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NEWS : STORIES
Like the biblical Adam before it, the National Music Publishers Association had to learn the hard way Thursday (October 2) a lesson any schoolchild could have told them for free: Don't ever try to take a second bite of the Apple. Bowing to
The decision was the board's first on digital downloads and will set royalty rates for the next five years. Calling the 66 percent increase into their already-slim profit margins a surefire road toward negative cash flow, Apple earlier threatened to close its music store should the proposal get approved. "We're pleased with the CRB's decision to keep royalty rates stable," Apple spokesman Tom Neumayr told CNN. Apple has steadfastly refused in recent years to raise the price of their iTunes downloads from 99 cents, which is what songs cost when the store first opened in 2003. Out of that dollar, 70 cents reportedly goes back to record companies (9 cents of which goes to copyright holders). Of the remaining 29 cents, Apple is reportedly left with about a dime per song after operating expenses. It is estimated that Apple will sell some 2.4 billion songs this year. At 10 cents a pop, that's an annual profit of $240 million. Forced to pay 6 cents more in royalties, their estimated profit would sink to $96 million. Despite the drop in profits should the measure have been approved, an actual shutdown was unlikely, speculated CNET, which pointed out Wednesday that Apple has sold some 160 million iPods and more than 5 billion songs to date, and it would be foolish to leave all those iPod owners with nothing to download. "No party got everything it wanted, yet at the end of the day, the certainty provided by this ruling is beneficial," Recording Industry Association of America chairman Mitch Bainwol said in a statement to CNN. This report is provided by MTV News
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