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in Filmmaking
on Oct 1, 2008

I’ll steal a page from Keith Olberman as I link to this CNN article on Apple’s threat to shut down its iTunes movie store over a dispute over artist royalty rates.

From the piece by Devin Leonard:

The Copyright Royalty Board in Washington, D.C. is expected to rule Thursday on a request by the National Music Publishers’ Association to increase royalty rates paid to its members on songs purchased from online music stores like iTunes. The publishers association wants rates raised from 9 cents to 15 cents a track – a 66% hike.

Apple (AAPL, Fortune 500) declined to discuss the board’s pending decision or its previous threat to shut down iTunes. But it adamantly opposes the publishers’ request. In a statement submitted to the board last year, iTunes vice president Eddy Cue said Apple might close its download store rather than raise its 99 cents a song price or absorb the higher royalty costs.

“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.”

This is a joke. Apple’s bluff is a preposterous piece of brinksmanship that seeks to short circuit an attempt to boost digital royalties for artists while not acknowledging the massive hardware profits the company reaps from iPod sales. Go after the record companies (or match Amazon’s .89 cent downloads and add the .06 to that) but don’t draw a line on the sand right at the spot where artists might see more money.

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