Copyright Board Rules On iTunes Royalty Fee

Copyright Board Rules On iTunes Royalty Fee
The U.S. Copyright Royalty Board has made its decision on what new royalty fee online shops like iTunes will have to pay music publishers. And guess what? It is exactly the same as the old fee: nine cents a song.

The board’s decision on Thursday (October 2) comes amidst recent concerns that iTunes would close its shop if the proposed fee increase was approved. As previously reported, iTunes vice-president Eddy Cue said in a statement that Apple’s store would not be able to continue if the company had to pay higher royalties.

"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."

Had the board followed the National Music Publishers' Association’s recommendation to raise royalty rates, the fee paid out to publishers would have been increased to 15 cents a track from nine cents. Such a change to the royalty system may have cut into Apple’s profits by $300 million over the next five years, Rolling Stone reported.

But even if that $300 million had gone to songwriters and their representatives instead of iTunes, Apple was never really in too much trouble, music-industry analyst Aram Sinnreich told Rolling Stone. "It’s gamesmanship,” Sinnreich said. "Apple doesn’t make its money from selling iTunes songs, and it’s a break-even business anyway. Let’s say Apple agreed to keep half of it and [publishers] agreed to keep half of it — it would make a dent, but it wouldn’t cause them to go out of business.”

The new royalty pay-out deal for digital sales will hold for the next five years. Good luck getting better paid for your songs then, musicians.