Page last updated at 08:22 GMT, Friday, 3 October 2008 09:22 UK

Online music avoids rate hike

jobs
The iPod is the world's most popular digital music player with 160m sold

The veiled threat to shut down iTunes if royalty rates on downloaded songs were hiked has been averted.

The Copyright Royalty Board (CRB) opted to keep the status quo and turned down a request to increase royalties from 9 to 15 cents on songs bought online.

The National Music Publishers Association (NMPA) asked for the rise while Apple opposed it and said it could result in iTunes being shut down.

"We're pleased with the CRB's decision," said Apple's Tom Neumayr.

In testimony submitted to the CRB 18 months ago, but only brought to light this week, Apple executive Eddy Cue said: "Apple has repeatedly made clear that it is in this business to make money and would most likely not continue to operate iTS (the iTunes Store) if it were no longer possible to do so profitably."

The CRB also rejected a call to cut the rate to 4.8 cents and in the end agreed to peg it at 9.1 cents a song for the next five years.

Even though the NMPA was behind demands for a rise, it "hailed the Board's decision as a positive development for all songwriters and music publishers".

"This decision represents an important milestone for the music industry," said NMPA president David Israelite.

"These events will bring clarity and order to an environment that for the past decade has been hampered by litigation and uncertainty on all sides."

'Innovate and grow'

This decision marks the first time the Board has established mechanical royalty rates for songs distributed digitally.

An ad shows colours of the new iPod Nano
Apple charges 99 cents for every song downloaded through iTunes

The Digital Media Association, which represents online music stores including Apple, Amazon.com and Best Buy, applauded the outcome.

"Keeping rates where they are will help digital services and retailers continue to innovate and grow for the next several years," the Association's executive director Jonathan Potter said in a statement.

The Recording Industry Association of America said sales of digital songs and albums rose 46% last year to $1.2bn (652m).

Over the last five years Apple has sold more than 5bn songs online.

Meanwhile CD sales dropped 20% to $7.4bn (4bn).

For ringtones, the federal agency set a new rate of 24 cents, roughly in line with industry practice of paying songwriters 10% revenue on each $2.50 (1.35) ringtone. The rate was even higher than the 15 cents per song requested by songwriters and publishers.

Print Sponsor


SEE ALSO
iTunes store shutdown feared
01 Oct 08 |  Technology
Nokia unveils new music service
02 Oct 08 |  Technology
MySpace launches net music store
25 Sep 08 |  Technology

RELATED INTERNET LINKS
The BBC is not responsible for the content of external internet sites


FEATURES, VIEWS, ANALYSIS
Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit

BBC navigation

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.

Americas Africa Europe Middle East South Asia Asia Pacific