For the past five years, Apple's iTunes has been the internet's most successful music store. Now they're threatening to close in the face of proposed higher royalty rates paid to publishers. With MySpace music launching a week ago, 2008 is looking more and more like the year that will shape and solidify how music is distributed and paid for in the digital age.
According to an article in CNN, Apple could shutdown its iTunes music store this week, if a verdict from the US Copyright Royalty Board forces the company to pay higher royalty rates. A ruling is expected by the board tomorrow (October 2) on an application by the National Music Publishers' Association to raise the royalty fees paid to its members on songs purchased from all online music stores.
Assumingly, this is in response to the ever increasing ease at which the general public can get music for free online. In the music-industry's equivalent to targeting drug dealers instead of drug users, by shifting focus away from those illegally obtaining the music to those hosting it, it is conceivable that we could witness a sharp decline in the number of free songs made available on the internet. Or - in the best case scenario - a medium where musicians will get paid a publishing fee for all usage and no longer have to worry about which songs are floating around aimlessly on the world-wide information superhighway.
The association wants to increase rates by 66 percent, from nine cents to 15 cents per track, whereas Apple wants a decrease to 4.8 cents per track. In a statement submitted to the board last year, iTunes vice president Eddy Cue said that Apple would not stand for an increase: "If the [iTunes 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 added that Apple would have no qualms about shutting iTunes down if it was not making enough money.
This is a tough case to take a stance on, because there definitely needs to be a higher publishing rate to better compensate musicians for the lack of traditional sales - with all of this talk about labels losing money, the people making the music should be considered as well. But iTunes was one of the first and few fighting to keep a value on music, and albums especially. By moving towards a MySpace Music model, the internet is slowly creeping towards becoming one giant radio station, and if the rules begin to tighten, it will inevitably lead to a place where the only sites hosting songs are the ones who can afford to pay a publishing fee. Is that good for musicians? Is that good for fans? Or is that just going to revert us back to a pay-for-play undustry controlled by the big dogs? The debate is open, we'll fill you in on the details as things progress.