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How much is an iTunes download worth?

How much is an iTunes download worth? About 70 cents, if conventional wisdom is correct. That's the commonly quoted number for the iTunes money that gets passed back to the record labels. And according to the New York Times today, the record labels are angling for more. They argue that broadband music sales through the mobile iTunes store somehow should bring them a greater profit than sales through the standard iTS, pointing to industry practice for ringtone and ringback sales.

I don't quite understand their reasoning. I think most phone-based ringtone sales are outrageously overpriced. Increased sales volumes will benefit the labels even at the current wholesale prices. Ah well, another example of Underwear Gnome economics in action.

How much should Apple pay for wholesale tracks?
Apple should pay more per track124 (2.7%)
If Apple pays less, we pay less2118 (46.0%)
It doesn't really matter with the fixed price per track model771 (16.7%)
Underwear Gnomes!1593 (34.6%)



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iPod Family iTS iPhone

How much is an iTunes download worth? About 70 cents, if conventional wisdom is correct. That's the commonly quoted number for the iTunes...