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iTunes Lives to See Another Day


By: Spacelab Research Staff

While we might have to pay a lot to bail out Wall Street, we won't have to pay more for music on iTunes. Whew!


The Copyright Royalty Board met last week about an increase for sales of digital music. The request was for a 66% increase of "mechanical" royalties from 9 cents to 15 cents a track. They voted to keep the rates the same, which will keep royalty rates stable for the next 5 years.


A popular recent theory is that the proposed rate increase would have called into question the existence of iTunes, as they tried to say in a statement given to the Copyright Royalty Board last year.


"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. Apple has repeatedly made it clear that it is in this business to make money, and most likely would not continue to operate iTS if it were no longer possible to do so profitably,” wrote Apple's Vice President of iTunes Eddy Cue.


It's hard to imagine that Apple would actually shut down iTunes, as it's been one of the main drivers of the iPod / iPhone revolution. Apple doesn't really make much money off of iTunes (or it should be said that they could be making an awful lot more if they wanted to), but rather uses ithe store to help sell iPods. Maybe last week's letter was tough talk that would provide a hedge at a time when they might have been forced to break a long-standing cardinal rule at Apple: the raising of rates for song purchases.


Tags: iTunes, copyright

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