Apple Threatens to Close iTunes Store Over Possible Royalty

Apple Threatens to Close iTunes Store Over Possible Royalty Hikes

http://www.macrumors.com/2008/09/30/apple-threatens-to-close-itunes-store-over-possible-royalty-hikes/

According to Fortune, the Copyright Royalty Board in Washington D.C. is expected to rule on Thursday about a request by the National Music Publishers' Association to increase royalty rates for downloads from online music stores such as iTunes. The request asks for an increase in rates from 9 cents to 15 cents a track. It should be noted that this group represents the copyright holders of songs and is distinct from the record companies themselves.

Understandably, Apple is opposed to the rate increase and, in a statement submitted to the board, even suggested that Apple might close iTunes altogether:

"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."

Apple claims that the market would not accept an increase in the per-track price and that overall sales would decrease. The Fortune article writer doubts that Apple would take such drastic measures as closing the iTunes Store as Apple has used it to leverage hardware sales of iPods and now iPhones.

http://money.cnn.com/2008/09/30/technology/itunesthreat.fortune/index.htm?postversion=2008093014

this seems pretty bad

yes it does. though i doubt they will really close the itunes store

I don't like the sound of this

yeah that would be bad. i doubt they would close it though b/c its so successful and in the end they would lose a lot of profit.

but they would be getting no profit if they raise the fees