iTunes Store
News has been spreading about a possible iTunes shutdown. Apparently, “Apple would rather shut the iTunes store down than operate it at a loss.“ This decision will of course depend on the ruling by The Copyright Royalty Board tomorrow, which will decided whether or not to raise royalty rates by 66% for online music sales.
Apple’s iTunes VP, Eddy Cue, released a statement to the Times of London:
If [iTunes] 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. Apple has repeatedly made it clear that it is in this business to make money, and most likely would not continue to operate [iTunes] if it were no longer possible to do so profitably.
Obviously, Apple is not planning on shutting down iTunes. They are trying to increase their leverage by basically telling publishers that if they raise the price, they will not be getting the revenue they would expect from iTunes. If anything, the price per download would simply be raised, passing the additional cost along to the consumers, which will probably just send more people searching google for free illegal downloads.
