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

10/1/08, 2:15 pm EST

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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Comments

Steve Getarealjobs | 10/2/2008, 7:44 pm EST

auramac is just another one of the group who react with a knee-jerk-type reaction whenever anything happens or is said in the media that does not paint Apple as the sole saviour of the digital future.

Wake up, dude–stop being a lemming and get a clue. Stop swallowing the pablum Jobs and Co. have been feeding the like of you for the past decade. Apple is good at making money, and that’s fine, but, ultimately, at what cost to the social fabric they are portrayed to be guardians of?

Jimmy | 10/2/2008, 5:41 pm EST

Auramac is so right.

pffff | 10/2/2008, 3:38 pm EST

Gronge: you fucking hippie

KillTheMusicIndustry | 10/2/2008, 3:11 pm EST

The Industry has never paid artists properly… never has there been so much transparency… it simple..
99 cents too much for

cut it to 60 cents a trak

artist gets 30 cents
record company gets 15 cents
Itunes gets 15 cents

of Ipods

the artist pool gets 1% of gross RETAIL sales from IPOD hardware -split based on downloads sold to be paid out yearly..

same with record industry…

now shut up get on with it and make the downloads hig rez

Gronge | 10/2/2008, 2:47 pm EST

I hate the music industry today. the labels are so greedy!! I mean come on. I LOVE what Radiohead is doing. it’s smart of them to release there OWN music WITHOUT a label and LET THE PEOPLE PAY WHAT THEY WANT! They release it over the internet so they don’t have to make stupid cases and booklets. It helps the environment AND saves you time and money!

Vince Wylde | 10/2/2008, 2:36 pm EST

Many of you blaming Apple for this as opposed to the RIAA ought to go cash a nice big fat reality check.

The issue is, and always has been, the RIAA wanting to manipulate radio airplay, genre control, and churn out disposable artists to further fill their pockets. When you’ve worked in radio as long as I have, you know this goes on.

Blaming companies like Apple, Microsoft, and Amazon for this problem is blase ignorance and fullfillment of one’s own personal agenda and/or opinions. It’s nice and even all hero-like to say, “Good, maybe people will start buying physical copies again.” But bear in mind, if you break down the math you soon realize the Major Labels make damn near a 200% profit while artists report only making on average $.89 a cd. Thats CENTS.

Like it or not, Apple, Microsoft, and Amazon are the heroes for embracing the digital music age. If the RIAA gets their way, ultimately, the independent artist who offers album downloads will no longer have that venue because the mere format of MP3 will be considered illegal as someone on Limewire could use it to share RIAA controlled music.

dude | 10/2/2008, 2:25 pm EST

LONG LIVE VINYL

Briggs | 10/2/2008, 1:57 pm EST

When someone spends 9.99 on an itunes album 14% goes to the Artist, 30% goes to Apple, and 56% goes to the label. The label also saves big money over selling CD’s because of manufacturing, distribution, and packaging. I would expect record companies to eat the increase because they don’t want to see this cash cow die. If they don’t we’ll see Apple stand firm and they’ll back down when the losses kick in. The dispute between Apple and NBC is a perfect example. I don’t know about you but I’m happy to be able to download the office again and not have to pay the increase NBC wanted.

The Seeker | 10/2/2008, 1:21 pm EST

Good, maybe more people will start buying physical formats again.

Jungleland2 | 10/2/2008, 12:18 pm EST

Why are these posts “shame on Apple” and not “Shame on the record companies”???? They take $.70 per song and pay the artist $.09 (or less for artisits who signed contracts in the 1970’s who get $.03 per song - regardless of the format)

The record companies need to eat this increase, not Apple.

The cost of paper, gas, printing, shipping have all gone up in the last 2 years, the money the labels SAVE by selling through I-tunes has to be more than $.03 a song.

Bill | 10/2/2008, 11:29 am EST

Tell your record company:

I want my MP3!

The music-buying public has spoken. Walmart, Amazon and, to some extent, iTunes have switched to MP3 sans DRM. The only thing standing between us and portable digital music is greed.

Kaptain K | 10/2/2008, 8:54 am EST

I’m looking at the fine print of my TV on the Radio cd and it says ‘Touch and Go Records under exclusive liscence to Interscope Records’. Obviously TVOTR need Interscope otherwise their cd wouldn’t make it all the way to the mall in my little town. It cost $15 (@ $1.20 per cut). It sounds fantastic on my stereo (no mp3 reduction in quality).
I hate record companies, too but this is another example of my $15 well spent. Same with new Metallica, Motorhead etc.

gwill | 10/1/2008, 8:52 pm EST

Greed? How is it greed to operate a service at a loss and refuse to raise the price of a good that consumers want. And to think there was zero investment from the record companies in this revolutionary technology that now delivers them a whopping 70% profit on every dollar of music. The prices of music are FIXED people. WHy would prices go up when technology makes it cheaper and cheaper to produce and sell music. Anyone can record high quality these days. There is no packaging for digital music. And promotion of artists is all done by Apple’s iTunes service. And for you Microsoft lovers, the Goliath Walmart only allows downloads on Explorer/ Windoze. Seems like to me Apple is not to blame for the greed of record companies who refuse to adapt 15 years after their industry began its self-inflicted free fall.

gwill | 10/1/2008, 8:51 pm EST

Greed? How is it greed to operate a service at a loss and refuse to raise the price of a good that consumers want. And to think there was zero investment from the record companies in this revolutionary technology that now delivers them a whopping 70% profit on every dollar of music. The prices of music are FIXED people. WHy would prices go up when technology makes it cheaper and cheaper to produce and sell music. Anyone can record high quality these days. There is no packaging for digital music. And promotion of artists is all done by Apple’s iTunes service. And for you Microsoft lovers, the Goliath Walmart only allows downloads on Explorer/ Windoze.

auramac | 10/1/2008, 8:44 pm EST

Apple has fought to keep prices down from the very beginning as well as putting an end to people stealing music. Apple-bashing has been going on from day one (the eighties) by idiots for various reasons whether or not the company has been successful. There are always valid criticisms of any product, company, or magazine, but the negative comments I’ve seen here are clearly moronic and best ignored.

JoeNY | 10/1/2008, 8:23 pm EST

Capitalism and the free market provide the reason for creative thought and product. Who would spend years creating an invention like the IPOD without riches at the end of the rainbow. Apple, like others provide a terrific product that millions enjoy. Yes, they make a buck, but without the desire to make that buck there would be no reason to exist. Capitialism is the great equalizer. For anyone who does not wish to join, move to South America with the red shirt and let him take over your business.

JoeNY | 10/1/2008, 8:22 pm EST

Capitalism and the free market provide the reason for creative thought and product. Who would spend years creating an invention like the IPOD without riches at the end of the rainbow. Apple, like others provide a terrific product that millions enjoy. Yes, they make a buck, but without the desire to make that buck there would be no reason to exist. Capitialism is the great equalizer. For anyone who does not wish to join, move to South America with the red shirt and let him take over your business.

Steve Getarealjobs | 10/1/2008, 7:46 pm EST

Apple is more of a monster than Microsoft could ever HOPE to be. I hope and pray they do close iTunez because of this petty issue–and one that has nothing to do with the RIAA anyhow!

Apple got a bone up their rear-end because a three-person board of the US Library of Congress was expected to recommend a six-cent increase in the royalties awarded to recording artists for their material. Six freakin’ cents per recording!

If Apple is this greedy, they should be ashamed of themselves; but, since they ARE this greedy (and more) they will be plenty of ice cubes and snocones in Hades before this happens.

Microsoft has traditionally been the whipping boy for everyone looking to bash companies for unfair treatment, privacy abuses, and general ignorance when it came to their customers. Well, just wait–you ain’t seen nothin’ yet.

Just wait until you see what Apple can do with your hardware, software, property, and personal information, and watch what destruction they can make of your personal life and privacy. Apple is a corporate monster like few others–beware!

Steve Getarealjobs | 10/1/2008, 7:37 pm EST

This is all about a Library of Congress committee that may vote to increase royalties fees by six cents per recording. That I could see, it had nothing to do with the RIAA, though it may, scumbags that they are.

Speaking of scumbags, though, if Apple wants to shutdown their biggest cash cow for the sake of giving artists an additional six cents per recording, I hope and pray that they do it–and reveal what a greedy, fascist monster the whole Apple organization is.

People used to talk up (and still do) Microsoft as a godless, steamrolling monopoly–wait until you all get a load of Apple and what they will do with your hardware, software, personal information and yes, your personal life and privacy. Don’t say you didn’t see it coming. They are going to be a monster far larger and more dangerous than Microsoft could ever HOPE to be.

The Lady | 10/1/2008, 7:28 pm EST

I kinda agree with “stupid companies” post. During this time, the industry should be grateful people are paying at all.
Focus on something else becuase so far iTunes is the only strategy that is working….

Stick it to em | 10/1/2008, 7:14 pm EST

Way to go Apple. Stand your ground.

Bill | 10/1/2008, 6:54 pm EST

I hope Apple sticks to its guns. I am sick of the greed of the RIAA.

Jeff | 10/1/2008, 5:52 pm EST

So if the label gets 70 out of 99 cents, I wonder just how much the artist makes? no wonder the music biz is wacked, unless you sell a half-million copies of every album you record, you won’t exist on a major label. just think about how many GREAT bands didn’t sell that many albums………and wouldn’t exist in today’s market.

ted | 10/1/2008, 5:23 pm EST

who pay’s for downloads anyway?

buy the album | 10/1/2008, 4:23 pm EST

if songs go above 99 cents you might as well just buy the album.

stupid music companies | 10/1/2008, 3:27 pm EST

,,,,record and disc sales spiral downward,,,,,,theses guys should be happy that the younger generation is buying ANY music, let alone digital downloads. But nooooooooo,,,lets grab whatever money we can from our few customers, the rest we will sue. Just stupid.

frank | 10/1/2008, 3:10 pm EST

This will never happen, as good as Apple is, they are greedy just as much as every other conglomerate out there…

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