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Apple Threatens to Close iTunes Store Over Possible Royalty Hikes
Understandably, Apple is opposed to the rate increase and, in a statement submitted to the board, even suggested that Apple might close iTunes altogether:
"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," Cue wrote. "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 claims that the market would not accept an increase in the per-track price and that overall sales would decrease. The Fortune article writer doubts that Apple would take such drastic measures as closing the iTunes Store as Apple has used it to leverage hardware sales of iPods and now iPhones.