Absurd Hike in Royalty Rates Might Lead to iTunes Closure: Apple

Pulkit Chandna

Apple’s iTunes service is to legit music downloads what Napster was to file sharing. Napster went out of business more than seven years ago after loosing a fierce legal battle against the music industry. Now, Apple’s iTunes might go out of business despite occupying legally sound ground .

Apple has threatened to close its iTunes music store, if the Copyright Royalty Board approves a hike in the royalty rate on music sales. The board is to give its decision on Thursday. The National Music Publishers’ Association is pleading for a hike of 66% in royalty rates. On the other hand, digital store owners are demanding a cut in royalty rates.

"If the [iTunes 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,” Apple’s VP Eddy Cue warned the board in a filing.

Do you believe Apple can take such a drastic step?

Image Credit: Iphonica

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