Record downloads
The US, and it's record labels, have been trying to exert their influence where it is not wanted, once again. This time, they are trying to force Russia to shut down the AllOfMP3.com website, or Russia's entry to the WTO will be blocked.
Naming a specific business is strange enough. Even more so given that AllOfMP3.com operates completely legally under Russian law, and they also claim that US citizens are able to use the site legally.
For those who have not come across the site before, let me explain. AllOfMP3.com sell music online. You can specify the bitrate (quality) of the recordings you want, and also the format, so you can have it in MP3, OGG and a few others should you desire. The thing that has made them so successful (second only to evil iTunes) is that they charge per megabyte, at a rate of 1 US cent. Therefore a typical song can be downloaded for about 5c, compared to 99c from iTunes. And the AllOfMP3.com version will not be stuffed full of Digital Rights Management stuff that restricts you from playing it on anything other than the PC you downloaded it with and an iPod. These files can be played anywhere.
No wonder the US is scared. The cost is a fraction of the exact same thing from iTunes. And the US hates competition.
But, here comes the moral debate. AllOfMP3.com is legal because they operate under an oddity of Russian law that allows them to sell anything like they like for whatever price they like. They pay 15% of their profits to the Russian copyright people, who are supposed to distribute this to the copyright holders. Whether this happens or not is unknown - they claim it does - but it isn't actually AllOfMP3's problem. They are complying with the law.
So the record labels don't like this. When a song is purchased from iTunes, the record labels get a nice big chunk of that 99c (70c to be precise). When it's bought from AllOfMP3.com they don't. But, the thing is, the artists actually don't get as much from the record labels as you might think from their online sales.
When a CD is sold, the artist will get around 10-15% of the cost of sale. Minus packaging costs. They also would normally get 50% of licencing costs (i.e. if it's used in a film or a TV show). Here's the kicker: When a song is sold on iTunes, it isn't a physical sale in the normal go-into-HMV-and-buy-a-copy sense. It is a licence deal; you buy a licence to use the song on your computer and your iPod. You don't get a physical copy. But, the labels treat this is a normal sale - not a licence - and so the artist gets 10% instead of 50%. And then - incredibly - they still get the packaging costs removed, despite there being no packaging at all.
Given these packaging costs are about 30% of the artists royalties, the label is making more from online sales than from traditional sales because they simply don't have to pay these costs, although they are charging the artists for them anyway. So out of the 70c that iTunes pays the label for the song, the artist makes about 5c, compared to the label's 65c. Really fair, huh? If it was treated as a licence sale (which is what it is), the artist would get 35c. Somehow, they get away with this.
AllOfMP3.com is to be commended to refusing to back down. It has proved it's legality under Russian law, and has quoted from US law as well that implies it is legal to use from the States.
Record labels must start realising that times are changing and that they must move with them.
Naming a specific business is strange enough. Even more so given that AllOfMP3.com operates completely legally under Russian law, and they also claim that US citizens are able to use the site legally.
For those who have not come across the site before, let me explain. AllOfMP3.com sell music online. You can specify the bitrate (quality) of the recordings you want, and also the format, so you can have it in MP3, OGG and a few others should you desire. The thing that has made them so successful (second only to evil iTunes) is that they charge per megabyte, at a rate of 1 US cent. Therefore a typical song can be downloaded for about 5c, compared to 99c from iTunes. And the AllOfMP3.com version will not be stuffed full of Digital Rights Management stuff that restricts you from playing it on anything other than the PC you downloaded it with and an iPod. These files can be played anywhere.
No wonder the US is scared. The cost is a fraction of the exact same thing from iTunes. And the US hates competition.
But, here comes the moral debate. AllOfMP3.com is legal because they operate under an oddity of Russian law that allows them to sell anything like they like for whatever price they like. They pay 15% of their profits to the Russian copyright people, who are supposed to distribute this to the copyright holders. Whether this happens or not is unknown - they claim it does - but it isn't actually AllOfMP3's problem. They are complying with the law.
So the record labels don't like this. When a song is purchased from iTunes, the record labels get a nice big chunk of that 99c (70c to be precise). When it's bought from AllOfMP3.com they don't. But, the thing is, the artists actually don't get as much from the record labels as you might think from their online sales.
When a CD is sold, the artist will get around 10-15% of the cost of sale. Minus packaging costs. They also would normally get 50% of licencing costs (i.e. if it's used in a film or a TV show). Here's the kicker: When a song is sold on iTunes, it isn't a physical sale in the normal go-into-HMV-and-buy-a-copy sense. It is a licence deal; you buy a licence to use the song on your computer and your iPod. You don't get a physical copy. But, the labels treat this is a normal sale - not a licence - and so the artist gets 10% instead of 50%. And then - incredibly - they still get the packaging costs removed, despite there being no packaging at all.
Given these packaging costs are about 30% of the artists royalties, the label is making more from online sales than from traditional sales because they simply don't have to pay these costs, although they are charging the artists for them anyway. So out of the 70c that iTunes pays the label for the song, the artist makes about 5c, compared to the label's 65c. Really fair, huh? If it was treated as a licence sale (which is what it is), the artist would get 35c. Somehow, they get away with this.
AllOfMP3.com is to be commended to refusing to back down. It has proved it's legality under Russian law, and has quoted from US law as well that implies it is legal to use from the States.
Record labels must start realising that times are changing and that they must move with them.
posted by Nej at
1:30 pm
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