Big Bucks - Ipod license fees paid by car manufacturers

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With Sunday's announcement that Chrysler (Research), Dodge, and Jeep vehicles will feature iPod connectors, 16 auto brands now offer accessories that let you plug your iPod into your car's audio system.

Apple estimates that 40 percent of cars sold in the U.S. this year will offer iPod integration.

Acura plans to let drivers command an iPod through a voice-recognition system. Simpler accessories offered by automakers broadcast the iPod's audio signal to a car's FM radio.

For automakers, this seamless integration comes at a cost. Apple exerts tight control over accessories for its music player through its "Made for iPod" licensing program.

"Made for iPod" may be quite lucrative for Apple, with accessory makers reportedly paying 10 percent of the wholesale price of their wares for a license. Some observers have dubbed the license charge an "iPod tax."


Phil Magney, principal analyst at Telematics Research Group, estimates that 400,000 iPod-specific car audio accessories were sold in 2005 -- worth between $750 million and $1.5 billion at wholesale -- and he expects the market to grow to 6.8 million units by 2010.

Telematics Research Group forecasts that by 2011, 28 million autos in the U.S. and 73 million autos worldwide will have iPod integration, up from just under a million last year.
 


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