Lost in the verbiage over Apple’s decision to expand the number of DRM-free songs on iTunes was a fee some are calling Apple’s ‘music tax’ potentially worth $1.8 billion to Cupertino.
iTunes users will need to pay $0.30 per track ($0.60 per video and 30 percent of the price of an album) to use Apple’s one-click conversion to DRM-free listening pleasure. While offering copy-protection free iTunes songs is viewed as a ‘win’ for consumers, it may also further enrich Apple’s coffers.
Erick Schonfeld of TechCrunch estimates Apple would earn $1.8 billion if each of the 9 billion iTunes sales were converted to non-DRM.
“That’s a music tax, plain and simple,” wrote Schonfeld.
Of course, the fee doesn’t apply to songs you burnt from your own CDs or obtained elsewhere – only from Apple. Still, the conversion could amount to a significant sum both in money and time, another writer discovered.
Fortune’s Philip Elmer-DeWitt wrote it cost $50.60 to convert 231 songs he’d originally purchased from Apple. The conversion to the DRM-free iTunes Plus took more than seven hours, he said.
In related news, Apple’s adoption of a three-tiered pricing formula to entice music label’s agreement on the DRM issue may actually cost publishers, analyst firm Needham & Co. said Tuesday. Offering a higher price for more popular songs may push more music lovers to file-sharing, while the lower $0.69 per track price could force publishers to sell 40 percent more songs just to break even.
Ed Sutherland is a veteran technology journalist who first heard of Apple when they grew on trees, Yahoo was run out of a Stanford dorm and Google was an unknown upstart. Since then, Sutherland has covered the whole technology landscape, concentrating on tracking the trends and figuring out the finances of large (and small) technology companies.
