Stevie-boy has made his position known: raise the royalty fees he (or well, they) pays and iTunes will no longer be profitable. Jobs wants to make money. If he does not make money, he’ll shut iTunes down.
The Copyright Royalty Board, which will be voting this week to determine the issue put forth by the National Music Publishers’ Association to raise fees from 9 cents a track to 15, has a pretty large amount to consider.
In response to the request for iTunes to raise royalties, the VP of iTunes Eddy Cue wrote in with this statement:
Any increase in the royalty rate for DPDs (digital permanent downloads) will reduce aggregate revenues for copyright holders and stall or reverse the growth of lawful digital distribution channels for music. [The iTunes Store's] cost structure and margins are not flexible enough to enable the company to incur an increase in the mechanical royalty rate for DPDs without either (i) imposing a retail price hike that will reduce consumption and thereby reduce overall industry revenues or (ii) absorbing the cost input increase, eroding its margin and thereby jeopardizing its continued ability to remain in the business. 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.
We’ll keep you updated when we hear the result, but it wouldn’t be that big of a deal if iTunes shut down, to be honest. Hah.
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