QueenB
10-01-2008, 10:56 AM
Just been reading this story about itunes and how Apple would rather close its itunes store than pay more in royalties. I doubt that will happen but, its interesting to read and the response from the Music Publishers’ Association is great - they make no money selling ipods so they dont care if they charge Apple more :D.
Apple would rather close the iTunes music store than increase prices to meet higher royalty costs, according to the head of its Internet Services division.
The US Copyright Board is expected to rule later this week on a claim by the Music Publishers’ Association (MPA) for an increase in the royalty on digital sales from 9 to 15 cents per track.
But Apple’s Eddy Cue told Fortune that the company is not prepared to bear the burden of any increase.
“The result would be to significantly increase the likelihood of the store operating at a financial loss - which is no alternative at all,” he wrote in a submission to the board,.
Apple charges 99 cents per track, of which 70 cents go to the record company which then passes on the royalties. But with record company revenues falling by the year, they are unlikely to absorb the extra cost themselves. Instead the burden will fall on Apple either to cover the increased royalties out of its own margin - already slim once server and bandwidth costs, salaries, credit card fees and other expenses have been met - or to increase prices, something it has steadfastly refused to do.
In fact Apple, as a member of the Digital Music Association (DiMA), has called for a reduction in the royalty rate, arguing that it has risen - and looks likely to rise further - while the average price per track has fallen.
MPA president David Israelite is unmoved.
“Apple may want to sell songs cheaply to sell iPods,” he said. “We don’t make a penny on the sale of an iPod.” Nor, it might be said, from a record, cassette or CD player.
via (http://www.pcpro.co.uk/macuser/news/227664/apple-threatens-to-close-itunes-if-costs-rise.html)
Apple would rather close the iTunes music store than increase prices to meet higher royalty costs, according to the head of its Internet Services division.
The US Copyright Board is expected to rule later this week on a claim by the Music Publishers’ Association (MPA) for an increase in the royalty on digital sales from 9 to 15 cents per track.
But Apple’s Eddy Cue told Fortune that the company is not prepared to bear the burden of any increase.
“The result would be to significantly increase the likelihood of the store operating at a financial loss - which is no alternative at all,” he wrote in a submission to the board,.
Apple charges 99 cents per track, of which 70 cents go to the record company which then passes on the royalties. But with record company revenues falling by the year, they are unlikely to absorb the extra cost themselves. Instead the burden will fall on Apple either to cover the increased royalties out of its own margin - already slim once server and bandwidth costs, salaries, credit card fees and other expenses have been met - or to increase prices, something it has steadfastly refused to do.
In fact Apple, as a member of the Digital Music Association (DiMA), has called for a reduction in the royalty rate, arguing that it has risen - and looks likely to rise further - while the average price per track has fallen.
MPA president David Israelite is unmoved.
“Apple may want to sell songs cheaply to sell iPods,” he said. “We don’t make a penny on the sale of an iPod.” Nor, it might be said, from a record, cassette or CD player.
via (http://www.pcpro.co.uk/macuser/news/227664/apple-threatens-to-close-itunes-if-costs-rise.html)