iTunes Avoids Shutting Down

In recent weeks there has been a lot said regarding the possible rate hike for distributed music. Sites like iTunes, Amazon, and Napster to name a few, are all music distribution sites with business models that would have been greatly affected by this possible increase.

The Copyright Royalty Board was to meet to discuss a rate increase of almost 60%, which would hit deep into the profits that distribution sites make. Apple, so angered by this possibility threatened to shut down iTunes if the board passed the rate increase. Apple, who currently owns the largest margin of mp3 players on the market, the iPods, would have shut down their site? A part of me says no, perhaps an idle threat. All in all, the board has decided to keep rates the same, 9 cents per song. You can read more about the decision here.

Still, Apple may not have come out of this situation without egg on their face. The reality of one of the largest music distribution markets completely shutting down, with an mp3 player that is connected to propriety software, iTunes, may scare people into moving towards a more functional player that is not directly tied to any one site. Could Apple have shown it’s own weakness? Or is Apple relying on its millions of dedicated fans to stick with the “in” platform of choice?

For now iTunes is safe.

Tags: apple Copyright Royalty Board ipod itunes music Royalties