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Apple – Dont Mess With Us, We Will Close iTunes

Posted By on October 2, 2008

    iTunes might be shutting down in protest. Record companies have been fighting with Apple to raise it's price for songs from the standard it set of $0.99. Now a a Royalty Board in D.C. is set to rule on a request from the Music Publishers Association to increase royalty rates from 9 cents per song to 15. Currently Apple pays 70 cents per song to the record companies and the record companies then pay 9 cents of that to the music publishers.

    Apple's iTunes vice president Eddy Cue said Apple would rather shut down iTunes than raise it's prices. Saying if they did, and had to absorb the raise itself (in order to keep songs at 99 cents), it would then operate in a financial loss, which he says they will not do. "Apple has repeatedly made it clear that it is in this business to make money, and most likely would not continue to operate [the iTunes music store] if it were no longer possible to do so profitably," Cue said.

    Apple has controls over 75% of the digital music market, and is projected to top 85% this year. Since Apple's profit margin with iTunes is low, Fortune magazine says a raise in prices would lower sales and closing could be possible, although CNET says its doubtful as Apple sold over 160 million iPods to fill with the music in question.