Greed Is Not Good: Why We Oppose Any iPod Tax

"Greed is good." At least that's what Gordon Gekko proclaimed in Wall Street (1987). That is, greed is good for corporations and stockholders.

It's not good for the rest of us.

Greed is the reason Apple, Intel, Dell, and the rest of the industry are always pushing newer, faster hardware, trying to convince you that your year-old Mac or PC is now low-end and needs to be replaced.

Greed is also become a big factor in the iPod world.

Apple's Greed

First, Apple came up with their "Made for iPod" program, seeking 10% of the wholesale price of accessories that would be sold with the Made for iPod badge. Now they want 10% for any accessories that use the iPod's dock connector - that ranges from car power adapters to full-blown stereo systems.

Bose, Altec Lansing, and others are not happy. Some are contemplating pulling out of the iPod accessory market. Some are now promoting a standard dock connector for all the other MP3 players on the market.

Recording Industry Greed

Hardly a week goes by without another story about the RIAA filing suit against a destitute mother, a juvenile, or a grandmother accused of illegally swapping MP3s. Some of these people don't even have computers, yet most seem to be settling. I haven't heard of a single case going to trial.

The recording industry blames file sharing for a decline in CD sales, refusing to consider that perhaps people just don't want to buy as many CDs as they did a few years ago. CD sales were down about 5% last year in the US, they whine, yet 6% of all music sales came through the iTunes Music Store and other online services.

The big labels are greedy. They want more money, and they're pushing Apple to break their 99¢ per track pricing policy. Steve Jobs remains adamantly opposed, and several of the labels are not available in the Japanese iTunes Music Store. Artists and fans are upset, but executives are being greedy.

The simple fact is, there is virtually no overhead involved with online music sales. The track is recorded, mastered, compressed, and offered for sale. There are no CDs stamped out, no discs to screen print, no album art to print, no fragile CD cases to put everything in and then wrap. There's no cost of warehousing or shipping. There's no risk of returns.

Yet the recording industry is begging for more than 99¢ per track, and some labels may at least threaten to pull out of iTMS. (Then again, as greedy as they are, are they willing to surrender that last 6% of their sales?)

The Media Tax

Although copyright laws vary around the world, in most places the person who owns a CD has the right to make a personal copy, which includes ripping it to your hard drive in iTunes and putting it on your iPod so you can listen to it on the go. (Australia is a notable exception. It's illegal to rip your CDs down under, and there's no iTMS, so it's pretty much illegal to use an iPod in Australia.)

Canada has had a media tax for year, and anyone buying a blank cassette tape or recordable CD has to pay a levy. This fee goes to the Canadian recording industry as "compensation" for lost sales. It also essentially makes it legal for Canadians to do what is considered piracy in the States.

Canada even had a levy on iPods and other MP3 players, although a court finally overturned that.

Now the recording industry is pushing for a 10% cut of all iPod sales - yeah, pretty much the same deal Apple is making with any company that wants to use their iPod dock.

Their reasoning is that they're losing sales because of the iPod, which flies in the face of facts. After all, people are paying for tracks from online music services - 6% of RIAA sales over the past year, in fact.

It's a real catch-22 situation. On the one hand, online music sales are so successful that they're trying to milk it for another 30-50¢ per track. On the other, CD sales are slipping, so they want to tax people for buying an iPod initially and then hit them again with a higher price on every track they purchase.

And they wonder why the recording industry has few fans!

Greed Is Bad

Greed is one of the seven deadly sins, and while it may be good for lining the pockets of corporate America, it isn't good for consumers. Because of that, we can applaud Apple when they hold the line on 99¢ tracks and oppose any levy on the iPod - and at the same time we can decry Apple socking it to iPod peripheral makers.

Doesn't Apple make enough from the iPod, the iTunes Music Store, and all the iPod wares they sell online and in their retail stores? Why should Bose, Altec Lansing, or anyone else have to boost prices by 10% to further line the pockets of the most profitable computer hardware company on the planet?

Apple used to be about innovative new products. I wish they'd get back to that instead of finding innovative ways to stick it to the consumer.

• Link: Apple to Slug Partners 10% of All Revenue, David Richards, Smarthouse, 2005.10.11