Why after all the whining from the record labels about Apple not wanting different (i.e. higher) prices are they allowing Amazon to sell for .89?

Maybe Apple is taking too high a margin on music? Somehow I doubt it. The label gets 70% of that .99 and the rest is for Apple and the artist. I believe the artist gets .10 leaving Apple with .20. That money has to take care of bandwidth, store design, dealing with Fairplay code (which is a requirement of the labels).

Don't get me wrong. Competition is great. Enjoy the spoils for now but look at the bigger picture and see that once again the labels are trying to manipulate you. Here's a possible scenario:

The labels entice you with price giving a better deal to Amazon than Apple. They hope the store gets popular. Then they have leverage against Apple for the next round of negotiations. If Apple doesn't allow the price structure they want (higher price for newer music) then they won't sell to Apple anymore because now they have Amazon.

Apple's iTunes Music store sees its inventory dwindle and people stop thinking of it as THE place to get music online.

Amazon becomes popular as it has more songs and artists. The only place to get the newest singles will be Amazon and they'll surely sell the newer singles for more. Amazon obviously won't take a hardline on prices like Apple has (as it has a variable price structure now anyway) and it will be the ONLY place to get the new tunes.

The labels win, Apple is hurting but not too badly because it makes the real money on iPods and the customer loses. Once again having to pay more for certain things and less for others determined by who the record labels think will make them the most money.

Hopefully the customer won't even realize how they've been screwed again as they've gotten used to Amazon's pricing.

@1969L46 re Apple gets 2x as much as the artist--you asked "Do you have any sources for that breakdown in price? If that breakdown is correct, should Apple really be getting twice the cut that the artists do?"

Check out this article: http://www.reuters.com/article/musicNews/idUSL2488079220070924

and this one: http://arstechnica.com/journals/apple.ars/2007/09/24/vivendi-airs-grievances-over-apples-indecent-proposal

It's funny that you wonder why Apple should get 2x as much as the artist but have no problem with the label geting 7x as much.

You also say: "Also, Rhapsody was able to charge $0.89/track for the last 5 years or so"

If you want to own any of the music (and wouldn't you want to own music you like) it's not really .89 because you have to pay for your subscription on top of it. That subsidizes the price doesn't it. And I'd really like to know what the breakdown is for the artist in this business model. That's a constant revenue stream for the company but does the artist get compensated?...something tells me no...but I'm not sure. If you know please educate me.

@1969L46

I think we're getting off track here. What business model benefits the artist is a whole other can of worms. Artists have been getting screwed for years!

My real point is that the labels are up to something. They're offering Amazon a better deal so they can sell for less and they're not complaining about DRM-less tracks. Why?

Because they want to squeeze iTunes out and have a store where they can sell variable (i.e. higher) prices. They partner with a trusted online retailer, bait everyone into the store with the nice price and now they've cosied up to a store that they have more control over. Amazon, if anyone, has a chance at beating Apple and becoming top online music retailer. When that happens they increase the price.

It's a long term thing. Not this year, maybe not next year but eventually you'll see that the new hotness will cost considerably more than other tracks. If they want to push a certain artist they'll offer those tracks cheaper (probably for a limited time). It will be just like the brick and mortar stores we have now.

So all I'm saying is this may not be as good as it seems. Everyone is saying, "DRM-less music for less! It just seems to be good to be true." Maybe that's because it isn't true.