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

October 1, 2008 2:15 PM ET

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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Song Stories

“Promiscuous”

Nelly Furtado with Timbaland | 2006

This club-oriented single featuring Timbaland, who produced Nelly Furtado's third album, Loose, was Furtado’s sexy return after the Canadian singer's exploration of her Portuguese heritage on Folklore. "In the studio, initially I didn’t know if I could do it, 'cause Timbaland wrote that chorus," Furtado said. "I'm like, 'That's cool, but I don't know if I'm ready to do full-out club.'" The flirty lyrics are a dance between a guy and girl, each knowing they will end up in bed together but still playing the game. "Tim and I called it 'The BlackBerry Song,' she said, "because everything we say in the song you could text-message to somebody."

More Song Stories entries »
 
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