Greg Ferro - Work to Live

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Why I think iTunes Match Works for the Music Industry

Music's lost decade: Sales cut in half in 2000s - Feb. 2, 2010: "Total revenue from U.S. music sales and licensing plunged to $6.3 billion in 2009, according to Forrester Research. In 1999, that revenue figure topped $14.6 billion."

But for the same year, Business Wire reports that US Music purchases actually increased 2.1% by units sales, but sold 8.5% less albums. In other words, gross revenue is shrinking.

So Apple said that iTunes has 200 million registered users globally with their credit card on file.

Lets say that 30% of those users sign up for the iTunes match at USD$25 per year.

That 60 million * $25 = $1.5 billion

Lets say Apple takes their standard 30% which includes their costs.

That’s USD$1.1 billion dollars, or about 20% of the gross income of the record industry.

Any industry which can report a 20% increase in profit at almost no cost, would be chewing their arm of.

And remember, 30% of users is probably conservative. And Apple may have already paid an advance to the record industry as inducement.

The record labels will get this money as a split from their copyright agencies.

That’s why iTunes match works for the Music Industry.