The Register’s article today helps us understand the online music services.
Apple’s iTunes store charges 99 cents per song. Apple claims it is the most popular of several competing services selling authorized downloadable music.
Apple is losing money on the iTunes Music Store.
Steve Jobs admitted to financial analysts that the service is a loss leader for Apple. Almost all the money goes to the RIAA; the rest goes to the credit card companies processing the charges and the overhead of running the site. Apple is hoping to make a few dollars from selling the iPod and other hardware accessories.
It’s likely that the numbers aren’t much different for the competing services. Secure, licensed downloadable music could represent the future of the recording industry – but instead it’s being used to surreptitiously install restrictive DRM technology on as many computers as possible, under conditions that ensure that the new serivces either fail or remain trivial.