Apple Music Pays Industry Standard Subscription Revenue Fees to Record Labels

[MacRumors]

Apple plans to charge between $9.99 and $14.99 per month for its upcoming on-demand Apple Music service, with 58 percent of its subscription revenues going to record labels. For every $9.99 Apple collects from subscribers in the United States, it will pay out $5.80 to labels. Additionally, Apple pays approximately 12 percent to publishers and/or songwriters, leaving the company with somewhere around 30 percent of the revenue from the Apple Music service.

The figures come from a leaked document shared by Digital Music News earlier this week. In its article, Digital Music News erroneously suggested Apple was paying less to music labels than other streaming music services like Spotify (after failing to take into account the publisher's fee), but as it turns out, the 70 percent that Apple pays out to rights holders is on par with the industry standard.

In some circumstances, the fees provided to rights holders can vary, such as when student accounts are involved or when the Apple Music service is provided through a third-party service like Google Play or bundled into a carrier package. During Apple's three-month free trial period that it provides to all subscribers, it is not required to pay any fees to rights holders.

Profit sharing and value concerns often cause a lot of tension between streaming music services, record labels, artists, and other rights holders. Many artists have complained about the low fees they receive from streaming music services, primarily those with free streaming tiers. Taylor Swift famously pulled all of her music from Spotify last year, claiming that by offering music for free, Spotify was undervaluing her work.

With Beats Music and Rhapsody you have to pay for a premium package in order to access my albums. And that places a perception of value on what I've created. On Spotify, they don't have any settings, or any kind of qualifications for who gets what music. I think that people should feel that there is a value to what musicians have created, and that's that.

Apple does not offer a free ad-supported tier for its on-demand streaming music service, choosing to supplement instead with an accompanying radio service. Apple has even allegedly urged record labels to cease offering deals to services that do offer free ad-supported listening tiers, like Spotify and YouTube.

Apple's focus on paid-only music is unsurprising, given the current state of the streaming music industry. Spotify recently announced 75 million users and 20 million paid subscribers, but Spotify continues to operate at a loss. With more than 800 million iTunes accounts with credit cards attached at its disposal, Apple Music could quickly become one of the most profitable streaming services, as long as Apple can draw in customers.

Apple Music launches on June 30 as part of iOS 8.4.

Article Link: Apple Music Pays Industry Standard Subscription Revenue Fees to Record Labels

 

[farewelwilliams]

but how will Kanye afford another car?

 

[Paradoxally]

Still better than Spotify.

(For all the criticism Tidal got, it actually pays 72% to artists...well, it would, if people actually signed up for it).

 

[Reason077]

How long before record labels are irrelevant?

Artists and publishing companies must be looking at that 58% cut the labels are getting and wondering why they don't just go direct to Apple and Spotify to distribute their content.

 

[HappyDude20]

Lets get one thing clear; the true purpose of Apple Music in the long term, as amicable it may be to persist in wanting to be the leader of music services (remember Ping?), is for Apple to have a world-wide radio broadcast system. And in this sense they've already won, easily: Up the date, to the second broadcasting alongside every single other person that has an iOS device.

The music streaming stuff is just a revenue stream for Apple; the channel to communicate with everyone, in real time is the real goal and honestly everyone is already a part of it.

This is the new world. Welcome.

 

[AdonisSMU]

I'm happy this is cleared up. I do think artists should be compensated for his work adequately. People think it's just the artists...but there are all the people besides the guy singing the song who deserve to be paid. There is the janitor who maintains the studio and the array of people who are involved in producing a single track like musicians and song writers and then there are promotional costs as well. Artists who are rich are generally loaded up because they have many many hits or they are producing for other artists or they are touring and have other avenues for revenue generation.

 

[Paradoxally]

How long before record labels are irrelevant? And artists/publishing companies go directly to companies like Apple and Spotify to distribute their content?

Artists will soon be able to, as part of the connect feature of AM.

 

[Wreckus]

So does this pretty much confirms that Apple music streaming service is coming to canada on June 30th?

 

[DCJ001]

Why is the annual amount on that chart 10 times the monthly amount instead of 12 times the monthly amount?

 

[HurtinMinorKey]

Artists will soon be able to, as part of the connect feature of AM.

If you think Apple Music will have the effect of mitigating label market power, you're going to have a bad time.

 

[Paradoxally]

So does this pretty much confirms that Apple music streaming service is coming to canada on June 30th?

Canada and 99 other countries, yes.

 

[Paradoxally]

If you think Apple Music will have the effect of mitigating label market power, you're going to have a bad time.

For now, it won't. In the future, maybe. The option is there, so that's better than nothing.

 

[hemanwomanhater]

Artists will soon be able to, as part of the connect feature of AM.

This was one of the cool things about the Apple Music announcement that it seemed like nobody paid attention to in the original thread. I guess because it doesn't directly benefit the consumer or something.

 

[jpiett]

How long before record labels are irrelevant?

Artists and publishing companies must be looking at that 58% cut the labels are getting and wondering why they don't just go direct to Apple and Spotify to distribute their content.

I think its only a matter of time, when Apple comes into a new category, they usually change it.

 

[Alenore]

At least Apple is constant : App store or Apple Music, still get 30% !

 

[elmateo487]

How long before record labels are irrelevant?

Artists and publishing companies must be looking at that 58% cut the labels are getting and wondering why they don't just go direct to Apple and Spotify to distribute their content.

It used to be that being on a label mattered. I remembered giving everything that came out on Tooth and Nail a chance. It was something special to be on that label.

Now? I have no idea. But I am curious about this too.

As favorite band of mine Emery, just released an album self recorded and produced by themselves, with no label. And they put it on iTunes and it has had great success for what it is.

 

[ChrisCW11]

Lets get one thing clear; the true purpose of Apple Music in the long term, as amicable it may be to persist in wanting to be the leader of music services (remember Ping?), is for Apple to have a world-wide radio broadcast system. And in this sense they've already won, easily: Up the date, to the second broadcasting alongside every single other person that has an iOS device.

The music streaming stuff is just a revenue stream for Apple; the channel to communicate with everyone, in real time is the real goal and honestly everyone is already a part of it.

This is the new world. Welcome.

I really could give a rats ass about hearing someone babbling inanely from LA, NY or London. If I listen to the radio I want local content, news and things that are relevant around me. I even listen to local music talent that would never show up on Apple Radio. On my iPhone I don't need a person to announce a song or boil down important global issues into trite single liners. Not even sure what a global DJ is going to say?

Just play music and shut up, I don't need to pay money to hear someone tell me what song played. Personally I think Apple's "Global Radio" is a contrivance of a bygone area.

 

[elmateo487]

I really could give a rats ass about hearing someone babbling inanely from LA, NY or London. If I listen to the radio I want local content, news and things that are relevant around me. I even listen to local music talent that would never show up on Apple Radio. On my iPhone I don't need a person to announce a song or boil down important global issues into trite single liners. Not even sure what a global DJ is going to say?

Just play music and shut up, I don't need to pay money to hear someone tell me what song played. Personally I think Apple's "Global Radio" is a contrivance of a bygone area.

Isn't the global radio free to everyone? If so? Can it. If not? Carry on.

 

[TsMkLg068426]

I don't care how much the Labels are making no one is paying to hear Britney Spears do auto tune. Until than if no discount for iTunes Match customers than no one gives a crap about the poor music labels that make tons of money from concerts.

 

[Oletros]

Still better than Spotify.

(For all the criticism Tidal got, it actually pays 72% to artists...well, it would, if people actually signed up for it).

Spotify also pays the 70% to the artists

 

[AlphaTeam]

It still doesn't mean Apple didn't make back end deals with labels.

 

[Rogifan]

Scathing blog post from Bob Lefsetz on Apple Music. Sure doesn't feel like anyone in the business is terribly impressed. You know it's bad when even Jim Dalrymple says Jimmy Iovine was terrible and his and Drake's portions of the keynote were a complete failure.

http://lefsetz.com/wordpress/index.php/archives/2015/06/10/apple-music/

Apple Music provides nothing new other than a live radio service, which is mildly interesting, but never forget that iTunes Radio didn’t put a dent in Pandora. And sure, Beats 1 will make it worldwide before Pandora ever does, but is that what the world is clamoring for, a global radio service? I don’t think so.

But the heart and soul of Apple Music is its streaming service. And it broke the number one rule of technology. That in order to succeed you’ve got to deliver something better, bring in those who were disinterested or scared to participate previously, and there’s nothing in Apple Music that isn’t widely available elsewhere, including its social network and playlists. Is that what we need, a new place to display musicians’ thoughts and wares? You can’t compete with Facebook just like you can’t compete with Google. Innovation can kill them, but there’s nothing innovative about Connect other than it’s located on Apple’s platform.

As for playlists… The internet is inundated with them. And if hand-curated playlists were the key to success, the original Beats Music would have triumphed. But to call it an also-ran would be generous. Turns out to win, or at least play the game in a meaningful way, you’ve got to have a freemium offering. And Apple Music does not.

That’s right, there’s a huge backlash to Monday’s presentation. Primarily in the press, because the public doesn’t care. But you can’t find anybody saying anything good, from Iovine to Cue. Furthermore, there’s the story of the indie act having previous ties to Iovine and being fake. Those who care are aghast, even if most people don’t give a crap. But the truth is Iovine is tone-deaf. He’s way out of his league. He comes from a land where relationships and intimidation mean everything. You scratch my back and I’ll scratch yours and we’ll make it on the image of propped-up stars. But the truth is in the modern era the winners are faceless techies who go their own way, whether they be Mark Zuckerberg of Facebook, Evan Spiegel of Snapchat or Nick Woodman of GoPro. They’re giant slayers who think different, something Apple used to have a hold on.

 

[tkukoc]

Labels are dinosaurs, artists do not need them.. Excuse me.. real artists do not need them. Real artists put time and effort into what they do. Anyone who has half a brain could release a cd these days and tour off that. But of course to many dumb people in an industry that is dying because they want to play the blame game on mp3's and illegal downloading when really it's all about the way contracts are written.. the raping of artists by labels is something that should completely go away in time as more and more people realize they can release material on their own.

 

[Razeus]

DOJ should be investigated music label practices. More and more streaming services come online and yet all the prices are the same. This industry is the most rigged industry ever.

 

[AdonisSMU]

The label doesn't want to take a chance on everyone who comes through and shouldn't. I think Connect is better for everyone. It limits label risk and artist risk TBQH.