The Copyright Royalty Board will be deciding on whether to increase the royalties paid on digital downloads to music publishers from 9 cents to 15 cents. Apple has responded stating that if the changes go through, they will close down iTunes due to the fact that they would not be operating at a profit.
“If the [iTunes music store] was forced to absorb any increase in the… royalty rate, the result would be to significantly increase the likelihood of the store operating at a financial loss — which is no alternative at all,” wrote Apple iTunes vice president Eddy Cue in a statement filed with the board last year, according to Fortune. “Apple has repeatedly made it clear that it is in this business to make money, and most likely would not continue to operate [the iTunes music store] if it were no longer possible to do so profitably.”
Out of each 99 cent song, Apple currently pays artists and labels an estimated 65 to 70 cents per song, 9 cents of which they currently pass on to publishers. According to Apple, the 66 percent increase in publishing royalties to 15 cents per song requested by the National Association of Music Publishers (NMPA) is too much for the company to bear.
I can say that I’ve never really used iTunes, however I do consider it to be something that iPhone/iPod users value when it comes to purchasing music online.
Full story at wired.com “Apple Threatens iTunes Shutdown over Royalty Dispute”