Apple Will Pay More To Streaming Music Producers Than Spotify -- But Not Yet

Reader journovampire supplies a link to Music Business Worldwide (based on a re/code report) that says Apple's new Apple Music service, after a trial period during which the company has refused to pay royalties, is expected to pay a bit more than 70 percent of its subscription revenue out to the companies supplying it, rather than the 58 percent that some in the music industry had feared. Notes journovampire: "If 13% of iOS device users in the world paid $9.99-per-month for Apple Music, it would generate more cash each year than the entire recorded music biz manages right now."

Comments

0x4650

[gnupun]

Suppose a subscriber does not listen to any music for one month and still pays $9.99. How will Apple distribute the 70-80% proceeds of the $9.99 to the copyright holders?

Re:0x4650

[TheMegaLoser]

Without knowing: All money goes into the same pot and gets divided per what's listened to totally. There's no point in doing it per user.

Re:0x4650

[Imazalil]

I'm guessing that the money would still go to the record companies who would just keep for themselves.

I do hope that Apple has it worked out that this doesn't happen. Not that I want Apple to sit on an even bigger pile of cash, just if musicians aren't going to get the money, I don't want it to go to the record companies.

Re:0x4650

[dave562]

That is an interesting question. When I was consulting, I worked for one of the accounting firms in Santa Monica, California that tracks the royalties paid to artists for their songs. Now granted this was back in 2006, but the model at the time was pennies per song. The radio stations were required to track the plays and reimburse the labels, who then reimbursed the artists.

While Apple may set aside a whole slew of money to pay out from, I have a suspicion that the pennies per song model will stay in place.

Re:0x4650

[MitchDev]

Just get an mp3 player, rip your discs (used music shops and garage sales are great for bargain hunting), no internet connection required, no monthly fee

Re:0x4650

[Righ]

This is what's going to happen, because it's what happens with Spotify and other services. The record companies will pay their artists based upon royalty rates * sales - fees. Only the larger artists will ever be able to offset the fees and the record companies will continue to pocket the proceeds generated by 'minor artists' (which actually includes all the major artists of the past who are no longer selling in sufficient weekly volume). Jay-Z and Madonna will get richer of course, but Roxy Music (for example) won't (unless Jay-Z samples them).

Re:0x4650

[AmiMoJo]

They will do what everyone else does. Pay based on total plays for all users, give the money to the recording industry bodies responsible for distribution in each country, and let them handle it. It's a huge scam because to actually get on a streaming service and get paid you have to sign up with a record label that is a member of the local distribution body, you can't just go to Spotify and get paid directly.

That's why YouTube is a more interesting platform for most musicians. You can get paid just by having a bank account, you don't need to be with a record label. It's a shame Google's music streaming service isn't the same.

Re:0x4650

[MitchDev]

Why? MP3 works fine, and most of us have hearing so damaged they can't tell the different between a 192+ MP3 and the CD it was ripped from.

Re:0x4650

[alex67500]

And nobody can delete or disable your files remotely. But please, this is 2015. Use FLAC instead of MP3.

FTFY

Re:0x4650

[Feral Nerd]

Why? MP3 works fine, and most of us have hearing so damaged they can't tell the different between a 192+ MP3 and the CD it was ripped from.

Good point, I've been working on device that runs a simple cross-browser live-streaming app. After taking a close look at RTSP which requires a client player or a plugin, as well as HTML5 and the cluster f**k that is the <video> tag. I concluded that the most cross browser way to do this without involving a crappy plugin is with websockets and MPEG-1 plus JavaScript MPEG decoder on the browser end. This has earned me a number lectures about how I'm a luddite but the thing is that MPEG-1 still achieves up to a 1:100 compression ratio, it supports fairly high resolutions, it's relatively light weight and amazingly this lash-up works half way decent on mobile browsers. Another plus is that all the patents have expired. Just because something is old it doesn't mean that it is useless.

Re:0x4650

[teg]

Without knowing: All money goes into the same pot and gets divided per what's listened to totally. There's no point in doing it per user.

Many artists in Norway is asking for this to happen. The reason? If you look at the listening patterns, they would get a much bigger share of the pie. Those who listen to music and often want to listen to Norwegian artists with which they have a long relationship, tend to listen to fewer songs per month than those who play it more as background noise, using generated playlists etc. Thus, with a per user scheme their slice of the pie wouldn't be marginalized by teens using spotify 10 hours a day.

13%?? Keep dreaming

[master_kaos]

Between family share plans, people who have multiple devices, and people who have zero interest in apples streaming platform, there is no way they will get a 13% paid subscription rate.

Re:13%?? Keep dreaming

[cdrudge]

That was never Apple's goal. That was just the pie in the sky calculation the article made using extremely optimistic numbers of 1b devices. It stated that Apple's goal was eventually 100m users. I think that's plausible although the number of paying subscribers I think will be just a small fraction of that.

Not for me...

[Lumpy]

I refuse to pay for any service that rewards the scum that is the record industry. Free services only for me or my own music ripped off of used CD's.

I am the record industry's worst nightmare, someone that buys CD's but only second hand. It's the best way to steal from them.

Re:Not for me...

[N1AK]

I think you're giving yourself too much credit. Who sells CDs second hand: People who buy CDs, including people who buy them new; and what do they do with the money raised by selling music... at least partly use it to purchase new music.

You're the music industries worse nightmare in the same way the guy who buys 2nd hand cars, and indirectly keeps the new car and trade-in markets going, is Ford's worst nightmare: In. No. Way. At. All.

Re:Where does the 13% come from

[Anonymous Coward]

Yeah I don't get it either. I mean YOU have Amazon Prime, therefore EVERYONE must have Amazon Prime! What was Apple thinking??? They should have just asked you!

why is this even a thing?

[hypergreatthing]

Seriously, who cares? Poor starving artists don't get paid? Then they should sign for better royalty rates. Spotify/apple/pandora does not set the rates which artists get paid. That's all up to the record labels and the artists who have contracts. There's the whole other mess associated with the government approved collection agencies which only gives money to member artists. If you create something and it's played seldomly and it's not part of any big label, then fat chance you'll see even a penny.
The idea isn't to give starving artists any extra money, it's to give the copyright holders even more cash through streaming.

...the company refused to pay royalties...

[xxxJonBoyxxx]

>> ... a trial period during which the company has refused to pay royalties...

How, exactly, did they get away with millions of unpaid plays that at the same time we're reading a story about the royalty police going after a mom-and-pop restaurant for a song or two?

Re:...the company refused to pay royalties...

[nine-times]

Because they negotiated it in advance. It's not really that Apple "refused to pay royalties", but that they negotiated licensing terms such that they aren't required to pay royalties under specific circumstances.

The summary is poorly worded.

That's my problem

[quantaman]

"If 13% of iOS device users in the world paid $9.99-per-month for Apple Music, it would generate more cash each year than the entire recorded music biz manages right now."

I sure as hell don't purchase $120 in music per year, even when the CD was king I doubt many ever did.

So why do they suddenly expect us all to start spending as much on music as the most vociferous consumers?

$3-5 monthly, $36-60 per year, that's a price point where subscription services start making sense to me.

Re: That's my problem

[AvitarX]

The subscription services are worth about double or triple what I used to spend on music.

The "radio" (hand picked, and automatic), and the music exploration features additionally have value.

I used to spend about $5/month for music (from ages 23 -30 or so, before then it was more, since then, subscription service, also more), I happily pay $10 for the subscription.

It seems unlikely they'll go much lower, unless they cut deals with the cell phone carriers or some such, though I suspect you could be correct, the optimum price could be a little bit lower (or higher too, I'd guess).

Re:Wait a fucking minute.

[nine-times]

When they say, Apple "refused to pay royalties", they're giving a false impression that Apple is supposed to pay royalties, but they refused. In fact, they negotiated a deal with record labels so that they wouldn't have to pay royalties during their "free trial" period. Customers aren't paying Apple during that period, and Apple isn't going to pay record labels, but that was all negotiated with record labels in advance.