Apple Threatens To Kill iTunes Store Over Music Royalties

Sep 30th, 2008 | By | Category: Digital Music, iPods & Portable Media Players

Fortune reports that Apple is threatening to kill the iTunes Store over music royalties. 

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. 

“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,” notes 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.

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No Responses to “Apple Threatens To Kill iTunes Store Over Music Royalties”

  1. I don’t see what is so magical and immutable about $.99 tracks. They don’t have to absorb anything. Raise the price six cents. Isn’t that a more mature response versus “I’m taking my toys and going home?”

  2. James Lewin says:

    Matthew – that was my initial thought – but this may be more about the music industry trying to squeeze everything it can out of Apple to reduce Apple’s dominance in the industry.

  3. Nash says:

    Once again, music industry leaders (lawyers and musicians who ‘just weren’t good enough’) are looking for ways to get their annual raise without so much as trying to better the industry providing the meal on their lear-jet tables.

    With no one left to fire, we’re just starting to see the dark side of the beast.

    Mac on the other hand…well let’s put it this way; If iTunes isn’t seeing amazing profit by now then maybe Steve should be looking towards a better accounting firm…LoL

    Seriously, my company represents a major country artist and the money we give these guys every month was the main reason for us to start SEOing our own on site store. It’s already paid for itself so I advise anybody selling music online to look into that…hint ! hint ! major labels and multi-media firms.

    Above all else, for a leader to say; “if you cut my salary I’m going to fire everybody in here”….well let’s just say I’d think twice about going to work for that guy.

    I think iTunes and Mac should be grateful for pulling off the whole MP4 thing and Brand specific extensions and adapters . The last giant who attempted to go against industry standards was SONY and they’d sure do things a little different if they could go back in time.

    Tangent Music Nashville

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