Music Publishers Keep Same Download Rate, Apple Keeping iTunes Open (AAPL)
That was never believable, but it would have been fun to see what happened if the Copyright Royalty Board went ahead and called Apple's bluff by increasing so-called "mechanical" royalties. Alas, we won't find out. Billboard:
The Copyright Royalty Board is standing pat with the 9.1 mechanical royalty song rate for both physical and digital album, sources say. Meanwhile, it is setting the mastertone rate at 24 cents, according to sources.
This is the first mechanical right royalty proceedings since the development of legal online music services and until now, all payments of been negotiated in anticipation of such a ruling by the CRB.
No word yet on whether the CRB has approved the proposed settlement for interactive streaming and limited downloads, which, in general, sets a mechanical royalty rate at 10.5% of revenues, less composition performance royalties.
If the mechanical rate for songs was raised, it wouldn't have been to the rate desired by publishers and songwriters. They aimed high knowing full well they would not get it. Any increase would have been so modest that all parties in the value chain could have sucked it up and absorbed the higher rate without much damage.
And you are certainly right on what would have happened had the rates had increased - nothing. Which is why the iTunes shutdown threat was never serious. I think most likely outcome would have been Apple forcing labels to pick up the additional charge. But obviously turning off iTunes over an additional $150M a year wouldn't happen.