http://arstechnica.com/news.ars/post/20081002-royalty-rate-stays-same-for-itunes-other-download-services.html
The Copyright Royalty Board, eased the mind of music lovers across the world when they arrived to their final decision of not encouraging the annex of music prices for online music stores. By doing so the Board had saved online stores like itunes, who were threatening to close down because music companies were demanding for a raise of online music stores convectional prices of ninety-nine cents to one that is increased by fifteen cents. This victory for online music stores has vital in the sense that music stores can keep their royalty rates for physical media has well as “permanent media,” which consist of no subscription music download.
The board’s decision classifies the fixed rate for publishers and songwriters to 9.1cents for each physical product like a cd this verdict also advocates against the initial fear of popular online music stores closing. Additionally by maintaining the fixation of a royalty rate, the CRB as well created a set rate for ring tones that are purchases for the first time as 24 cents. Music publishers have the capability of charging a 1.5% late fee a month from distributors that do not pay on the due date.
Before the board’s judgment a great deal of individuals feared that the rates of online music would be raised to an unreasonable price. The conjecture of an increase of the music rate by fifteen cents from its original price, influence Apple’s conclusion of accepting the possibility of closure if there is an increase in the price. Although Digital Media Association (DiMA) and Apple would prefer a lower royalty rate but were willing to come to a compromise. Initially online music stores wanted to place the rate of music to 4.8 cents for a track, which would bring royalties to a six percent rate of applicable revenues, which would seemingly become a rate lower than 9.1 cents per a song.
Although there is nothing comparable to doubling the rate per a song for music distributors, the outcome is that music labels and the RIAA prefer royalty rates to remain stable constant or lower because higher royalties basically means few amount of money in going to music labels.
Along with the mechanical rates for CDs as well as physical downloads, the CRB basically reinforced the rate of interactive streaming service and limited downloads services like Rhapsody which require a subscription. Those services that provide a streaming or subscription services will have to pay 10.5 percent of their profits, subtract the performance royalties that are given to music labels.
I feel that the court decision was the right one because by raise music prices it would hinder companies like itunes and would discourage those individuals who actually paid for their music. If the CRB decided to raise prices, many individuals could turn to pirating music as an alternative to overpricing online music stores.
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It's pretty good to hear this news, but it still does not make me feel that good. For now, it looks like not too much has changed, but it's inevitable that online music will be much more difficult to get for reasonable prices, say, five years from now. Some radical changes must occur or else we, the consumers, will lose the very few rights that we have. If only the lawmakers could understand that if prices were lower, American youth would not as frequently resort to illegal methods of getting their music.
I think Apple's threat to close the Apple store was 100% fake. They would never do that because of a few cent increase because the iTunes store is how the company keeps many of its millions of customers. But I guess the lie was effective and scared enough people that they won in the end.
- Jordan Morsberger
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