I'll show you where to put those royalties!

File this one under hyperbole for the time being, but Apple is pissed. Real pissed. Claiming its livelihood and profits are threatened by a proposed hike in artist royalties on downloaded songs, Apple has threatened to completely shut down its iTunes store in protest. Considering Apple controls 85% of the digital music market and iTunes is now the world’s largest music retailer, why would they do something this, well, McCain-esque?

The dispute stems from a decision that the Copyright Royalty Board is set to make on Thursday in Washington D.C. Recently, the National Music Publishers’ Association, which represents over 700 artists and “music publishers,” asked the board to approve a royalty hike for artists from 9 cents to 15 cents on every song sold on iTunes.

The three-judge panel oversees statutory licenses granted under federal copyright law, which includes music sales, according to the report. The board’s previous ruling covering physical CD sales was made in 1997 and expired last year, making the impending decision the first to affect digital music sales.

Apple isn’t terribly happy about this, as it claims that this royalty hike will force it to raise the price of iTunes songs above 99 cents. The company further claims that this will cause the store to become unprofitable, and therefore it has no problem shutting it down.

Talk about a pissing match. It’ll be interesting to see who blinks first, but it’s difficult to imagine Apple actually shutting down iTunes completely. The whole thing, though, is pretty stupid for a number of reasons.

This whole ruckus is basically about how much Apple and the record companies want to screw over artists. The fact that they created the damn music and get nine cents per download is absurd, and it has been for years in many different forms (which this Steve Albini essay explains rather well). And naturally, the record companies are pocketing 70 cents per download, but to give the creator of the music even 6 cents out of that total is unacceptable.

Even worse is Apple’s solution:

They’ve instead asked CRB to do away with fixed royalties in favor of an 8 percent commission to artists, which would translate to about 5.6 cents on the wholesale cost of each 99 cent track. The Digital Media Association, which represents Apple and other digital retailers, is seeking an even lower rate of 6 percent, or 4.8 cents per track, according to the report.

In other words, they basically want to nearly halve the money artists make on music they sell…which isn’t a whole hell of a lot to begin with. Of course as the NMPA president, David Israelite, points out, Apple just wants to keep their song prices low to keep people buying iPods, which artists don’t see any money for to begin with. 

As I said before, someone will eventually blink, and my money is on the NMPA. iTunes is still the world’s largest music retailer, and to suddenly lose it would throw the entire music industry into chaos. Perhaps someone like Amazon would fill the void, but this would be the equivalent of shutting down every Best Buy in the country. A lot of people wouldn’t know what the hell to do – iTunes is the only reason why they listen to digital music in the first place because the program is easy as hell to use. Would people start buying CDs again? Migrate to a different service? Stop giving a shit about music? Would society just completely collapse with consumers clutching their iPods and sobbing?

That’s precisely why this isn’t going to happen – iTunes is just too big and too important. Still though, it’s interesting to watch everyone struggle with the iTunes monopoly. iTunes is 85% of the digital music market, and even though services like Amazon have made inroads, they’re still nothing more than a blip on the radar. After all, Apple has all the leverage (for now), and it doesn’t look like that’s going to change anytime soon.

The unfortunate thing is that, once again, the artist will probably get screwed over and watch executives profit off his or her art more than they ever will. Because as much as they try to change the status quo and make more money off their work, at the end of the day the struggling musician trying to break through needs iTunes a hell of a lot more than iTunes needs them.

Just think of where Katy Perry would be without iTunes.

…

You know, on second thought, maybe iTunes really should shut down.

Apple threatens to shutter iTunes over proposed royalty hikes [AppleInsider]