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BREAKING NEWS: Apple threatens to shut down iTunes on royalty decision

Or Apple will simply increase iTunes charges

Apple is threatening to shut down its iTunes Store if told to pay artists higher royalties, arguing that raising music prices above 99-cents per track (79p in the UK) will be bad for its service.

The Copyright Royalty Board in the US will make its decision tomorrow. At issue is the rate of music royalties composers and songwriters should be paid for their work, following expiration of a previous deal last year. The National Music Publishers' Association wants rights-holders to be paid 15 cents per track.

Apple is utterly opposed to this, with iTunes VP Eddy Cue warning the company may close shop rather than pay up: "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," Cue wrote.

"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."

Apple pays around 70 cents in every dollar to the record labels, who then hand across nine cents to the music publishers who control the copyrights to the music.

Apple may be forced to swallow the royalty rise, which would be set for the next five years. The decision would likely mean that the new higher cost of music is passed on to the customer.

Music labels are also against raising royalties, while it's unlikely Apple or the labels will absorb the extra cost. Indeed, both Apple and the labels have been attempting to decrease royalties paid to songwriters and composers to just 6 per cent.


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