Online music avoids rate hike
Found on BBC News on Saturday, 04 October 2008
The veiled threat to shut down iTunes if royalty rates on downloaded songs were hiked has been averted.
The National Music Publishers Association (NMPA) asked for the rise while Apple opposed it and said it could result in iTunes being shut down.
"Apple has repeatedly made clear that it is in this business to make money and would most likely not continue to operate iTS (the iTunes Store) if it were no longer possible to do so profitably."
The CRB also rejected a call to cut the rate to 4.8 cents and in the end agreed to peg it at 9.1 cents a song for the next five years.
"Could result" and "most likely" makes this a hollow threat. Apple would have never closed iTunes, even if royalties raised from 9 to 15 cents. So let's say Apple would have started with those royalties five years ago: 5 billion sold songs for 99c each results in an income of 4.95 billion. Apple would have paid 742.5 million instead of 445.5 million in royalties; that's a difference of 297 million; or 59.4 million per year. Not really that much considering the billions Apple made. Especially since they only provide the shop, and never made the music.