CD-R Royalties Cut

Wednesday, November 3, 2004

CD-R Royalties Cut

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According to DigiTimes, Philips is planning to reduce its CD-R royalty charge from US$0.045 to US$0.035 per disc...

However, producers of optical discs have not responded favorably to the decrease in royalty charges since it is smaller than they expected.

The decrease of only US$0.01 in Philips? royalty charge is too small to cover the recent drops in the makers? gross margins due to rising prices for the key component polycarbonate (PC), coupled with falling CD-R disc prices, the Taiwan makers noted.

They were hoping that the CD-R royalty payment would be based on a percentage of their revenues rather than a fixed rate charge since a sliding rate would take into account price fluctuations in the market.