Royalty rates frozen, iTunes not shutting down

Posted by Wolfgang Gruener

New York (NY) - Yes, we know, it was unlikely that iTunes would shut down over a possible increase in royalty rates for music downloads anyway, but it is nevertheless noteworthy that the Copyright Royalty Board apparently decided to leave the current rates in place – which means that Apple won’t be charged higher fees, digital downloads are likely to cost the same next year and artists will not be getting a greater portion of the download revenue pie.

Cnet heard from “sources” that “the three-member board that sets statutory copyright licenses e-mailed the Digital Media Association (DiMA), the National Music Publishers' Association, Apple, and other download stores.”

As previously reported, music publishers requested a 6 cent increase (9 to 15 cents) per download for artists. Currently, 70 cents of a 99 cent download go to publishers, 9 cents to artists and 20 cents remain with Apple. A 6 cent increase would have meant that artists would get a 66% increase in pay and Apple would take a 30% hit. Obviously, Apple was not to happy with that model and threatened that it would shut iTunes down if it can’t make any money with the store.

It was not discussed whether music publishers would surrender a portion of their pie to artists, but the current disagreement appears to be another battle over maintaining and gaining influence in the music market. In the view of the music industry, Apple is much too powerful, but is able to shift an estimated 2.5 billion songs per quarter, which translates into a massive revenue source. On the other hand, a more powerful Apple is an obvious threat to the role of the music industry as a hub the controls music distribution today.