Apple Threatens To Shut Down iTunes Music Store Over Royalty Rates

The iTunes Music Store has allowed Apple to sell a ton of iPods and iPhones and it also has become a revenue stream for them as well. But a ruling expected tomorrow by the Copyright Royalty Board could raise royalties for online music sales by 9 to 15 cents per track. That would make Apple pull the plug on the iTunes Music 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,” [Apple V.P. Eddie] 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.”

I would like to think that this is some sort of empty threat designed to influence tomorrow’s decision, but I’m not so sure. As I mentioned earlier, the iTunes store sells a ton of iPods and iPhones for Apple. I don’t think that Apple would sell songs at a loss just to move other Apple products. So perhaps there’s something to their threats.

Check in tomorrow to see what happens next.

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