Are Your iTunes Really Yours? Bruce Willis and Eminem Are On the Case.
Because aside from giving consumers a better understanding of what they're buying from iTunes (or Amazon, or any other digital download retailer) it comes down to money. Album or single sales are paid out at a rate of 9-12% to the artist whether physical or digital. Money earned through licensing songs is split 50/50 between the artist and the label.
From a legal perspective digital downloads from iTunes or other similar retailers look a lot more like licenses than they do like a true purchased recording. In the first place, no one ever had to confirm they read a "Terms and Conditions" statement before they bought a record. With iTunes you get a certain number of "authorized devices" that you can synch with your account, and when you're done with it you can't sell it back to a used mp3 store where it can languish in a digital bin with everyone else's old 98 Degrees albums. The fact that one high court has ruled that what we call digital downloads can and/or should be treated as licenses in some circumstances means that this is something that more artists should challenge because seeing a 40% increase in your royalties is not a small matter.
At the end of the day it likely doesn't matter to iTunes one way or another. They get their 30% off the top and most people haven't bothered to make too much fuss about the fact that their music comes with many strings attached. Most people probably never notice. The record companies will fight it, but they don't really have much ground to stand on as long as digital files purchased through iTunes or other retailers still have so much legal language attached to them. The specter of Napster still looms large over the music industry, and the price of selling digital files with a full litany of restrictions spelled out for the consumer might be worth the extra royalties. Of course, if the courts do firmly come down on the side of these purchases being a license it's likely that new contracts will just be rewritten and the artist won't get that full 50% cut anyway. Or record companies will compensate by spending more on the artists up front so that those 50% royalties never have to be paid out because the artist's account stays virtually permanently in the red. But that's another column.
As a side note, if you are interested in leaving your children, friends, pets, whatever, a large library of carefully curated music at the end of your life I would recommend purchasing physical and having a dedicated hard drive that you copy the music to in AIFF, WAV, or FLAC files. MP3 and AAC files take a lot of audio information out of songs, so they're of a lower quality* which is why they're small enough to easily send back and forth online.
* And not worthy of expensive headphones.
Genevieve Burgess can seriously talk about this kind of stuff all day.