iTunes faces closure over royalties row
Apple could close iTunes, the world's largest online music store, if a decision to award higher royalties to music producers goes against it tomorrow.
By Jamie Dunkley
Last Updated: 3:31PM BST 01 Oct 2008
It comes ahead of a ruling by the Copyright Royalty Board (CRB) in Washington DC, which will decide whether music producers receive more money from songs bought from online stores. The producers, represented by the National Music Publishers' Association, have called for rates to be increased by 66pc from 9 cents to 15 cents.
Apple opposed the changes in a letter to the CRB last year and has since refused to discuss the matter – meaning the threat of closure remains a strong possibility.
iTunes vice president Eddy Cue said at the time: "If [iTunes] 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."
"Apple has repeatedly made it clear that it is in this business to make money, and most likely would not continue to operate [iTunes] if it were no longer possible to do so profitably."
If Apple does not close iTunes, the higher cost of music could be passed on to consumers, with the CRB's decision setting royalty rates for the next five years. Analysts estimate that iTunes will sell close to 2.5 billion songs this year worth around £1.1 billion and the decision will be the first regarding the sale of digital music.
To further compound the misery, Apple could also be sued by a Norwegian consumer group over its "unfair barriers" to playing iTunes music in a variety of MP3 players. Consumer ombudsman Bjoern Erik Thon is taking the firm to the country's market council, which has the power to force companies to change their trade practices.
The independent government body is urging other countries to follow suit and file cases against Apple.
Mr Thon said: "I want them to make their services interoperable so that you can play music bought on iTunes on other devices, including mobile phones. The consumer's freedom of choice in the online music market is an important right."
A spokesman for Apple declined to comment.
Apple could close iTunes, the world's largest online music store, if a decision to award higher royalties to music producers goes against it tomorrow.
By Jamie Dunkley
Last Updated: 3:31PM BST 01 Oct 2008
It comes ahead of a ruling by the Copyright Royalty Board (CRB) in Washington DC, which will decide whether music producers receive more money from songs bought from online stores. The producers, represented by the National Music Publishers' Association, have called for rates to be increased by 66pc from 9 cents to 15 cents.
Apple opposed the changes in a letter to the CRB last year and has since refused to discuss the matter – meaning the threat of closure remains a strong possibility.
iTunes vice president Eddy Cue said at the time: "If [iTunes] 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."
"Apple has repeatedly made it clear that it is in this business to make money, and most likely would not continue to operate [iTunes] if it were no longer possible to do so profitably."
If Apple does not close iTunes, the higher cost of music could be passed on to consumers, with the CRB's decision setting royalty rates for the next five years. Analysts estimate that iTunes will sell close to 2.5 billion songs this year worth around £1.1 billion and the decision will be the first regarding the sale of digital music.
To further compound the misery, Apple could also be sued by a Norwegian consumer group over its "unfair barriers" to playing iTunes music in a variety of MP3 players. Consumer ombudsman Bjoern Erik Thon is taking the firm to the country's market council, which has the power to force companies to change their trade practices.
The independent government body is urging other countries to follow suit and file cases against Apple.
Mr Thon said: "I want them to make their services interoperable so that you can play music bought on iTunes on other devices, including mobile phones. The consumer's freedom of choice in the online music market is an important right."
A spokesman for Apple declined to comment.
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