“For five years, Apple’s iTunes Music Store has been the Internet’s most successful music store. But as music publishers have sought a higher share of its proceeds, Apple has threatened to shutter iTunes,” Devin Leonard reports for Fortune.
“The Copyright Royalty Board in Washington, D.C. is expected to rule Thursday on a request by the National Music Publishers’ Association to increase royalty rates paid to its members on songs purchased from online music stores like iTunes. The publishers association wants rates raised from 9 cents to 15 cents a track – a 66% hike,” Leonard reports.
“In a statement submitted to the board last year, iTunes vice president Eddy Cue said Apple might close its download store rather than raise its 99 cents a song price or absorb the higher royalty costs,” Leonard reports. “‘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.'”
“Piper Jaffray estimates that Apple will sell 2.4 billion songs this year, giving it an 85% share of the digital music market,” Leonard reports. “The Recording Industry Association of America says sales of digital songs and albums rose 46% last year, to $1.2 billion. But as Cue notes in his statement, Apple’s profits from iTunes remain slim. This is because Apple doesn’t think the market is strong enough for it to raise its 99-cents-a-song price.”
Full article here.
The National Music Publishers’ Association would do well to remember that, if they greedily insist on killing the goose that lays the golden eggs, there are ways for their former paying customers to obtain their product for free. The royalty rates from P2P are 0%.
Apple will not shut down its store – that will never happen!
Instead of increasing Royalty rates, why not take some money back from the huge slice that Music cartels take.
yay! raising the prices on goods that have no physical overhead(discs, sleeves, case, shipping, ect). You make a copy and put it on a server. Shut the fsck up.
Honestly, I don’t have a problem paying an extra dime, if I know that at least six cents of it is actually going to the artists.
I’ve started buying digital tracks directly from the artists whenever possible (and it’s rare).
If they close down the iTunes Store it’s back to Bit Torrent for me.
I haven’t touched that thing in years, either.
Why p2p when you can borrow cds from the local library? Same result, and you know what you’re getting!
I don’t know whether this is new to iTunes, but their recently revised “Terms of Service” says that iTunes is now available only to subscribers in the United States…
Casey O’Connor
much props to apple for playing hard ball.
Lets cut the percentage going to the middle-muddle… and give the real creators a bigger slice of royalties…
‘Apple threatens to shutter iTunes Store?”
Is that really a correct way to use that word? Shouldn’t it read “Apple threatens to shut down the iTunes Store?
Just curious. I’m sure there are some grammar police here…
@sleeve
Just because it’s not physical doesn’t mean it doesn’t have value and people who produce it don’t deserve to be paid for what they create.
I for one get sick and tired of people who say they aren’t paying for it but still want it and steal it. Those people have never produced anything anyone would want to rip off otherwise they might think different(ly) about it.
Wait, The National Music Publishers want more money, but who is getting the bulk of the money? Shouldn’t they be hammering the record company for this money? How many people get proceeds from iTunes?
There ought to be some “logic” to this. I thought all the money went to the record company and they would dole out royalities to various entities like the Music Publishers and what not…….
pssshhhhhhhhhhh
The labels should be giving the music away for free anyway.
I would think that the key here is “Why does the artist want to charge iTunes more. iTunes does not market the artist or create records. It only helps sell the artists work. There is a processing fee that Apple charges but the main money maker for music is the music cartels. In fact, many times then now own the music. It longer beongs to the artist. Just ask Madonna. When she left to join a new marketer, she had to leave all her own songs behind.
Its a crazy world out there. 🙁
en
These dolts will shoot themselves in the feet if they want to go toe-to-toe with Apple and Steve Jobs. What are the viable online music selling alternatives to iTunes are there at this point? maybe Amazon, but that’s it.
NBC thought they could pressure Apple, by leaving…
Look who came crawling back?
+++++++++++++++++++++++++++++
I’ve never bought anything from the iTS.
Paying 99¢ for a low bit-rate track is a rip-off.
If they were lossless…. maybe.
For a few bucks more than what they charge for an album, I can buy the CD, rip it at any bit rate I want as many times as I want. Plus I get a disk (to add to my music library), album art and liner notes. NONE of those things do I get for the price of a download.
@MikeK
I think “shutter” in this instance means to draw the blinds, close the shutters and vacate the premises as it were.
Apple doesnt own the music and charges a hefty price for its own products so it shoul just shut the fsck up.
The bigger it gets the more evil it gets.
“there are ways for their former paying customers to obtain their product for free. The royalty rates from P2P are 0%.”
—————————
There is always a way for people to obtain a product for free, It’s called stealing.
Very irresponsible for MDN to even suggest that it’s the only alternative.
iTunes was the only reason I stopped downloading free songs from P2P sources.
National Music Publishers’ Association should rethink what they are about to decide on… As Gogol Says:
“Oh yeah, oh no, it doesn’t have to be so. Forces of the creative mind are unstoppable!”
– DL copy of LimeWire
– DL every Metallica track available.
– Make hundreds of ‘mixed’ CDs
– Pass them around for free
– Bronfman has annerism
– Ulrich hangs himself
– No one notices
Oh, “John,” externalizing one’s inner self is so immature and banal. Frankly, your opinion means less here than Jack Valenti’s when he pronounced to one and all that video tape would initiate the demise of the movie business. You’re just another of the great unwashed who want everything to be free, with rose petals bestrewn beneath your feet, no evil corporate giants to shinny down your beanstalk, and magic beans for one and all.
You, sir, are a puerile ass . . . so begone. You are banished. Banished, do you understand? Back to your bridge, you troll.
I still prefer importing music @ lossless quality from CDs. That said, the recording industry needs to tred very carefully here. The recording industry is not very popular with the general public. But the general public considers Apple to be extremely chic, and the iTunes Store recently surpassed Wal-Mart to become the #1 distributor of music in the USA in terms of sales volume. In other words, who do you think the John Doe and his wife Jane are going to blame if the iTunes Store goes away? With a minimum of marketing on Apple’s part, John & Jane will think that it’s the recording industry’s fault.
If Apple shows its ping-pongs by closing the iTunes Store, the recording industry could find itself in some serious trouble. Amazon is really the only company at the moment which is in any sort of position to fill the void that would exist if the iTunes Store were to turn itself off.
@Shame on you MDN
MDN is not saying that people should steal, and is certainly not saying that stealing is “the only alternative.” It is simply stating the obvious fact that if iTunes closed, rates of stealing would go up, so the record companies would lose money. Therefore, to help the record companies themselves, in addition to of course the consumers and Apple, iTunes should remain open.
Remember that The Copyright Royalty Board is the same bunch of douchebags that want to run the internet radio stations out of business.