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Royalty rate increase is rejected, Apple keeps iTunes open

Apple warned that iTunes would likely close down if rates were allowed to jump from 9 to 15 cents per song.

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Computing | by Greg Elliott | Fri Oct 3, 2008 2:36PM | 0 comments

The Copyright Royalty Board has rejected the royalty rate increase, from 9 to 15 cents per song, that prompted Apple to threaten a complete shutdown of iTunes. Originally Proposed by the National Music Publishers Association, the rate hike would have made the iTunes store unprofitable because Apple is unwilling to budge from its 99 cents per song model -- from which it currently pays 65 to 75 cents to labels and artists -- and eat the cost of the increase. Not surprisingly, Apple and the Digital Media Association are pleased with the decision and the iTunes store will remain open. Until now, royalty rates for digital sales have been subject to the rates set for physical albums, but the CRB's recent decision sets the rates at 9.1 cents for song downloads and 24 cents for ringtones for the next five years.

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