UK newspaper the Independent has published a piece on the online music download industry that accuses the major record labels of strangling its nascent distribution model. According to the article, the major labels are claiming some 62 cents for each 99 cent download, which represents an increase in their share of music sold, despite the almost negligible manufacturing costs from digital downloads. From the article:

Record companies are taking such a large cut from tracks sold online that many of the burgeoning online music stores will go out of business, experts warned yesterday.

Figures obtained by The Independent show that the labels take home the lion's share of the cost of a digital download - making more money per track than they do with CDs in shops.

Online stores such as Apple's iTunes were seen as a revolution in music sales, with customers turning their backs on CDs to shop online. Many also believed that the stores would drive down the cost of online tracks.

But figures from the US show that Apple Computer, the dominant legal download business in Europe and the US, retains just 4 cents from each 99-cent (55p) track sale while "mechanical copyright" holders - generally the record labels, who own copyright in the song's recording - take 62 cents or more. Music publishers take the rest - about 8 cents.

The piece goes on to say that such small margins will drive out most would-be online music retailers. We recommend it as a very interesting read.

The piece was co-authored by frequent iTMS critic Andrew Orlowski of The Register, who has also penned numerous rants against DRM schemes that limit what users can do with digital content.

You can find the full article at the Independent's web site.