After a great deal of
loose talk this week suggesting that Apple Inc. [
AAPL] might shut down its iTunes store if it had to pay higher
royalty rates on sales of downloadable music, the
Copyright Royalty Board returned a decision Thursday that will leave those rates
unchanged. The CRB, a division of the U.S. Library of Congress's copyright office, had
mulled multiple options that could have either raised or lowered per-song rate payments, or pegged them to a percentage of wholesale revenues.
Few seemed to believe that Apple would really shutter iTunes, but its bluff could have influenced the CRB's decision. The company, which sells music for little profit primarily to stimulate sales of its iPods and iPhones, has been rumored for months to be contemplating a monthly subscription service.
Separately, the CRB adopted the joint proposal of several industry groups that sets mechanical royalties for interactive streaming music at 10.5% of revenues, less performance royalties. As venture capitalist Jim Feuille of Crosslink Capital
suggested to me last month, dealmaking in the sector could increase once the industry standardizes royalties and licensing for online music.
The CRB also set royalty rates for ringtones at 24 cents per song, confounding observers who wonder why a snippet of a song costs $2.99 while the whole song costs $0.99. Including this observer.
-- Paul Bonanos
See Oct. 1 post from Tech Confidential concerning paid download royaltiesSee Sept. 23 post from Tech Confidential about interactive streaming royaltiesFor more, see
Billboard and
CNet
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