Fight Over Digital Music Continues

According to CNN, the National Music Publishers' Association (NMPA) is asking the Copyright Royalty Board (CRB) to increase the royalty they receive from iTunes from 9 to 15 cents per track.

Short explanation is in order first. NMPA represents "music publishers." That's the people who obtain and license the copyright for sheet music. Music publication, now a very small part of the industry, used to be a major source of revenue. Before recorded music, a song became a "hit" when lots of sheet music was sold for people to play on their pianos at home. When recorded music became possible, it was decided that the music publisher would receive a royalty for the sale of recorded music. It was decided that the royalty would be determined by a special royalty board, the CRB. The CRB now has jusrisdiction over a number of legal issues related to copyright.

The music industry has a love-hate relationship with Apple and iTunes. iTunes is the number one seller of retail music in the United States. As such it generates a huge amount of royalties for the industry where the year-over-year CD sales are cratering. The industry NEEDS iTunes. And that's why they hate them. Apple has so much control even the entire industry combined can't really fight them effectively. When music was sold through many different retail chains, prices for their product (and their profit margins) were much easier to control. The industry has repeatedly tried to change the pricing policy of the iTunes store, and never been able to succeed. Furthermore, the digital rights management (AKA "DRM" this is software designed to prevent people form sharing files bought on iTunes) which the industry insisted on is proprietary to Apple. If you buy an "iTune" you can only play it on an Apple device. So the success of iTunes not only gives Apple a large market share, but it locks in their customers to their proprietary system.

This move by the NMPA is an attempt to get a regulatory body to do what the RIAA/NMPA couldn't get with negotiations. A few things could happen. Right now Apple is threatening to shutter the store if it loses. That almost certainly won't happen, but they may force the record industry to renegotiate their deals or eat some of the royalty increase out of their cut.

We shall see.