Rate Hike for Digital Music Averted: iTunes Stays Open

Monday Apple all but threatened to close up iTunes pending a decision by the Copyright Royalty Board as to whether to raise digital music distribution royalty fees or not. And while it may have been an empty threat, we can all breath a sigh of relief that we won't need to find out. Yesterday the board made its decision and music royalty fees for online sales remain the same.

It seems like everybody wins with the current royalty plan. While the music labels wanted to increase royalty rates to as much as 8 percent of total revenue, the Digital Media Association, of which Apple and Amazon.com are a part of, was trying to get royalty rates reduced. It turns out that the status quo is just the compromise both sides were looking for. The decision will be revisited in 2012, so at least we know that the iTunes store will be safe until then. That is, assuming Apple doesn't face any DRM related issues.

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