New York - In a statement filed with the Copyright Royalty Board (CRB) last year, Apple (NASD: AAPL) threatened to shut down its iTunes Store should the board increase in the royalty rates that would make the Web store unprofitable -- a move the board may make tomorrow, Fortune reported. Songwriters and music publishers have petitioned the CRB to increase their royalty payments by six cents per song, a hike opposed by Apple and others including the major record labels, who favor paying instead a percentage of total revenues ranging from 6% to 8%.

"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," Apple iTunes vice president Eddy Cue said, in the statement.

"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."

Apple wouldn't comment for Fortune on whether it would follow through on its threat from a year ago should the CRB decide to increase royalties for songwriters and music publishers this week.

Apple pays about 70 cents of the 99 cents it collects from songs purchased at the iTunes Store to the record labels, who in turn then pay 9 cents per song to music publishers and songwriters.

The latter group is seeking to have this payment raised to 15 cents per song, an increase of 66%.

While record labels may absorb some of this increase, Apple would likely have to share the burden, introducing the possibility that the top Web music retailer may actually begin to lose money on song sales.

Related Links:
http://snipurl.com/4023z (Fortune)

http://blog.wired.com/music/2008/10/thursdays-copyr.html

http://www.nmpa.org