iLounge

By Charles Starrett

Senior Editor, iLounge
Published: Thursday, October 2, 2008
News Category: iTunes

The Copyright Royalty Board has issued new guidelines which leave the royalty rate for digital downloads at 9.1 cents per song sold. As a panel of three federal judges that sets the royalty rates paid by record labels to music publishers and songwriters for the sale of CDs or digital downloads, the Board had been under pressure from the National Music Publishers Association to raise the rate to as high as 15 cents per song, a proposal that Apple had openly opposed.

“If iTS (iTunes Store) were forced to absorb any increase in the mechanical royalty rates, the result would be to significantly increase the likelihood of the store operating at a financial loss - which is no alternative at all,” Eddy Cue, Apple’s vice president of Internet Services, told the Board in April 2007. “Apple has repeatedly made clear that it is in this business to make money, and would most likely not continue to operate iTS if it were no longer possible to do so profitably.” The threat was apparently not further substantiated over the last year and a half, in which Apple became the country’s largest music retailer, a fact which would have made a shutdown of the iTunes Store extremely unlikely. Additionally, the board for the first time set a royalty rate of 24 cents for ringtone sales, which were not covered under the group’s previous guidelines.