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Apple to buy Universal Music

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Apart from the macworld popup it could be worthwhile. Apple would benefit from the obvious diversification. However, I don't think that ten cents per download is a viable business model.

Right now, when I buy a CD, I end up paying in the neighborhood of a buck per track. Granted, the distribution costs are somewhat less. However, the quoted price is too low. If you look at the RIAA website, it tells the story of where the costs of music production arise. Recording the music and getting it popular still have to happen and distribution is only one slice of the pie. Realistically, they are going to have to charge more like seventy-five cents per track just to break even. And it will take a long time before they reach the break even point.

Who remembers how long it took Amazon.com to turn a profit? It did not happen during the "internet bubble". In this economy, it will probably take longer. Also, it bears noting that Amazon.com was competing with Waldenbooks and Barnes and Nobel. Apple/Universal has to compete with the Napster clones. When DRM becomes real, they will get a boost. As for now, they have an uphill battle and they are not facing a gentle slope so much as a vertical cliff.
 
I think Apple would have a good shot at making a go of online music distribution, but I can't imagine 10 cents per track. Maybe just as a promotional deal.

The big thing would be making their service cross platform and not Mac-biased.
 
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