The folks at Apple have stopped holding their breath, as the Copyright Royalty Board rejected the request of music publishers to raise the royalty rates Apple pays from its iTunes service.
The National Music Publishers’ Association asked for an increase in royalty rates for songwriters and publishers to 15 cents for each song purchased from online music stores, a 66% hike from the current nine cents.
It took Apple 114 days to sell its last 1 billion songs, which comes to about 9.5 million songs per day. If the royalty increase had passed, Apple would have paid around $570,000 more per day, coming to more than $208 million in additional costs per year
Eddy Cue, iTunes VP, said in testimony to the board that the price increase would either go to the consumers and greatly decrease song sales, or Apple could absorb the fee and most likely operate at a loss.
“Apple has repeatedly made clear it is in the business to make money and most likely would not continue to operate iTunes store if it were no longer possible to do so profitably,” he said, according to court documents. “This industry needs reduced, not increased, costs in order to attract the investments necessary to its growth and stability.”
Fortune reported that Apple threatened to shut down the iTunes store rather than take the financial loss or raise its prices, and while the gesture seemed somewhat empty, there’s no doubt the record labels and the artists are glad not to see if Apple would follow through.
Apple has 85% of the market in online music with more than 8 million songs, and in April it surpassed Wal-Mart as the top music retailer in the US.