dust up in the attic. Why fuss with a poor quality home-made tape when you can get the real thing with crystal-clear quality and all the bells and whistles (deleted scenes and other extras) for a very reasonable price?

I keep waiting for the day that the recording industry decide to open their own "iTunes" stores and stop ripping off the consumer with these $17.99 CDs. But I am stunned to see that they still apparently insist on continuing on with their doomed "horse and buggy" business model. It's getting to the point now where it is too late for them to recover.

At least it will be fun to watch. Everybody loves to see a train wreck.

[MissouriConservative]

I agree with you both. Looking at the iTunes music store things break down this way (or so I've read).

1. 99 cents per song

2. Apple keeps 4 cents per son

3. Music Industry gets 95 cents per song

5. Apple has sold over 500 million songs to date

6. Music Industry has made 475 million dollars (95 cents X 500 million songs.

7. This money is pure profit as they don't have to advertise, produce a CD, make a CD cover including cover art, pay to ship these to a store, etc.

Now who are the greedy bas*ards here? In my opinion 99 cents a track is still too dang high. 99 cents a song is still CD type prices if you break it down by 17 or 18 songs a CD.

Anything else to add?

[Afronaut]

If you divide the number of I-tunes in the number of I-pods sold you get a very low number I-tunes sold vs. Ipods.

It would cost something like $14,500 to fill a 60 gig I-pod with I-tunes @.99

[SamAdams76]

That ratio is gradually increasing. There have been about 14 million iPods sold in the U.S and 650 million iTunes have been sold (U.S. only). That's roughly 36 iTunes sold for every iPod in the USA.

I remember reading last year where the ratio was only about 10 to 1.

The reason is that most people who have purchased iPods already have an extensive music collection on hand. Thus, the average iPod user spends the first year or so transferring their collection to their devices.

That mirrored my experience. I had nearly 1,000 CDs and when I got my iPod last year, I spend most of that first year burning my CDs and transferring them to my iPod. But I haven't purchased a single new CD in months. Whenever I want some new music, I get it off iTunes and my purchases there have been steadily increasing over the past few months.

As for my CDs, I now have them boxed up and in storage as backup devices.

Apple will be releasing their 4th Quarter numbers tomorrow that will show 8.5 million iPods sold in the past three months. They will likely sell over 10 million iPods over the next quarter. A year from now, we'll see close to 50 million iPods in the United States.

At that point, the traditional record store is going to have serious problems as the majority of music fans will be downloading their music over the Internet rather than purchasing it in record stores.

The tipping point is coming very soon and it will rock the music industry to its core. Next year at this time, there will probably be over 10 million songs a day sold over iTunes. Two years from now, we could be looking at some 50 million songs per day downloaded and probably at higher bit rates than we see today.

[Welsh Rabbit]

It's amazing how cheap DVDs are nowadays. I don't even watch the TV shows I like when they are on anymore. It's easier to wait a few months and buy the entire season, then I can watch the shows at a time convenient to me.

[SamAdams76]

That's exactly what I do. I haven't watched a TV series in real time in years. And I don't even bother with TiVO. Too much hassle and fussing around.

I just find out what the best series are and I either buy them on Amazon or I rent them through Netflix. "NYPD Blue", "Sopranos," "Deadwood", etc. I like the edgy stuff.

I can hit pause whenever I want and rewind stuff if I don't get it the first time. Unedited. No commercials. I actually spend more time watching TV shows on DVD than movies these days because so many movies are so crappy. Right now my wife and I are watching all the "X-Files." We are on season four right now. And a guilty pleasure of mine is "Mystery Science Theatre 3000", where they make fun of really bad B-movies from the 1950s and 60s. Some of those shows are hilarious.

[Welsh Rabbit]

MST3000 is pretty funny. When it came on cable, I used to watch with my dad sometimes, and he could actually remember seeing the movie when it was in theaters and would know what was coming next. I just started going through the entire series of the Sopranos (I'm at the end of season two). It's been so long since I've watched the earlier seasons that it's almost like watching it for the first time. About a month ago, I spent an entire weekend on both seasons of Carnival. It's a shame HBO decided to drop that one.

[steveo]

This money is pure profit as they don't have to advertise, produce a CD, make a CD cover including cover art, pay to ship these to a store, etc..

The record companies don't incur these costs, the artist does. It's deducted from from the .85 to 1.10 the artist gets from each cd sold through normal retail outlets.

[dhs12345]

Maybe there's a little resentment from the Japanese and Sony for missing the boat on MP3 players?

While Sony and others were playing CYA, Apple provided a solution -- the iPod.

[martin_fierro]

It would cost something like $14,500 to fill a 60 gig I-pod with I-tunes @.99

Interesting!

I'll have to perform that calculation on my 40 gig to see what I've "spent"* to date.

[dhs12345]

But, all of us have lots of LPs and CDs that we can rip.

However, if the cost per song is cheap, it is a lot easier to buy a copy versus ripping a CD or converting an LP to mp3. It has to be cheap, though.