Filed under: Apple Corporate, iTS
Royalty rate stays the same, iTunes Store still open
The U.S. Copyright Royalty Board decided today to keep rates the same for digital music stores, kneecapping Apple's threat to shut down the iTunes Store rather than operate at a loss.
The three-member board kept the royalty rate at 9.1 cents, and mandated a 24-cent rate for ringtones. The board has never before established mechanical rates for digital files.
"We're pleased with the CRB's decision to keep royalty rates stable," said an unnamed Apple spokesman.
The popularity of Eddy Cue's statement that Apple would shutter the iTunes Store apparently had an effect on the board. "Sure it was posturing," said a music industry source, according to CNET. "I don't think Apple would have gone out of business but a statement like that from the biggest music retailer is going to carry some weight."
[Via CNET.]
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Reader Comments (Page 1 of 1)
grull27 said 9:20PM on 10-02-2008
If I wake up tomorrow and iTunes isn't there.
I'm going to kick some ass!
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Zephyr said 10:47PM on 10-02-2008
I don't really think Apple would operate at a loss anyway...
It's not like they have production costs :s
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KarlW said 11:13PM on 10-02-2008
"I don't think Apple would have gone out of business but a statement like that from the biggest music retailer is going to carry some weight."
That was always the point. Apple bluffed it just to see how much weight they have. With record labels trying to crush Apple's monopoly on digital music, Apple want to re-establish just how important they are.
It's like at the end of the first part of the Godfather, except Apple's just threatening it.
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Tomahawk said 11:18PM on 10-02-2008
"24-cent rate for ringtones" that is one of the biggest rippoffs. Why is the royalty rate higher if I want 10-15 seconds of a song rather then 5 minutes of a song. I think ringtones should be free! They really are just and advertisement that is being addressed to everyone around, so why should I or anyone have to pay for it. I meanhonestly lets think about this is someone going to listen to that same 10-15 second ringtone over and over again and say to themselve, "I hate this song so I won't buy it, but I keep it as a ringtone. I don't think so.
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ghostshadow said 1:17AM on 10-03-2008
I think it's great that Apple did this. Someone needs to step in line and tell these record companies to get their act together. The reason they loose money is because they are too damned greedy in the first place. Now they want even more money. Screw big name labels.
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sk8rpro said 9:40AM on 10-03-2008
Too damned greedy!?
You act as though the RIAA are they only enemies. Apple's one of the Big Boys as well - they're contributing to high prices for music (which should be lower because of less production costs and lower quality music) and low royalty rates (which artists should be getting more). Therefore, Apple is also screwing consumers and artists alike.
Also, this update may make it take longer for Brahms to update Requiem to work with iTunes 8 (now 8.0.1) Sad day :(
Josh said 9:41AM on 10-03-2008
It's great that iTunes will stay open, but what about the artists? Getting 9 cents per record is horrendous, considering what most artists put into the production and promotion of a record.
No wonder so many are beginning to distribute independently.
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G said 12:44PM on 10-03-2008
This is not the artist royalty. It is the songwriter royalty. Unfortunately, most of the articles written about this situation have been incorrect regarding this so far. Artist royalties are completely separate and negotiated between parties, not mandated by law (that's a whole other story in itself).
http://www.harryfox.com/public/licenseeRateCurrent.jsp
ghostshadow said 10:27AM on 10-03-2008
While I don't disagree that the iTunes prices could be adjusted, you have to realize that the record companies and the other media providers are wanting the prices raised. Some record companies don't want their albums to be sold at $9.99 they want them to be $14.99, just like physical media. The thing is, you're not paying for the packaging or the physical disc, so prices SHOULD be lower than what the record company thinks they should go for, but the record companies are wanting to raise the prices to reflect what's on the store shelves.
They don't like the idea of media being online because that means their sales from the stores drop more because the prices are cheaper online.
While iTunes / Apple is no angel, I'd rather buy from them before buying from a bigwig record company, yeah you can argue "well you're still buying from the record company" - True, but I'm also getting it cheaper. I would prefer that Apple gives them the finger, because they want too much control and power.
RIAA and the MPAA are both insane, the record companies want to control it all. This is the time where we can tell them that we are tired of being controlled and manipulated. The pen is mightier than the dollar and we can make these record companies realize that we have a choice and we have the right to buy our media at decent prices instead of being over charged for digital media.
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PanicGirl said 4:35PM on 10-03-2008
Good for us!
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Davin said 5:40PM on 10-03-2008
this was the right decision to make.
everyone in the music industry is foolishly trying to move into a new market while trying to keep the habits and business models of the old one. it's like when people switch to OS X and then get angry because it doesn't work like Windows. the inevitable bottom line is that selling music is now a decentralized medium. the 10% / 90% success and failure trade-off of a traditional major label roster was doomed to be a failure if the tune of how people are exposed to and find music weren't tightly controlled. and now it's not, because you don't have to listen to radio or watch MTV to find music you want to get behind. you can find anything you want for next to nothing online, and that music doesn't even have to BE on a label and you don't have to actually spend a dime to realistically evaluate it and decree it purchase worthy.
mega-millionaire labels with ultra-rich artists are becoming a thing of the past. charging tens of thousands of dollars to record an album is now something the average aspiring artist can do at home for a fraction of the cost, and selling your music was something that a Label had a monopoly over. having the trucks and planes to ship your CD worldwide was a big deal. nowadays, anyone can sign up for iTunes and Amazon and Rhapsody and get their music out and only really need to sell a few physical copies, if demand is there.
the dilemma that these big labels face, is that they've built enormous businesses on the fact that they could control who gets to record "professional" albums, and out of those few they got they could control who got the most exposure. the tools and the mediums to get an album made and into the hands of the public was held behind these iron gates and the record labels had the keys.
now? it's relatively cheap for anyone who takes writing music seriously to produce the same quality work at home or in a small studio. the startup costs and overhead for them is low, and making a profit is that much easier. so selling a song for 99 cents is a pretty big profit, for an indie outfit. but a major label? they have to pay buildings full of employees and artists. they need enormous profits to keep alive.
but Moore's law is in full effect here, indie labels and indie artists are spending less and less producing albums and making them available on mediums that have the speed, low price and convenience that can really, actually compete with "free".
and while these new business models relentlessly push further forward down this path, the old guns of major labels are sheepishly dipping their toes in the water and slowly discovering that the way ALL business is going to be done in the future has to revolve around the idea of doing more with less.
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Samuel said 8:30PM on 10-03-2008
Remember that kids, the next time you buy and iTunes track your effectively placing yourself in the position of power; no other 'guy at the top' would have taken such a pro-customer stance. Its nice to know there is at least one person who has a conscience.
Those record company's are lucky they get anything, with the only service that makes money for them they should know what side their breads buttered.
I saw a bit in the news about Nokia phones giving customers all they can eat for a year, crikey! The best part is they can keep it at the end, and even do it all over again with a new annual contract! ..But, I wonder, is it DRM free and do they offer lossless quality?!
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