Apple Threatens to Close iTunes Store Over Royalty Hikes
- October 1st, 2008 - 11.22 am UTC
- Apple News, News of Interest, iTunes Store
- Alex Brooks
Apple has written to a regulator threatening to close the iTunes Store if they approve a royalty hike which would see artists receive a 66-percent increase in commission from each song sold through online download services.
Fortune is reporting that the Copyright Royalty Board is expected to rule on Thursday on a proposal from the National Publishers’ Association to increase the rates paid to its members from online services from 9 cents to 15 cents.
Apple is reportedly opposed to the rate rise and has submitted a statement to the board:
“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,” Cue wrote. “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.”
The record labels who are reportedly “in no mood to pay the proposed royalty increase” have suggested the CRB to do away with fixed royalties in favor of an 8 percent commission to artists, which would translate to about 5.6 cents on the wholesale cost of each 99 cent track. The Digital Media Association which represents online retailers such as iTunes has suggested an even lower rate of 6 percent, or 4.8 cents per track.
Comments
Gerald 1st October 2008, 15.36 pm
As an Apple Geek but also a composer / songwriter and a member of ASCAP, I find Apple to be the crybaby on this one.
No one else can make money with music only Apple?
Of course I know it is a different division of Apple, but Steve needs to be in control of all departments. This just makes Apple look like all; the rest of those money monger companies
Dizzle 1st October 2008, 18.52 pm
Gerald, whoa there. Apple’s statement said that they would likely take a loss, not simply less profits. Do you think that companies should operate at a loss?
I don’t know why all of a sudden in today’s culture it seems like a deadly sin to want to be profitable. It is the revenue from these ventures that allows Apple to do the R&D for all the other great stuff. I don’t know where that “money monger” comment came from, it hardly seems justified in this case.
It is like Pandora having to close shop if their licensing rates increased. Business exist to make money; they are not charities. That does not make them money mongers any more than you or I accepting a paycheck for our work with our employers make us money mongers.
dave 1st October 2008, 19.48 pm
Gerald, do you not realize that the music labels get more than DOUBLE the amount of money, per song, if the song is sold through the iTMS instead of on a physical CD?
And could you explain to my why songwriters should be paid more if the bits of a song are delivered over the internet instead of on a plastic disc?