A veiled threat by Apple to close its iTunes store has emerged 18 months after it was issued and just a day before royalty rates are to be set.

The Copyright Royalty Board meets on Thursday to rule on a requested 66% increase for sales of digital music from 9 cents to 15 cents a track.

A rise would have to be paid by either Apple, the record company or consumer.

Apple opposed the rate hike and has said it is unwilling to raise its 99 cents a song price or absorb a rise.

In April 2007 the company’s vice president for iTunes, Eddy Cue, submitted testimony to the Board at the Library of Congress.

"If iTS (iTunes Store) were forced to absorb any increase in the mechanical royalty rates, the result would be to significantly increase the likelihood of the store operating at a financial loss - which is no alternative at all.

"Apple has repeatedly made clear that it is in this business to make money, and would most likely not continue to operate iTS if it were no longer possible to do so profitably," said Mr Cue.

The National Music Publishers’ Association has asked for the royalty rake increase and has said it believes everyone will benefit because the digital music market is growing.

"I think we established a case for an increase in the royalties," said David Israelite, president of the NMPA. Read more...

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