Apple Talks Tough, Threatens To Close iTunes If Royalty Rate Rises

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A ruling by the Copyright Royalty Board tomorrow could spell trouble for Apple's iTunes. The National Music Publisher's Association has asked for a 66 percent increase on the royalty rate paid out on the sales of digital music — from nine cents per track to 15 cents. In a statement submitted to the board last year, Apple warned that they may shutter digital-music service iTunes if the request was approved. Apple already pays 70 cents of each song purchase to the record companies, who aren't willing to pay for the increase themselves. Since they would essentially be operating the service at a loss, Apple would rather shut the store down than raise their prices beyond 99 cents per track. While it's hard to fathom that Apple would close the world's most successful digital music store — possibly cutting into the sales of iPods and iPhones, where they make their real money — the fee hike would definitely have some adverse effects, most likely on the consumers' wallets.

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