Another Reason For Record Labels' Interest In A Music Tax: To Screw Apple

from the don't-think-it's-not-in-their-minds... dept

Tue, Feb 3rd 2009 4:54am — Mike Masnick

Despite early resistance, in the past few years, the record labels have warmed to the idea of a "music tax" put on ISPs. There are numerous reasons why this is a terrible idea, but you can bet there's one big reason why the record labels love it that they won't talk about: it would (they think, incorrectly) harm Apple. The recording industry has been amazingly jealous of Apple's success over the past few years -- even though its own demands for DRM caused much of the problem. It locked Apple in as the dominant provider and gave it tremendous market leverage -- such that no big record label risks rocking the boat and getting thrown out of iTunes.

And, despite the recent agreement to dump DRM and allow some form of variable pricing, the NY Times notes that the big record labels still have a strong hatred for Apple. While the article doesn't discuss it at all, you can bet that a big part of the desire to come up with a music tax/collective license/whatever they want to call it these days to make it sound palatable is that it will harm the iTunes lock on the market. That might be true, but the record labels may find it's more difficult to get rid of Apple than they believe. Apple's real profits are in the iPod, not the music -- so if they can suddenly offer music for "free" via iTunes as well, that would likely help sell more iPods, which would actually increase the use of iTunes as the dominant interface for interacting with the iPod.

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Filed Under: itunes, music tax, record labels
Companies: apple, riaa

38 Comments

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dkp, 3 Feb 2009 @ 5:26am

ipod all the way.
On apple could then just become the largest file server for music do away with paying and still make tons of money on the IPod.
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Anonymous Coward, 3 Feb 2009 @ 5:35am

The record labels are forgetting the real value of iTunes is introducing musicians to folks who otherwise might not of ever heard of them. I know I've found lots of new music I never heard before because I simply didn't know it existed. Prior to iTunes I relied primarily on radio air play to find new music. Now I use iTunes, Pandora, LastFM and others sources to find music I like and, not surprisingly, I've bought more music in the past two years than I did in the previous ten.
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Beltway Greg, 3 Feb 2009 @ 5:48am

The Record Business
Steve Jobs should receive a Grammy for helping the music business stay relevant. For years record executives screwed their artists and the consumer. Instead of developing synergistic (sorry about the buzz word) ways to do business with Apple and other companies they choose to defend ground that isn't worth defending; their position has been overrun. The "Barracudas" of the record biz want to return to the Golden Age of the 70s when they controlled the artist, the format, and the distribution of the product. That isn't going to happen. Sue the artists; sue the consumer; sue Apple. Sounds like a business plan to me?
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Anonymous Coward, 3 Feb 2009 @ 5:52am

I am with the record labels on this one.
Screw Apple and the iPhone; I have a Blackberry Storm!
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Twinrova, 3 Feb 2009 @ 5:52am

Excuse me?
"Apple's real profits are in the iPod, not the music"
Proof, please, because from what I've read, Apple's making exceptional profits on both elements and one is tied to the other.

If this music tax does succeed, I can definitely see the iPod falling as other MP3 makers could quickly enter the market of selling lower cost, better performing MP3 players.

Never underestimate the consumer's ability to get more for less. That would be a serious and stupid business decision.
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John Doe, 3 Feb 2009 @ 5:56am

I hope they pass the "music tax"...
I don't buy music or pirate music. I am sure the music tax couldn't me more than a couple bux per month on your broadband bill. So if that is past and pirating music is no longer illegal; I will have every song known to man and maybe a few that aren't. That would sure be cheaper than buying songs at $.99 each. Now if we could just get a "movie tax" thrown in I could get all those new HD movies for my new HD TV.
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Anonymous Coward, 3 Feb 2009 @ 5:57am

The more they push this BS the more I prepare to start Copying all my CDs and giving them out to my ENTIRE NEIGHBORHOOD!

GET A CLUE RIAA! Your on you DEATH bed!
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Anonymous Coward, 3 Feb 2009 @ 6:01am

The record labels could have worked on a new biz model like many others have and save themselves, but NOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO!! They are greedy bastards looking to SUCK every dime they can. What they dont seem to understand is that they are just pissing off paying customers and soon turning them into pirates. Keep it up!

Create your own reality!

Not 1 cent to the Record Labels and anyone/everyone whom support them!
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Anonymous Coward, 3 Feb 2009 @ 6:01am

The record labels could have worked on a new biz model like many others have and save themselves, but NOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO!! They are greedy bastards looking to SUCK every dime they can. What they dont seem to understand is that they are just pissing off paying customers and soon turning them into pirates. Keep it up!

Create your own reality!

Not 1 cent to the Record Labels and anyone/everyone whom support them!
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Anonymous, 3 Feb 2009 @ 6:12am

Re: I am with the record labels on this one.
I can certainly sympathize with your being so ornery for having to buy RIM's first generation touchscreen device.
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Emilio, 3 Feb 2009 @ 6:31am

How much are the labels worth?
So, Apple has bbbillyunz, and bbbillyunz in their war-chest. What if they simply bought all the record labels? Problem solved?
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Anonymous Coward, 3 Feb 2009 @ 6:42am

Re: Excuse me?
Wrong. The term is "Loss Leader".
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Anonymous Coward, 3 Feb 2009 @ 7:00am

Re: Re: I am with the record labels on this one.
Are you kidding; this thing is great. It could be a little speedier but there is a leaked version of new firmware that greatly improves the speed. I think the Storm is a great first effort. It blows away the Win Mobile phone I had previously.
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Chronno S. Trigger, 3 Feb 2009 @ 7:15am

Re: I hope they pass the "music tax"...
OK, Music tax for the RIAA, Movie tax for the MPAA, Then a TV tax for the broadcasters, than a tax for computer programs, then a tax for video games. Anything else?

$5 - $10 would probably be the initial price on each of these taxes but they will soon become completely insufficient and need to be raised. How much tax would be required for 500G full of music? 2T for movies? 4T for TV shows? $50-$100 per month per tax sound good?

One thing that can be said, Western Digital will be making a killing. At least from me.
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John Doe, 3 Feb 2009 @ 7:27am

Re: Re: I hope they pass the "music tax"...
I agree with you completely. But this tax is almost inevitable at this point so I will take full advantage of it. Of course at some point our tax on broadband will exceed the base price of the broadband, but that won't stop our illustrious leaders in government from passing it anyway. Besides, it is big business that puts them in office, not the voters.
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C. Em, 3 Feb 2009 @ 7:34am

Music tax on an ISP bill?? Expect an outrage for people who are innocent / dont know crap about downloading.
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chris (profile), 3 Feb 2009 @ 7:47am

Re:
Expect an outrage for people who are innocent / dont know crap about downloading.

you mean the 60 year olds that think computers and the internet are magic?

yeah, they'll just keep paying like good consumers.
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Johnny Canada, 3 Feb 2009 @ 7:50am

More Power to Apple
I am not an Apple FanBoi, I use a COWON D2. BUT if they can cause problems for the outdated record industry more power to them.

One day Apple will become a "Record Company" with them signing artist directly to avoid the major labels all together.

I wonder what they will call it :) APPLE :)
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chris (profile), 3 Feb 2009 @ 7:57am

Re: Re: Re: I hope they pass the "music tax"...
this tax is almost inevitable at this point so I will take full advantage of it. Of course at some point our tax on broadband will exceed the base price of the broadband, but that won't stop our illustrious leaders in government from passing it anyway.

i don't want a "tax" but i would gladly pay for a "pass".

i call it "the piracy pass". copyright holders keep employing media sentry and other outfits to snoop public trackers (which is how the record labels and studios figure out whom to sue) and send cease and desists to the ISP just like always. then the ISP can check to see if my pass is paid up and if so, they refer the copyright holder to the pass authority (run just like ASCAP and the like) for royalties. the artists or labels or whomever collect royalties and hand them out just like they do now.

in review not much changes:
1) i keep downloading using bit torrent
2) they keep snooping
3) they keep complaining to the ISP's
4) the performance rights groups keep deciding who gets the money

the only things that do change:
1) i buy the pass from the performance rights groups
2) i register my pass with my ISP
3) the labels and studios quit suing consumers and start suing the performance rights groups

it's simple, effective, everyone wins. obviously it will never happen.
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Anonymous Coward, 3 Feb 2009 @ 8:03am

Re: I am with the record labels on this one.
I boycott all things apple because I do not like their closed garden ideals and their business practices as it relates to screwing over third party developers. How many companies in this world can tell a group of people "No, I don't feel like allowing you to make money this year for all your hard work" and get away with it?

But despite all this bile I have towards the company I find your post stupid. How can you support another company with even shadier business practices over apple AND bring in a completely unrelated device in the comment? Simple, you are either a troll or a moron.
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Anonymous Coward, 3 Feb 2009 @ 8:13am

"Screw Apple and the iPhone; I have a Blackberry Storm!"

What a stupid comment, I hope you were joking.
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Chronno S. Trigger, 3 Feb 2009 @ 8:20am

Re: Re:
No he means like my mom who is smart enough to notice the tax, evil enough to complain (loudly), and computer illiterate enough not to be able to download.

And then there is group #3 (like me) who will download the hell out of everything and teach everyone they can about P2P.
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Haywood, 3 Feb 2009 @ 8:23am

Re: Re:
"you mean the 60 year olds that think computers and the internet are magic?"

I turned 60 on my last bd, I got a 1.5 TB drive from the wife & have it over 1/2 full. Over the weekend I built one new system & reworked 3 others. My generation invented this stuff, yours just learned to use it. BTW I gave one of my 500GB drives to the wife (also 60) she was running out of room, hopefully 1.3TB will hold her until her next birthday, the 2TB drives should be out by then.

A $10 or $20 tax would be doable to make honest citizens of the download community, but exceed that & folks would have to rethink the whole thing, $4 gas crashed the car companies, and folks need those to get to work.
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Anonymous Coward, 3 Feb 2009 @ 8:52am

Re: Re: I am with the record labels on this one.
Now that hurts. :) Actually, how can anyone support any company as they all will abuse whatever power they have? I don't "support" Rim, except through my purchase, at all. If I were to boycot companies I disagree with, there wouldn't be any left to buy from. I would have to make everything myself. Since I am too lazy to do that, I will buy the product that best suits my needs. I am sure you do the same.
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Anonymous Coward, 3 Feb 2009 @ 8:54am

Re:
Why do you hope I was joking? Do you prefer the Android or Pre?
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Johnny Canada, 3 Feb 2009 @ 9:09am

Re: Haywood
It is good to here from you 'Old Folks' :)

My mother is 75 and is on here third laptop, her second cell phone,second digital camera and uses here Sony Reader everyday, (She downloads books weekly.)

So much for the old folks myth
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txchristopher, 3 Feb 2009 @ 9:16am

Re: Re: I hope they pass the "music tax"...
Did you forget how Blank media Tax was supposed to solve the industry's problems? How much of that has been dispersed to artists? Once they are done, they'll tax your hard drives next!

I really think these tax purveyors are little mommas babies who have no guts to get into the digital business themselves in the long term.

Otherwise, you WOULD be able to buy music directly from the labels.
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txchristopher, 3 Feb 2009 @ 9:17am

Re: Re: Re: Re: I hope they pass the "music tax"...
Chris,

There's a great children's picturebook called "If you give a Mouse a Cookie." I think it's lessons fit well with this tax. They will have no incentive to make new music, just sell the back catalog. After a while, they'll just raise the taxes further.
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txchristopher, 3 Feb 2009 @ 9:18am

Re: The Record Business
Jobs deserves several Grammys as well as Emmys.
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txchristopher, 3 Feb 2009 @ 9:18am

Re: Re: I am with the record labels on this one.
>>I boycott all things apple because I do not like their closed garden ideals and their business practices

Good for you. This is why we have a free market system. Hope that boycott keeps up.

>>How many companies in this world can tell a group of people "No, I don't feel like allowing you to make money this year for all your hard work" and get away with it?

I would say a better answer would be to compete. But back when music and video interests were suing Diamond Multimedia's for the RIO, Sony for the Betamax and later, the cassette tape, they didn't quite get it then, did they?

They decided to pass on the digital music revolution, suing everyone they could, and not compete until Apple showed everyone how to do it, huh? Apple earned their keep.
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nasch, 3 Feb 2009 @ 10:42am

Re: Excuse me?
How would the music tax allow others to make lower cost better performing MP3 players?
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nasch, 3 Feb 2009 @ 10:47am

Re: Re: Haywood
Yeah, because two anecdotes are totally and overwhelmingly convincing.
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REB, 3 Feb 2009 @ 11:38am

Re: ipod all the way.
I agree. Taxing music isn't very smart. Tax iPods (the source of the problem). That would be more effective and easier to audit.
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nasch, 3 Feb 2009 @ 12:12pm

Re: Re:
He probably prefers comments that have something to do with the story.
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Anonymous Coward, 3 Feb 2009 @ 12:53pm

Big $ off hardware?
I find it very hard to believe there can be big profits in $200 ipods. The parts alone have to make up 1/3 of that $200, and stores want to make a 50% markup, add in some middle men, that doesn't leave a lot of profit.
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anymouse, 3 Feb 2009 @ 3:18pm

Apple's music service
"I wonder what they will call it :) APPLE :)"

iArtist of course, what else would it be called.... (covers music, movies, plays, paintings, you name it, they will provide it all...

And I've got a great deal on a slightly used Bridge in San Francisco while you're interested...
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Tom Erskine, 3 Feb 2009 @ 4:06pm

Apple and iTunes
I am amazed that Apple opened up the sale of digital music to the masses and is excoriated for having made money at it. Before Jobs came a long with the iPod and iTunes, DRM was the bane of the music industry and record and cd sales had tanked. Like it or not, they opened up a whole new business, a whole new industry and a whole new way of looking at the sale of music. The problem is not Apple...the problem is the record companies not having TOTAL control of music sales. Don't believe that? Ask the Dixie Chicks (for one!) how much Sony had control of their income! And as far as Apple vs. Microsoft in the music sales world, show me anything that works as well as Apple's iTunes and iPods. Microsoft is constantly having to patch this and that just to get Zune (or Vista) to work!
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Diane, 3 Oct 2009 @ 5:48pm

Age and magic
"you mean the 60 year olds that think computers and the internet are magic?"

I'm 60, and the only thing I find magical is how much bigotry is displayed toward people my age by people like you.
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