Apple could close its online music store iTunes in a row over royalty rates the company pays out to record labels for selling their music.

The rates are to be set later today by a US government federal agency and it is expected that Apple will be forced to boost its royalty payments from 9 cents a song to 15 cents a song for each track sold via iTunes - a 66% increase.

This is the first time in nearly three decades that the industry has been unable to decide the fee for sales of recorded music on its own.

Apple has so strongly opposed increasing the rate, now 9.1 cents per song (5.1p), that it threatened to shut down the iTunes store if the rate goes up.

"Everybody expects it to go up somewhat but nobody expects it to go up all that much," said Steve Gordon, an entertainment attorney and author of "The Future of the Music Business."

"The record business has a lot of problems. This is not going to make it much better or much worse," he said.

The last time the government had a hearing to set the so-called mechanical royalty rate was in 1980, which was triggered by a change in federal law.

"For the last seven years, we've been fighting over those business models," said David Israelite, chief executive of the National Music Publishers' Association, which is representing songwriters and their publishers in the copyright board proceeding.

Digital downloads grew 38 percent from 2006 to 2007 to become a $1.26 billion (£680m) business, according to the Recording Industry Association of America.

Last year, Apple's vice president of iTunes, Eddy Cue, argued that the store's price of 99 cents per song was not flexible so raising the royalty could jeopardize the iTunes store's profitability.

"If (the iTunes store) were forced simply to absorb any increase in its mechanical royalty rate, the result would be to significantly increase the likelihood of the store operating at a financial loss," Cue said.

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

Apple argued that it is unable to raise iTunes prices to compensate for higher royalties because the store is competing with pirated music available for free.