The headlines were pretty jarring . . .
“Apple threatens to shut down the iTunes Store over royalty rate increases”
“Apple threatens to shut down iTunes Store (really!) if forced to pay higher rates”
“Apple’s digital music showdown” … “an Apple threat to close iTunes looms”
Huh? What gives?
Seems that the Copyright Royalty Board, a three-judge panel that oversees statutory licenses granted under federal copyright law, is expected to rule Thursday on a request by the National Publishers’ Association to increase royalty rates paid to its members on songs purchased from online stores like iTunes.
The publishers’ association wants rates increased from 9 cents to 15 cents a track. At the same time, the Digital Media Association, which represents digital music stores, wants rates lowered to 4.8 cents per track.
Apple, the No. 1 music seller in the world, accounts for 85 percent of digital songs sold. It pays an estimated 70 percent of digital music revenue to record companies, who pass on a percentage to artists.
Eddy Cue, an Apple vice president, filed a statement with the board around April 2007 — why it’s coming to light now is anybody’s guess — said, “If the [iTunes 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.
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