So iTunes won’t be closing after all

Apple's nuclear deterrent appears to have paid off. The company had threatened to shut down iTunes if it had to pay more royalties to songwriters, and yesterday the Copyright Royalty Board decided to leave the fee unchanged at 9.1 cents (about 5p) per song.

Oddly, everyone else seems to be happy with the deal too. AP reports that artists’ representatives are pleased to get a fixed fee per song rather than a percentage, protecting them against drastic discounting designed to reinvigorate the market. Record labels, meanwhile, said the fixed price would mean that payments they make to artists would make up a smaller proportion of their income if music prices rise. SInce prices can’t rise and fall, one side is going to be left wishing they’d gone for a percentage.

That all sides were relieved that the deal wasn’t worse is evidence of the ongoing uncertainty in the music industry, despite the emergence of new business models.

Other Apple news: Steve Jobs survives another health rumour

Comments

[Carla Sanderson]

I wonder how new emerging models who are offering music for free using ad-funded models are going to pan-out though. I recently saw a news
program about Kerchoonz.com where apparantly musicians are paid for every stream of their music at a rate 1cent per stream.
Their pitch was that artists can also give their music away for free as a download and still be paid something like 10pence per download (can't remember, the report exactly So, I think they said 10pence something like 20cents/download inclusive of the royalty to publishers). If apple only pays artists .09 cents per download, how are they going to compete with new 'free' models who are actually paying the artists more. In theory, if artists give their music away for free and get paid for it, they could make a lot more money than 'hoping' the public will go and buy it (whether on a legal site like Kerchoonz or We7 or illegally on a torrent site) An example, Kerchoonz will offer it's service free to the consumer/users as a social networking site. Nokia is doing a flat rate of unlimited music for £130 , there's a big difference there I see. We7 has a similar free model, but attaches audio adverts to the files. Also, if iTunes is operating at a loss, it must only be to sell more iphones, ipods and macbooks.