Friday, October 3, 2008

Music Royalty Rate To Stay the Same, Apple iTunes Not Shutting Down

The Copyright Royalty Board on Thursday froze the rate that digital-music stores such as iTunes and RealNetworks' Rhapsody must pay music publishers. 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 with its decision to keep the royalty rate at 9.1 cents a song. The board also set the same rate for CDs and established a 24-cent rate for ringtones. The decision is the first time the board has established royalty rates for digital downloads. The rates are set for the next five years. What all this means of course is that Apple will not be shuttering iTunes--as if there was ever much of a chance of that--and appears to remain very much in control over the economics of digital music. Alarm bells were set off on Tuesday when Fortune magazine reported that Apple had told the CRB that "it most likely" would shut down iTunes if forced to pay too high a royalty rate. Eddy Cue, Apple's iTunes manager, had told the royalty board in April 2007 that the company "would not continue to operate (iTunes), if it were no longer possible to do so profitably."

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