Apple Threatens to Shut Down iTunes
Musicians and their labels want Apple to increase the amount they make per digital music download. Apple says they would rather shut down iTunes music store. They are turning down a request for an increase of six more cents per song for music publishers and songwriters.
Apple has insisted on keeping the price at 99 cents per download arguing that any price increase above that will make them unprofitable. The Copyright Royalty Board is scheduled to decide on the proposal by a three-person board appointed by the Librarian of Congress by Thursday. Music publishers want their cut to go from 9 cents to 15 cents per song – a 66 percent increase.
Digital downloads have been at the same rate for 12 years and at the the same rate as the sale of physical albums. The board will also raise royalties on physical albums and ringtones, “for the next five years.” I don’t know if that means in five years they will raise the rates higher.
Wired quotes Apple’s iTunes vice president Eddy Cue as saying:
“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.”
Rather than raising prices to $1.05, running at a profit loss, or closing iTunes altogether, Apple is threatening the latter. Given the popularity of iPods and iTunes, I’m not buying what they’re selling. But Apple is taking a hard line stand – just as they’ve done on the DRM issue.
So far Apple has managed to get their way, despite a lot of challenges – not only from Amazon – but from other countries. A consumer group in Norway is threatening to sue Apple for making it difficult to playing music from iTunes on anything other than an iPod. They’re trying to recruit other countries to join the fight to get Apple to make music downloads available on other products – including mobile phones.