UK newspaper, The Independent has uncovered data suggesting that Apple make as little as $0.04 per track sold. Apple operates iTunes in the US and Europe, which is the largest legal music download provider. The investigation concludes that because record companies are taking such a large percentage from online sales, many companies will go out of business within years due to lack of profits.
Copyright holders, most often the recording industries, take as much as 60% of the $.99 that Apple charge for each song on iTunes. Music Publishers take the rest, amount to about $.08 per song. The report highlights the fact that even though online publishing has virtually killed costs, record companies have almost doubled their take from each song sold.
Record companies need to wake up to the fact that high prices are going to cause even more problems in the long run. Legitimate downloads have helped stop the tide of music piracy, and to over-price the songs would be disastrous. They desperately need to start thinking long term about this issue. Although Apple has the iPod to help shore up revenues, others do not; market analysts predict that many of the music download start-ups coming to market in the next 12 months could be bankrupt within 5 years. Michael Robertson from MP3.com told the Independent that online music providers are so un-profitable that it"s more of "a race where the winner gets shot in the head".