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The Apple iTunes stores looks like it will be staying open after the Copyright Royalty Board in the USA declined a request by the National Music Publishers Association to increase royalties from 9 cents to 15 cents on songs purchased from online music stores.
The Apple iTunes stores looks like it will be staying open after the Copyright Royalty Board in the USA declined a request by the National Music Publishers Association to increase royalties from 9 cents to 15 cents on songs purchased from online music stores.
As we reported yesterday Apple opposed the proposed 66% increase and threatened to close the iTunes if the copyright fee was hiked up. According to Fortune Magazine PricewaterhouseCoopers estimates that Apple only makes about 10 cents a song in profit.
Apple spokesman Tom Neumayr said the company was happy with the ruling. “We’re pleased with the CRB’s decision to keep royalty rates stable,” he said.
In a statement issued this morning the Copyright Royalty Board which is made up of a a three-judge panel said that the most recent case followed the expiration last year of a 1997 decision that had governed sales of so-called physical music products like CDs for a decade.This was the board’s first ruling on the digital sale of music.
CNN Money said that iTunes is the largest music retailer on the Internet. Piper Jaffray estimates that Apple will sell 2.4 billion songs this year, giving it an 85% share of the digital music market.
But the company’s aggressive position in this case illustrates the challenges faced by the nascent digital music industry. The Recording Industry Association of America says sales of digital songs and albums rose 46% last year, to $1.2 billion. Apple laments that its profits are still slim. Therefore, Apple argues, it would be dangerous to raise its 99-cents-a-song price.
Apple pays an estimated 70 cents on the sale of every dollar it collects per song to the record companies responsible for each track. The record companies turn over 9 cents to the music publishers who control the copyrights to these tunes.
