On Thursday, the Copyright Royalty Board (CRB) in Washington, D.C., is scheduled to vote on a request by the National Music Publishers Association to increase the royalties paid to its members for online music sales. Artists are currently paid a royalty of nine cents and want the CRB to increase it to 15 cents.
The move is opposed by the Recording Industry Association of America and the Digital Media Association, a trade group of online music retailers that includes AOL, Apple, MusicNet, Napster, RealNetworks and Yahoo.
The CRB’s decision will be the first to address the sale of digital music and will establish royalty rates for publishers and artists for the next five years.
None of the opponents of the royalty hike have been as emphatic as Apple, and the reason isn’t hard to discern. Apple’s online iTunes Store is the largest and most successful digital delivery service, and an increase would mean some difficult choices.
In a filing with the CRB last year, iTunes Vice President Eddy Cue said Apple has invested millions in the online store, and providing a quality consumer experience costs Apple a huge amount each month.
“The fact is,” Cue wrote, “that even though we are optimistic about the future of the online music marketplace and heartened by iTunes’ success so far, there are significant risks posed by very high operating costs, the infancy of the market, the evolving nature of the business models attempting to provide digital music to customers, and the competitive pressures that we face — particularly from privacy.”
The digital-music business, Cue told the CRB, has very small margins, and it is only because Apple recognizes that fact that the iTunes Store has never lost money. That could change, he said, if the royalty rate is increased.
“Any increase in the royalty rates we pay…