The National Music Publishers Association, a trade group representing music publishers, has presented a proposal to the Copyright Royalty Board, the three-judge panel that determines royalty rates and copyright terms in the U.S., that would see the royalty rate for digital music sales paid to music publishers increased to 15 cents per track. The move comes after the expiration of a ten year agreement that had set the royalty rate for all music sales at the current rate of 9 cents for each song. The board’s forthcoming ruling, expected Thursday, will set the rate for the next five years.
This means that a single song download would cost Apple more which would force it to increase its current 99 cents price. However, Apple will not agree to the increase in royalty rate since it would drastically lower the digital music sales. Hence, if the proposal would be approved, Apple is threatening to shutdown iTunes.
According to Fortune, Apple pays 70 cents to the record companies for every song it sells who in turn pays 9 cents to the record publishers who own the copyrights. With the increase in the royalty, Apple will only have 23 cents left to finance iTunes’ operations since the record companies would not likely to absorb the said increase. Hence, such a situation could lead Apple to operate in the negative that shutting down iTunes would be the best alternative.
We know how it is when prices are up….there are a lot of ‘alternatives’ in the net. As such, music industry’s sales would significantly be reduced. And we are talking of ALL forms of media.
Well, let’s see.