Apple has long contended that the iTunes Music Store exists in large part to stoke the iPod’s fires. Or, in the words of Apple’s Senior Vice President of Marketing, Phil Schiller, “The iPod makes money. The iTunes Music Store doesn’t.” Similar sentiments about the profit potential of online music sales have been expressed by Microsoft, which recently launched its MSN Music Service.
Regardless of whether the money Apple takes in from the iTunes Music Store goes entirely to overhead, many have wondered exactly how much of a $.99 download makes its way into an artist’s pocket. According to the
iTunes Artist-Producer Royalty Calculation document prepared by Los Angeles entertainment attorney Dina LaPolt — and distributed at a recent national Association of Record Industry Professionals panel — artists make less than a third of what Apple keeps and less than a fifth of what the major labels realize.
The document states that $.34 of that $.99 song never leaves Apple, major labels collect $.55 per song, and the artist receives the remaining $.10. According to the panelists, independent artists do a bit better.
While this may seem a pittance considering the artist’s role in the work, such royalty rates are common with “real” recordings released on audio CDs. Traditionally, artists receive between $1.14 and $1.17 per CD. If a CD contains 15 songs, the artist can expect to receive a little less than $.08 per song.