Apple to Close iTunes if Royalty Increase Passes?

Some rather shocking headlines have been making the rounds this morning, from who else but Apple. By this point, I’m sure many are aware that the record industry is chalk-full of the greediest people on earth, and as a result, the consumer and retailers have been affected. Music costs more, it’s harder to find in a retail store and the bands who deserve the cash, don’t see it. Bad situation all around.

Well, the execs still aren’t happy and are looking to increase their share of the pie from digital music sales, which would affect all of the digital music stores available now, including iTunes. The prospected increase is so extreme that Apple has stated that they will consider closing down iTunes if they go through, which is rather extreme in itself.

If the rate increase does goes through, it will come to a point where iTunes isn’t near as profitable as it is now, and in some cases, they might even take a loss. Even still, it would seem highly unlikely that Apple would ever consider closing the online music store, and I really can’t see it happening even if this increase proceeds. They’d not only lose money on iTunes, but iPod sales as well.

It’s going to be interesting to see how it plays out regardless. If Apple doesn’t close iTunes, they could very well increase their rates, despite claiming that they refuse to. It’s a business, after all. But then, who wants to pay $1.15 per song rather than the $0.99 we’ve been used to? It’s a bad situation.

The National Music Publishers’ Association, however, argues that the royalty increase will help everyone and will not hurt online music growth. David Israelite, president of the NMPA, the organization which is requesting the increase, stated, “I think we established a case for an increase in the royalties. Apple may want to sell songs cheaply to sell iPods. We don’t make a penny on the sale of an iPod.”