iPhone/iTunes Users Rejoice: Copyright Royalty Board Does Nothing

The Copyright Royalty Board sets the rates that companies like Apple, Rhapsody and Amazon must pay music publishers for each and every digital music track they sell. Fortunately for iPhone users, who use iTunes to sync music and other data or media to their iPhone, they will continue to be able to do so for the foreseeable future.

The reason: the rate were not changed and remains at $.09 per song. That brought a sigh of relief to many who like us have seen the stories circulating around the internet about a rumor that a rate increase would shutdown the iTunes Store.

Reports [1 and 2] were based on a letter that was sent out allegedly by Apple over one year ago regarding royalty rates and the effect an increase would have on the iTunes music store. The letter, addressed to the Copyright Royalty Board is supposed to have contained this quote from Eddy Cue, Apple's global vice present of iTunes:

"Apple has repeatedly made it clear that it is in this business to make money, and most likely would not continue to operate iTS (iTunes Store) if it were no longer possible to do so profitably."

The iTunes store accounts for an 85 percent market share and over 2.5 billion downloads. However, in the same letter, Apple argued about costs of maintaining the store, etc. Mark Selfe writes: "By Billboard's calculations, iTunes turned a profit in 2007 with $1.9 billion in revenue and a 30 percent profit margin, or $570 million, which seems to be a little more than just a slim margin."

Luckily for us the debate is over since the Copyright Royalty Board's action today effectively set the rates with no changes as stated above for the next five years.