Intellectual Property Law

Royalties on Digital Tunes Stable Through 2012 - DRM in Doubt

By Posted by Alan Wexelblat

I've been so busy with the mess on Wall St that I totally missed Apple's threat to close down iTunes if royalty rates went up. There were several proposals on the table, including one to lower fees, which are formally known as "mechanical royalty rates". Jacqui Cheng on ars has a nice summary of the various posturings that went into this.

So, in theory, everything stays the same through 2012. At least in the US. Things in Europe may be a bit more unsettled. According to a PCWorld story, Apple is facing a challenge to its use of DRM to encumber downloads in the first place. At the moment, this move only affects a small country (Norway) that isn't really significant to Apple's revenue. Even if they lose the current court case they could simply stop doing business there. The question is whether the rest of the EU gets behind this idea.

If Apple gets a ruling it doesn't like that applies across the entire EU that could force some kind of change, with likely echos on this side of the pond. I don't really expect that, but also lost in Monday's news was the story about Wal Mart shutting down its own music download service.

The problem is that they didn't just take down the service for buying new music - they're shutting down the DRM servers. So if you bought music locked into Wal Mart's electronic box you are out of luck. You may be able to burn your tunes to a CD and then re-rip them, but probably only if you do it before October 9.

Cory makes the point emphatically when he points out that the current scenario is, roughly: buy DRM-encumbered music legally and get screwed; acquire illegal but unencumbered copies and life is good.

My guess is that if download services continue having these problems, Apple will have a lot to worry about before the next royalty rate review rolls 'round.

Full post as published by Copyfight - The Politics of IP on October 03, 2008 (boomark / email).