iTunes Safe: CRB Denies Request to Raise Royalty Rates

The Copyright Royalty Board yesterday denied the National Music Publishers’ Association’s request for an increase in royalty rates for music sold online.

The National Music Publishers’ Association was this week seeking to increase the royalty rates for artists from 9 cents to 15 cents for each track purchased from online music stores. The news was not well received.

iTunes charges 99 cents a song, with the recording industry accounting for 61 cents, 9 cents going to the artists and the remainder going into Apple’s pocket. Apple claims the 29 cents the company makes per song is barely enough to maintain the iTunes store, let alone make a profit.

Vice President of iTunes, Eddy Cue told the Board in a statement submitted last year that if Apple’s online music store was forced to absorb any increase in royalty rates, it would “increase the likelihood of the store operating at a financial loss – which is no option at all,” which would mean no more iTunes at all. “Apple has repeatedly made it clear that it is in this business to make money, and most likely would not continue to operate [the iTunes music store] if it were no longer possible to do so profitably,” he added.

Whether this was an empty threat or not, we may never know. The CRB’s decision to keep digital royalty rates where they are means iTunes will remain open for business. Jonathon Potter from the Digital Media Association, which represents online music stores (including Apple), said that keeping the current rates will help the growth and innovation of digital services and retailers for several more years.