The Justice Department helps Apple (AAPL)

Wrong.

Apple receives a very small percentage of each sale with most going to the record companies.

iTunes is not intended by Apple (at least at this point) to be a major moneymaker.

Apple uses the service to, guess what, attract folks to its platform via the iPod.

Your article is rather unintelligent.

Get informed, then publish. Don't do it the other way around...

Apple keeps $.29 of the $.99 fee

I was curious what people think is a good profit for apple to receive? In regards to setting their price at will....don't they already have an established price of 99 cents and they haven't changed that price so how are they setting it at will? What does Amazon charge as well as other companies charge and what are there profit margins? To me 70 cents out of 99 cents seems pretty good but I'm sure there are other fees that take away from that 70 cents.

Gee, I suppose it's wrong for Apple to even be in the digital music business...

Even more egregious for them to actually make a few pesos in the process, right?

Does Apple pay a 'modest fee' to the record companies, or give them 2/3's of the deal? I'd say 2/3's is a bit more than modest...

Suppose the record companies don't like the arrangement they've voluntarily entered into; let's consider the alternative: OK, let the record companies keep making CD's that the populace will duplicate and distribute at will.

Apple's doing reasonably well with iTunes because, otherwise, the record companies have no choice!

Given the public's desire to share music, the publishers have to take what they can get.

And that, uninformed writer, is not big, bad Apple's fault.

Stop ignoring the hard business realities, and position, that the poor publishers have basically put themselves in.

Doug,

In your best informed opinion, what is the fairest percentage that Apple can receive for building a mechanism that allows these record companies to get anything at all for the songs sold?

Before Apple's iTunes, was Napster.
Free music for all, no money for the record companies.

The labels should be on their knees thanking Steve and his vision for creating a business model for them going forward, implementing it, advertising it and changing the "free music" mindset for a generation of users.
Granted, it allowed them to sell more iPods with the ensuing halo effect but that was his focus and the reward for Apple.
The .29 covers the overhead in running the program that the labels are too inept to envision and run themselves.

Apple's "lock" on the market as you call it is a result of their success in innovating a solution for the labels so they can actually sell and profit from their product instead of giving it away for free.
Microsoft, Sony, Amazon, MusicNet and all failed examples of the sort of lackluster marketing and technology that was the competition for iTunes.

Should Apple be punished for innovating a successful technology that is singlehandedly saving whatever profitability record labels have left to save?
By reading your blog, I guess the answer is yes.

But ask yourself this, can they pull it off?
Given their collective histories and complete and total lack of forward thinking, I bet there isn't a technical visionary in the whole consortium.

The latest attempt at new music distribution is to give the music away free.... see SpiralFrog or QTrax. Unfortunately, this is completely unsustainable from a cost perspective, and counterproductive to the music retail market. The digital ad industry is simply not big enough to support the digital music industry.

There's an excellent analysis at Brooding Savage blog. http://www.BroodingSavage.com/journal/2008/2/7/ad-supported-music-1.html