iTunes closure threat leads music industry to back down

3 October 2008

Apple’s warning of closing down iTunes made the Copyright Royalty Board keep the price of royalties being given to record companies for the music downloaded, at 9 cents per song.

The Cupertino Company, on the other hand, threatened to shut down the successful music marketplace once the decision of increasing the price of song downloading went through. Song downloading has been decided to increase to 15 cents from nine cents, a price hike of 66 per cent.

For this reason, the National Music Publishers Association (NMPA), which has been impelling for the royalty increase for 18 months, renounced its decision after undoubtedly realising that the vast amounts of wonga (website) invested by Apple (maker of digital music, video players, iphone, etc.) fans would lead the site impoverished.

The CRB attained a futile victory by gaining a proposed cut rate to 4.8 cents as proposed by several vendors, but it came to a contract of 9.1 cents per song for no less than five years. The CRB’s decision has been taken by the National Music Publishers Association as a progress for all music publishers and songwriters.

According to Digital Music Association’s online music store representative, Jonathan Potter, "Keeping rates where they are will help digital services and retailers continue to innovate and grow for the next several years".

As per sales figures shown by the Digital Music Association, the sales of songs and albums in the previous year rose by about 50 percent. Moreover, the sales of CDs dropped by 20 per cent to an amount of $7.4 billion (£4.0 billion).