Apple calls industry bluff, royalties stay static, iTunes stays open
Last week we talked about Apple challenging the music industry’s royalty rate hike, throwing down a gauntlet by saying that iTunes would be closed outright if Royalties increased. We speculated that they may not follow through, but now we won’t have to find out. The industry caved to their demands and the iTunes store will be staying open, with songs at 99 cents a song.
This is big news for both music lovers and Apple junkies. This was a huge demonstration of both one company’s clout overall and the sea change going on in the music industry. Music delivery via online distribution systems are taking over for the traditional model. While many still buy CDs as backup for the music they download, there are legions of fans who get all of their content delivered online via iTunes and other content distribution systems.
The success of iTunes over all, especially in light of a successful stoppage of this royalty hike, is interesting. Mainly because while Apple does turn out high quality products most of the time, iTunes is inherently flawed. The DRM, the sound quality, the issues with levels, all leave some true music buffs in the cold. Even so, it is incredibly easy to use, integrates with the popular iPods and readily available with millions of songs, making it the number one choice for digital music management.
So what exactly did Apple win? The royalty increase would have been as much as 66%, as proposed by the National Music Publishers Association. The association wanted to increase royalties from 9 cents to 15 cents on songs purchased from all online music stores. Thanks in large part to Apple’s efforts, The Copyright Royalty Board in Washington, D.C. voted down the request.
In a transparent attempt to save face after the blatant smack down by Apple and The Copyright Royalty Board, RIAA chairman Mitch Bainwol said “We’re pleased that this decision freezes the current rate for CDs and digital downloads for the five-year term. No party got everything it wanted, yet at the end of the day, the certainty provided by this ruling is beneficial.”
Related Posts:
