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Could new royalty rates kill iTunes?

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After carving out a major place for itself in the music industry, Apple warned that new royalty rates could spell doom for its iTunes Store.

Washington's Copyright Royalty Board will decide Thursday how much music publishers may charge for each song downloaded through online stores. In this battle over slices of the pie, the National Music Publisher's Association is pushing to increase the standard price-per-track royalty fee from 9 cents to 15 cents. This 66-percent hike is too much, says Apple. It wants the fee closer to 4.8 cents per song, bringing it back down to 1980s levels, according to Ars Technica.

"If [the iTunes store were] forced to simply 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," Eddy Cue, Apple's VP of in charge of the iTunes Store, wrote in a statement to the royalty board. "Apple has repeatedly made clear that it is in this business to make money, and most likely would not continue to operate [the iTunes store] if it were no longer possible to do so profitably."


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