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Apple Threatens To Close iTunes

Published: Thu October 02, 2008  News Feed

A ruling by the Copyright Royalty Board tomorrow could spell trouble for Apple’s iTunes.


There are 8.5 million songs on the iTunes store

Apple have made a threat that they might axe their music store altogether if the US Copyright Royalty Board increases the price payable per track from nine cents to fifteen cents. Apple already pays 70 cents of each song purchase to the record companies, who aren’t willing to pay for the increase themselves. Since they would essentially be operating the service at a loss, Apple would rather shut the store down than raise their prices beyond 99 cents per track.

Eddy Cue of iTunes says: "If iTunes Store were forced to absorb any increase in the mechanical royalty rates, 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 clear that it is in this business to make money, and would most likely not continue to operate iTS if it were no longer possible to do so profitably," said Mr Cue.

The National Music Publishers' Association has argued for the rise on the ground that Apple make a substantial amount of money from their hardware. “We don't make a penny on the sale of an iPod,” they said.

The public have responded by saying: "it is a pathetic PR stunt to help their bargaining position so customers will put pressure on the Copyright Royalty Board to not increase the amount they want for each sale. It is no doubt that Apple has a fully-costed Plan B in place in case they needed to drop the store."

 

 
 
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