Apple Threatens To Kill iTunes Store Over Music RoyaltiesSep 30th, 2008 | By James Lewin | Category: Digital Music, iPods & Portable Media Players
Fortune reports that Apple is threatening to kill the iTunes Store over music royalties.Â
The Copyright Royalty Board in Washington, D.C. is expected to rule Thursday on a request by the National Music Publishers’ Association to raise royalty rates on songs purchased from online music stores, like iTunes, from 9 cents to 15 cents per track.Â
“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,” notesÂ iTunes vice president Eddy Cue. “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.”
At this point, Apple’s stance seems to be little more than saber rattling. Apple is quickly moving to diversify the iTunes store beyond music. While the digital video market is slow to take off, Apple has another hit with its App Store.