Apple Wins; iTunes Not Shutting Down; Royalty Rates Staying at 9 Cents Per Song

by Jody Mitoma on October 3, 2008 at 2:52 pm

So, good news for those who make use of the iTunes Music Store…

Apple has decided against pulling it from existence. The Copyright Royalty Board in Washington declined a request by the National Music Publishers Association to increase royalties from 9 cents to 15 cents per song purchase.

Apple only makes approximately 10 cents per song in profits. The cost per song download is 99 cents. Record companies take 70 cents, 9 cents of that 70 cents going to Royalty fees, leaving Apple with 29 cents. After operating expenses, Apple is left with 10 cents profit, which definitely adds up as hundreds of thousands of songs are downloaded every day. Piper Jaffray estimates that Apple will sell 2.4 billion songs this year, making the company a total profit of ~$240 million off of music downloads through iTunes.

The Copyright Royalty Board is a three-judge panel that oversees
statutory licenses granted under federal copyright law. That includes
royalty rates for music sales. The current case followed the expiration
last year of a 1997 decision that had governed sales of so-called
physical music products like CDs for a decade. Thursday’s decision will
set royalty rates for the next five years.This is the board’s first
ruling on the digital sale of music.

The NMPA wanted an increase of royalty fees up to 15 cents, while The Digital Media Association (which represents Apple and other online music services) wanted a decrease to 4.8 cents of royalty fees per track. The increase, nor the decrease ended up occurring, leaving the current royalty fee rate at 9.1 cents per track.

(via Fortune Apple 2.0)

If you enjoyed this story, join the growing number of subscribers to our RSS Feed for live updates!

One Response to “Apple Wins; iTunes Not Shutting Down; Royalty Rates Staying at 9 Cents Per Song”

Amerikā nepalielina nodevu uz mūziku | Pods.lv said:

October 6th, 2008 at 4:45 pm

[...] vēlējās palielināt starpnieku nodevu no 9.1 centiem uz 15 centiem par vienu dziesmu. (Bildi no šejienes) Apple has decided against pulling it from existence. The Copyright Royalty Board in Washington [...]