This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

Apple's iTunes Radio Will Fail the Music Industry

Stocks in this article: AAPLP

NEW YORK ( TheStreet) -- Outside of my June 28 article, Apple (AAPL) Should Be Ashamed of Itself, nobody has a bad word (or, in most cases, even a word) to say about the iTunes Radio deal Tim Cook shoved down the music industrial complex's throat.

Actually, it's independent labels and artists, particularly the small ones, you should feel badly for. The majors have never had a problem being led into the depths of hell by a company that couldn't care less about its fate.

If you think Cook pulled off a brilliant coup, similar to Steve Jobs taking $14.99 album sales and turning them into 99-cent a la carte singles sales, you're wrong. He miscalculated.

Ultimately, this miscalculation won't hurt Apple's business -- music downloads and even ad revenue generated from iTunes Radio is and will remain a paltry fraction of its multibillion dollar hardware juggernaut. But, as usual, the music industry, in its lack of vision, fear of change and allergy to innovation, will get the short and wrinkled end of the stick.

After spending five minutes with iTunes Radio, something we knew all along becomes clear -- Apple wants streaming radio to gateway users into more music downloads. Based on the deal the indies signed with Apple (presumably the majors agreed to something similar), they're holding out hope that the company that revolutionized music listening and buying ends up right again.

Why else, in an age where some artists can't stop whining about how little they receive in royalties from Internet radio, would you agree to a deal where Apple pays exactly zero for so many plays. Just review my June report -- here's the link again.

If a song you stream on iTunes Radio is in your iTunes library, Apple might not have to pay a royalty. Stream a song from an album you own songs from -- but not the one you streamed -- and Apple might not have to pay a royalty. Apple was thoughtful enough to set a two songs per hour, per user cap on this highway robbery.

Promotional "heat seeker" tracks -- also exempt from royalties. And, if Apple decides to use some indie music to promote talk, weather, sports and news programming -- no royalties! During the iTunes Radio beta, which could last up to 120 days (I'm unclear as to when that period begins -- or began -- and ends), no royalties.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,827.75 +12.81 0.07%
S&P 500 2,072.83 +5.80 0.28%
NASDAQ 4,787.3170 +29.0650 0.61%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs