iTunes Store and Apple’s DRM Safe Haven In Jeopardy

Fortune has an article on an upcoming ruling by the Copyright Royalty Board where artists are proposing a 6 cent (66%) hike in the per-track royalties they receive for digital music retail sales. Needless to say, Apple is not happy with this situation and has indicated that the continued operation of the iTunes store would be questionable at best if the resolution is passed:

“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.”

We’ve heard for years that Apple operates the store on a tight margin and it is conceivable that this royalty increase could eat away at the per-song profit to the point where running it would be economically unwise.

Some may argue this is just chest pounding by the current king of the hill, but one should not take much solace in this point of view. We have seen many other DRM-based music sites go out of business, the most recent one being Wal-Mart. I find it amusing that Wal-Mart’s parting words (shot?) to their customers was “burn your tracks to CD and re-import them”, an unfeasible option for those with an extensive library. Not doing so would, however, render your digital collection utterly useless, as the home DRM servers will be offline permanently.

This same situation could happen with Apple – both audio and video – leaving a significant number of users with gigabytes (perhaps even terabytes) of digital garbage. With the loss of the iTunes audio/video stores I suspect the attraction of the iPod & iPhone would be greatly diminished, initiating a cascade effect no one really wants to see.

While there are solutions for making your library DRM-free, perhaps it’s time to demand the removal of FairPlay from all iTunes content so you do remain fully in control of your digital property. I know I make sure an iTunes audio purchase is in their new DRM-free format before buying, otherwise I turn to other sites such as eMusic, Noise Trade, Aime Street and the Amazon MP3 Store.

What do you think? Is this just an Apple ploy to protect their profit margin? Are you concerned that your DRM-laiden library may be inaccessible soon? Where do you (legitimately) get your tracks? Sound off in the comments!


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