Crisis averted: music royalties stay the same!

Posted October 3, 2008 at 08:22 AM by Shawn Ingram

Section: Audio, Web, Downloads, Online Music/Video

A few days ago, our friends over at Appletell reported on a possible increase in royalty rates that could spell out a problem for iTunes, and possibly other digital music stores.  A meeting took place on Thursday, and royalties were set on digital downloads and ringtones for the first time ever.  The good news for those who buy songs and albums online: prices probably won’t be going up any time soon, at least not because of this.  The Copyright Royalty Board set the royalty rate for songs on albums and songs downloaded online at 9.1 cents, or the same rate it was.  This rate will remain into effect into 2012.

The interesting rates announced were actually those of master tones.  That rate is a comparatively astounding 24 cents.  Yeah, you read that right, 24 cents. 

Apparently before this rate, all the rates were negotiated between copyright holders and the people who wanted to use them.  If those prices were anything like the rate now, I can see why almost every single gets a ringtone for it.  If 100 people buy a ringtone, that’s $24 in the pocket of the copyright holder, compared to $9.10 for 100 songs downloaded.  If there’s any money to be made in music aside from performances, I would imagine it be getting a ton of people to buy ringtones of your songs.

It is possible that the move might be due to Apple’s statement that it would severely impact the fate of the iTunes Music Store if the rates increased to 15 cents that publishers requested.  The reason why doesn’t really make that much of a difference.  The important part here is that consumers can buy their songs at the same prices they’ve been getting them from.  As the New York Times article points out, it might not make up for the losses of piracy, but it’s doubtful that those losses will ever be made up for given the state of the Internet at the moment.

Read [New York Times]