this has been brewing for quite sometime. all along i’ve thought that royalty rates would either decrease
or move from a statutory penny rate to a percentage of the retail price. there just doesn’t seem to be any way that the market, operating on the penny-rate model, would stand for an increase in royalty rates while the price of the product was dropping. and i thought the labels would lead the charge.
in this wired article from last february
, we’re told:
”While songwriters want an increase from 9.1 cents to 12.5 cents per song sold -- saying distribution costs are dropping during the transition to digital -- the Recording Industry Association of America, or RIAA, wants songwriting royalties to be set at 8 percent of the wholesale price. DiMA proposes 4.1 percent of the retail price, and has asked the Copyright Royalty Board to decide whether webcasters need to pay mechanical royalties at all, since streaming isn't designed to leave the consumer with a copy of the song.”
and now, this just in
, as the royalty board will vote this thursday on whether or not to raise the rate - to fifteen cents per song
apple’s response is that ”if the rate hike goes through and the labels refuse to absorb the entire resulting increase, the iTunes music store will become unprofitable.”
”...Steve Jobs is unlikely to raise the standard track price on iTunes to $1.05, although that would probably be just fine with the labels, which have been pressuring Apple to budge on its 99 cents per track policy for years by allowing Amazon to sell DRM-free albums that they insist be wrapped in DRM when iTunes sells them, among other things. Despite this pressure, Jobs has refused to relent, continuing to insist on the 99 cent flat pricing structure. It's hard to believe that Apple would close iTunes rather than raise prices, but that's exactly what iTunes vice president Cue threatened to do.”
looks like the rate is now 9.1 percent. basically, the board did nothing. so itunes is saved to fight another day.
however (and i'll editorialize here) the board did nothing to help the digital music industry. and so, ladies and gentlemen, we'll find ourselves in the same place five years from now. at which point i'm predicting they'll really
be backed into a corner.