Music industry watch
Slim margins in music downloads
Not too long ago I was wondering about online music stores making money, comparing M$'s and Apple's statements about their online music offerings. M$ was the only one coming out saying that there was lots of money on the table and Apple maintained it was a driving force for selling iPods. Now C-Net has more details about slim margins on music downloads:
"There's very little money in this to begin with," said David Ring, vice president of Universal Music Group's eLabs division. "A lot of people are already recognizing that we're going to have to sell a lot more singles at 99 cents in order for us to make money, and for artists to be able to make a living."
. . .
Currently, close to two-thirds of the 99 cent digital song price goes to labels and other copyright holders, leaving slim or even negative margins for the song stores themselves. Apple CEO Steve Jobs recently said his company remains interested in the business because it helps sell the company's profitable iPod music devices.
So, it looks like M$ is smoking rock or they are up to something sneaky once again.
Posted by Mayhem at December 9, 2003 08:34 AM
MS do this all the time -- as long as they can make enough money from Office, they can use that positive cashflow to offset ludicrous money-losing propositions (like the X-Box, for example).
This is why splitting the company up would be such a big deal; it'd mean that they can't just steamroll into whatever market they feel like with guaranteed cashflow from their other markets.
