The music publishers (Copyright Royalty Board) want to increase their take of digital downloads from 9 to 15 cents, a steep increase of 66% but not much of the overall $1 that Apple charges for digital files.
Fortune says that increase might be enough to turn Apple's iTunes music store from a break even proposition to a loser. They interviewed Apple's VP of iTunes, Eddie Cue who put together a quote that tried to tie this action by the Copyright Royalty Board to bankrupting the iTunes store:
"If the [iTunes music store] was forced to absorb any increase in the ... royalty rate, the result would be to significantly increase the likelihood of the store operating at a financial loss - which is no alternative at all," Cue wrote. "Apple has repeatedly made it clear that it is in this business to make money, and most likely would not continue to operate [the iTunes music store] if it were no longer possible to do so profitably."
What about the record companies? Are they going to help out Apple by absorbing the cost? They take in around 70 percent of every dollar that the iTunes Store makes. But they are also falling on hard times. CD sales have unsurprisingly been plummeting - 20% was last year's tally and this year is expected to be much worse. I know, shed a tear for the record companies.
So any loss will be on Apple. But is there any possible way that Apple will shut down the iTunes Music Store? No. Apple is trying to send a message to the Copyright Royalty Board that it isn't willing to take the 66% increase.
But perhaps it will take a few cents in stride. After all, Apple should have streamlined its digital music operations by now and at the same time is operating at such a massive scale (85% of the market) that a few cents should be able to be absorbed. Also, Amazon is selling tracks for less and actually profiting from the whole digital music store.
Threatening to close down the iTunes Music store? That's just Apple being Apple, trying to keep their costs down.