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Apple Could Shutter iTunes if Royalty Rates Rise

iPod users may suddenly find themselves without iTunes if the music industry keeps pushing for higher royalty rates, according to previous comments by iTunes chief Eddy Cue. Although the statement was made nearly a year and a half ago, it did not come to light until Fortune made note of it Tuesday.

Cue’s words have apparently been publicly available here for quite awhile, it’s just that nobody took notice of it. The reason why most reporters missed this is likely due to the fact that at no time in the past has Apple made any overtures that it would do such a thing — only suggesting that higher royalty rates could lead to higher prices, and thus a return by customers to piracy. Cue reemphasizes this in his letter.

The labels are asking for the board to approve a 66% hike in royalties from 9 to 15 cents per track. Apple does not make much of a profit right now to begin with, and further cutting into that with additional royalty payments would make those profits smaller. The board is set to rule on Thursday, according to reports.

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