Apple Threatens To Close iTunes Music Store Pending Copyright Board Decision

Edward Kirk · October 1st, 2008, 11:30 AM

Apple is threatening to close down it's massively popular iTunes Music Store pending a ruling this Thursday by the Copyright Royalty Board in Washington, D.C. The National Music Publishers Association is demanding that Apple raise their rates from $0.09 per track to $0.15, a 66% increase. However, Apple refuses to raise the price for consumers, and rather than absorb the cost and operate at a loss, they would simply close the store down.

"If the [iTunes music store] was forced to absorb any increase in the ... royalty rate, the result would be to significantly increase the likelihood of the store operating at a financial loss - which is no alternative at all," wrote iTunes VP Eddy Cue. "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."

The Copyright Royalty Board consists of three judges that oversee statutory licenses granted under federal copyright law, which includes royalty rates for selling music. Their decision on wether to increase rates will remain in effect for the next five years.

Apple will sell around 2.4 billion songs this year according to estimates from Piper Jaffray, which will account for 85% of music sold. Still, despite controlling most of the market, their profits from the iTunes store are small, in large part due to their belief that the market can't handle a price higher than $0.99 per song. "I have no doubt that an increase in the per track price would lower total music purchases at the store," the Apple executive said in his statement.

In addition to the $0.09 they pay in royalties now, they pay record companies $0.70 of the $0.99 they get. However, record companies aren't willing to pay the 66% increase, but are instead asking Apple to foot the bill.

Still, "I think we established a case for an increase in the royalties," said David Israelite, president of the National Music Publishers Association. "More importantly, we were able to beat back the proposal that could be a [royalty] cut."

"Apple may want to sell songs cheaply to sell iPods," he said. "We don't make a penny on the sale of an iPod."

[via CNN]

octane · October 1st, 2008, 11:53 AM #2

Greedy bastards... "We don't make a penny on the sale of an iPod."

'Cause you have no COST in the sale of an iPod!!

No risk no reward!

madscientest · **Fine with me** - October 1st, 2008, 11:58 AM #3

That would be ok with me. ive been an apple customer since 1999 and have started using itunes when it first came out. i was disappointed to see the store open, espically when it used itunes to do so. The fact that now itunes carries everytype of media including movies, tv shows has gotten out of hand and has lost the real purpose of the program which is music, hence the name ITUNES not imoves or itv.

It would be nice to have itunes only for music on the computer and have a completely different app for syncing movies, and all that other garbage. I just want itunes the way it was before apple started adding crap to it. just a basic mp3 player where i can store my music. It does not need to be this complicated where i can store movies in itunes. if they keep doing that why dont they change the name to imedia or something better fitting?

GERGreg427 · October 1st, 2008, 12:09 PM #4

Quote:

Originally Posted by madscientest

That would be ok with me. ive been an apple customer since 1999 and have started using itunes when it first came out. i was disappointed to see the store open, espically when it used itunes to do so. The fact that now itunes carries everytype of media including movies, tv shows has gotten out of hand and has lost the real purpose of the program which is music, hence the name ITUNES not imoves or itv.

It would be nice to have itunes only for music on the computer and have a completely different app for syncing movies, and all that other garbage. I just want itunes the way it was before apple started adding crap to it. just a basic mp3 player where i can store my music. It does not need to be this complicated where i can store movies in itunes. if they keep doing that why dont they change the name to imedia or something better fitting?

So, you would like your iphone to have to sync with 2+ more programs before its done syncing? You want it to have to open more programs and slow down your computer? The all-in-one function does not hurt itunes, but gives it more options without slowing down your computer. If I had to open mutiple programs for one sync to my iphone, it would be like owning a windows mobile phone, and i left that because it was to dificult to sync.

hawkmankt · October 1st, 2008, 12:25 PM

What a knucklehead. It's not like you can't just avoid using iTunes for things other than music. I mean, it's not incovenient for you or anything.

I think it would be a real shame if iTunes shuts down. Apparently these people wanting the royalties forgot that the reason their products are selling as much as they are is because of iTunes.

Just look at the app developers people. They've lowered the pricing on their products as they have come to realize that the more you sell the better. Not how much you sell it for.

Get a grip people.

WmH2 · October 1st, 2008, 12:35 PM #6

Apple should stick to their guns! Does anyone know what the Copyright Royalty Board actually brings to the table? If they are protecting the record labels, then they should be paid by the record labels! And not Apple!

madscientest · no - October 1st, 2008, 12:49 PM #7

Quote:

Originally Posted by GERGreg427

So, you would like your iphone to have to sync with 2+ more programs before its done syncing? You want it to have to open more programs and slow down your computer? The all-in-one function does not hurt itunes, but gives it more options without slowing down your computer. If I had to open mutiple programs for one sync to my iphone, it would be like owning a windows mobile phone, and i left that because it was to dificult to sync.

Just use one program called SYNC to sync ipods and iphones info. not a program for every media. sorry if i was misunderstanding.

madscientest · October 1st, 2008, 12:56 PM

Quote:

Originally Posted by hawkmankt

What a knucklehead. It's not like you can't just avoid using iTunes for things other than music. I mean, it's not incovenient for you or anything.

I think it would be a real shame if iTunes shuts down. Apparently these people wanting the royalties forgot that the reason their products are selling as much as they are is because of iTunes.

Just look at the app developers people. They've lowered the pricing on their products as they have come to realize that the more you sell the better. Not how much you sell it for.

Get a grip people.

for one i dont use itunes for anything other than music cause there is a program for other media types, like iphoto and imovie for uumm movies. I always wondered why they put movies in itunes? it makes no since. like the chewbacca defence from south park, it makes no since! and yes it is inconvenient cause i have to store movies in two location and import the movie into itunes to sync.

if you were a real apple fan from way back you would understand, im not asking anyone to agree with me but that is my opinion. goodbye and good riddance to the music store...

Stephen007 · October 1st, 2008, 02:06 PM #9

One of your main gripes appears to be the name. It's still called iTunes because that's what it originally was. It's what people are used to. Many (most?) people still say they're going to "tape" a show even if they're really using TiVo or their DVR.

You can hate that they've changed iTunes to inlcude more stuff, more features & more complexity. To some extent I agree but still... suck it up & use it or choose to use a different program is what it really comes down to.

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Edward Kirk WrAdminterizer Join Date: Apr 2007 Location: Illinois, USA Posts: 3,084 Thanks: 19 Thanked 26 Times in 25 Posts	Apple Threatens To Close iTunes Music Store Pending Copyright Board Decision - October 1st, 2008, 11:30 AM #1
	<script language="JavaScript" src="http://adserver1.backbeatmedia.com/servlet/ajrotator/13894/222/viewJScript?pool=13886&type=3158&pos=20&zone=5000"></script> Apple is threatening to close down it's massively popular iTunes Music Store pending a ruling this Thursday by the Copyright Royalty Board in Washington, D.C. The National Music Publishers Association is demanding that Apple raise their rates from $0.09 per track to $0.15, a 66% increase. However, Apple refuses to raise the price for consumers, and rather than absorb the cost and operate at a loss, they would simply close the store down. "If the [iTunes music store] was forced to absorb any increase in the ... royalty rate, the result would be to significantly increase the likelihood of the store operating at a financial loss - which is no alternative at all," wrote iTunes VP Eddy Cue. "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." The Copyright Royalty Board consists of three judges that oversee statutory licenses granted under federal copyright law, which includes royalty rates for selling music. Their decision on wether to increase rates will remain in effect for the next five years. Apple will sell around 2.4 billion songs this year according to estimates from Piper Jaffray, which will account for 85% of music sold. Still, despite controlling most of the market, their profits from the iTunes store are small, in large part due to their belief that the market can't handle a price higher than $0.99 per song. "I have no doubt that an increase in the per track price would lower total music purchases at the store," the Apple executive said in his statement. In addition to the $0.09 they pay in royalties now, they pay record companies $0.70 of the $0.99 they get. However, record companies aren't willing to pay the 66% increase, but are instead asking Apple to foot the bill. Still, "I think we established a case for an increase in the royalties," said David Israelite, president of the National Music Publishers Association. "More importantly, we were able to beat back the proposal that could be a [royalty] cut." "Apple may want to sell songs cheaply to sell iPods," he said. "We don't make a penny on the sale of an iPod." [via CNN] __________________ About my iPhone: iPhone & Color: iPhone 3G 16GB White iPhone Version: 3.0 Computer & OS: MacBook Pro 15", Mac OS X 10.5.4 Twitter

octane Forum Lurker Join Date: Apr 2008 Posts: 2 Thanks: 0 Thanked 0 Times in 0 Posts	October 1st, 2008, 11:53 AM #2
	Greedy bastards... "We don't make a penny on the sale of an iPod." 'Cause you have no COST in the sale of an iPod!! No risk no reward!

madscientest Rocks the Board Join Date: Sep 2007 Location: CA Posts: 294 Thanks: 1 Thanked 0 Times in 0 Posts	Fine with me - October 1st, 2008, 11:58 AM #3
	That would be ok with me. ive been an apple customer since 1999 and have started using itunes when it first came out. i was disappointed to see the store open, espically when it used itunes to do so. The fact that now itunes carries everytype of media including movies, tv shows has gotten out of hand and has lost the real purpose of the program which is music, hence the name ITUNES not imoves or itv. It would be nice to have itunes only for music on the computer and have a completely different app for syncing movies, and all that other garbage. I just want itunes the way it was before apple started adding crap to it. just a basic mp3 player where i can store my music. It does not need to be this complicated where i can store movies in itunes. if they keep doing that why dont they change the name to imedia or something better fitting?

hawkmankt Forum Lurker Join Date: Sep 2008 Posts: 9 Thanks: 0 Thanked 0 Times in 0 Posts	Who cares about iTunes being about more than tunes? - October 1st, 2008, 12:25 PM #5
	What a knucklehead. It's not like you can't just avoid using iTunes for things other than music. I mean, it's not incovenient for you or anything. I think it would be a real shame if iTunes shuts down. Apparently these people wanting the royalties forgot that the reason their products are selling as much as they are is because of iTunes. Just look at the app developers people. They've lowered the pricing on their products as they have come to realize that the more you sell the better. Not how much you sell it for. Get a grip people.

WmH2 iPA Regular Join Date: Jan 2008 Location: St. Louis, MO Posts: 43 Thanks: 0 Thanked 1 Time in 1 Post	October 1st, 2008, 12:35 PM #6
	Apple should stick to their guns! Does anyone know what the Copyright Royalty Board actually brings to the table? If they are protecting the record labels, then they should be paid by the record labels! And not Apple!

Stephen007 Rocks the Board Join Date: Dec 2007 Location: Milwaukee WI Posts: 347 Thanks: 20 Thanked 3 Times in 3 Posts	October 1st, 2008, 02:06 PM #9
	One of your main gripes appears to be the name. It's still called iTunes because that's what it originally was. It's what people are used to. Many (most?) people still say they're going to "tape" a show even if they're really using TiVo or their DVR. You can hate that they've changed iTunes to inlcude more stuff, more features & more complexity. To some extent I agree but still... suck it up & use it or choose to use a different program is what it really comes down to.