Not A Bluff
Eddy Cue of Apple, speaking before the Copyright Royalty Board:
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. 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.
Some are calling this a bluff. I think it isn’t. Read between the lines, and Cue’s statement might easily mean this:
iTunes Store exists mostly to earn revenue for Apple, not to sell iPods and iPhones. If you turn it into a loss, we’ll just turn it off, and then everyone will go back to ripping off all the music for free like they did before iTunes Music Store existed. And they’ll still put all that free music on their iPod or iPhone — which is what they were doing before iTunes Music Store existed. It is the demand for iPods and iPhones that props up the sales of music on iTunes Music Store. Not the other way around. NBC found this out the hard way. You’re welcome to do the same.
Update 2008.12.17 — Just a few weeks before IDG’s Macworld Expo, Apple announced that Jobs won’t be delivering the keynote, and Apple won’t be attending any more Macworld Expos, to boot!
To me, this smells like another NBC-iTunes situation. Perhaps IDG was still mentally living in the late ’80s when Apple badly needed to be at that show. Today, Apple can (and does) put on a keynote-publicity-level event any time it wants to. Maybe Apple said it would pull out of Macworld if IDG didn’t make certain concessions, and IDG called Apple’s bluff.
And it wasn’t a bluff.
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