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Apple to shut down iTunes?

An argument over royalty fees is due to be settled soon

Apple's new 5th Generation iPod
Apple could shut down its iTunes music store this week, if a verdict from the US Copyright Royalty Board forces the company to pay higher royalty rates.

A ruling is expected by the board tomorrow (October 2) on an application by the National Music Publishers' Association to raise the royalty fees paid to its members on songs purchased from online music stores including iTunes.

The association wants to increase rates by 66 per cent, from nine cents to 15 cents per track, whereas Apple wants a decrease to 4.8 cents per track, reports CNN.

In a statement submitted to the board last year, iTunes vice president Eddy Cue said that Apple would not stand for an increase:

"If the [iTunes 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," the statement read.

Cue added that Apple would have no qualms about shutting iTunes down if it was not making enough money.

"Apple has repeatedly made it clear that it is in this business to make money," he said, "and most likely would not continue to operate [the iTunes store] if it were no longer possible to do so profitably."

Research analysts Piper Jaffray predict that Apple will have an 85 per cent share of the digital music market this year.

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