Danny Gorog03 October 2008, 4:24 PM
iTunes lives to fight another day as the US Copyright Board rejects music publishers' demands for a royalty rate increase.
The US Copyright Royalty Board today announced it
would freeze the rate that digital-music stores must pay music
publishers.
The rate remains at USD$0.091 per
song and applies to both digital downloads and CDs. The rate for
ring-tones is nearly three times higher at USD$0.24. The group of music
publishers pushing for the increase wanted rates to rise 66 percent
across the board.
It means that for now, Apple's threat to close iTunes if the rates went up disappears. While Apple
maintained its position that it would shut down the iTunes store if royalty rates were raised, it's unlikely it would have done so. I can't think of anybody in the history of monopolies who just walks away. While Apple has a greater than 75 percent share of
the digital music player market and is the leading retailer of music in
the world, its share of the digital download market is far bigger -
based on
this estimate it may be above 90 percent.
Mike McGuire, a music industry analyst for Gartner, was
quoted as saying that the royalty board made a wise decision for consumers, musicians and download stores by not raising rates. The download stores are competing against piracy, where songs are obtained easily and at no cost. This is still a new and struggling industry and now isn't the time for a drastic rate increase that would have an effect on consumer demand for legal music.
This saga, once again highlights the absurdity of the RIAA's mindset. If anything, I'd argue that a drop in digital download costs is required to encourage more people to find their media legally. But don't expect this any time soon.