Apple threatens to close iTunes

Posted on Wednesday, Oct 01 2008 @ 21:05 CEST by Thomas De Maesschalck
BBC News writes Apple has threatened to close its iTunes store if the Copyright Royalty Board decides to increase rates on sales of digital music from 9 cents to 15 cents a track:
A veiled threat by Apple to close its iTunes store has emerged 18 months after it was issued and just a day before royalty rates are to be set.

The Copyright Royalty Board meets on Thursday to rule on a requested 66% increase for sales of digital music from 9 cents to 15 cents a track.

A rise would have to be paid by either Apple, the record company or consumer. Apple opposed the rate hike and has said it is unwilling to raise its 99 cents a song price or absorb a rise.

In April 2007 the company's vice president for iTunes, Eddy Cue, submitted testimony to the Board at the Library of Congress.

"If iTS (iTunes Store) were forced to absorb any increase in the mechanical royalty rates, the result would be to significantly increase the likelihood of the store operating at a financial loss - which is no alternative at all.

About the Author

Thomas De Maesschalck

Thomas has been messing with computer since early childhood and firmly believes the Internet is the best thing since sliced bread. Enjoys playing with new tech, is fascinated by science, and passionate about financial markets. When not behind a computer, he can be found with running shoes on or lifting heavy weights in the weight room.

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Re: Apple threatens to close iTunes
by Anonymous on Thursday, Oct 02 2008 @ 02:16 CEST
At a time when nearly every company is looking to reduce costs, at a time when every household is likely to spend less on "extras" what gall, what arrogance to believe that raising the royalty rate AT ALL, let alone by a huge 66% is the proper thing to do.

$.99, which equates to $12+ for a CD worth of songs, on a pure digital distribution basis is bad enough as it is. To even think of raising it is horrid.

And Apple isn't in the business of handouts either. Would the royalty board care to give an accounting of why this cost should be so high? I'd bet not!

Oh yeah, so Madonna can go buy another castle. Pardon us for thinking that's a bit over the top.