Apple Establishes New Streaming Deal With Warner Music Group, Will Pay Lower Rates

[MacRumors]

As Apple's original Apple Music deals with record labels begin expiring, Apple has been pursuing lower streaming rates as it negotiates new deals. Apple recently reached a deal with Warner Music Group, reports Bloomberg, and the Cupertino company was indeed able to secure a lower rate.

Warner Music Group will provide Apple with a catalog that includes Ed Sheeran, the Red Hot Chili Peppers, Bruno Mars, and more, for iTunes, the online store, and Apple Music. Apple will be paying Warner Music Group a smaller percentage of sales from Apple Music subscribers than it did in its original deal. Apple is also close to a deal with Sony Music Entertainment, but is still negotiating with Universal Music Group.

Large technology companies and music rights holders are establishing a framework this year for how to share proceeds from on-demand streaming, now the dominant source of sales for the record business in the U.S. Music rights holders are willing to accept a slightly smaller share of the sales from on-demand services, provided those services continue to sign up paying subscribers at a high rate.

Apple began aiming for a lower rate after Spotify was able to secure a rate reduction. Since 2015, Apple has been paying labels 58 percent of revenue from Apple Music subscribers, while Spotify was paying 52 percent. Apple is now said to be considering providing labels with a 55 percent cut, with that number decreasing should Apple meet certain subscriber number targets.

Since its debut in June of 2015, Apple Music has seen steady growth, undoubtedly giving the company an upper hand when negotiating new deals with labels. As of June 2017, Apple Music had 27 million paying subscribers.

Article Link: Apple Establishes New Streaming Deal With Warner Music Group, Will Pay Lower Rates

 

[JeffyTheQuik]

Cool! I'm looking forward to them passing on the savings!

oh...

Cool! I'm looking forward to them passing on the profits in dividends!

 

[macs4nw]

Small wonder Spotify gets a better deal with their substantially larger subscriber base.

 

[Jakewilk]

I guess this means less subscription money spent paying music labels and more money spent making carpool karaoke episodes?

 

[riverfreak]

Awesome news. Greedy artists are getting paid way too much for making content. Only the management and infrastructure people should be entitled to profit.

 

[Mirice99]

That's wondeful, content creator make even less while Apple makes even more money.

 

[goobot]

So let's be realistic here for a second. None of this is going to be passed on to the customer and will result in artist being payed less. Then we will have a bunch of artist pulling their music from streaming services.

 

[Blu Reel]

Cheaper is better...but still not cheap enough to get me to subscribe.

 

[0098386]

The next headline I want to read is that due to lower fees to record studios, Apple Music will cost less.

No? Not happening? Well who gets that extra money now?

 

[OldSchoolMacGuy]

So let's be realistic here for a second. None of this is going to be passed on to the customer and will result in artist being payed less. Then we will have a bunch of artist pulling their music from streaming services.

And yet none of them have been successful without streaming. Sorry, but streaming is the norm now. It would be like refusing to be played on the radio back in the '80s or '90s. You simply couldn't have become successful without it. Every industry has their necessary evils.

Artists use to take more profits from their albums. Now they're only paid for the songs which are played. This can still make them insane money. More than they would have selling albums, as now you don't just get paid 1 time but every time someone listens to a song.

But they're also realizing they need to do more if they want the mega-millions to roll in. Touring is becoming a bigger part of how the big acts make money. I don't see anyone complaining that streaming is causing their favorite artist to come to town more often.

The big names now even richer than ever before. Streaming isn't hurting them. And the truth is the smaller acts never saw huge album sales before anyways. The current state of streaming opens those small guys up to people who would never have paid to check out their album but are now paying them by listening to their songs. In this way it has spread the wealth across more small acts than in the past. On average people are listening to more than double the number of artist they did 10 years ago, and that's great for the music industry.

 

[PizzaBoxStyle]

Where's Taylor Swift during this darkest hour?

Must not be controversial enough this time to stage a publicity stunt over.

 

[bLackjackj]

So let's be realistic here for a second. None of this is going to be passed on to the customer and will result in artist being payed less. Then we will have a bunch of artist pulling their music from streaming services.

You need to get your facts right.

The artists AREN'T getting paid less. The record label is taking less. The artists are signed to the labels on fixed contracts, some get paid incentives, others just get a fixed sum, so they can't just pull their music as you say.

Its a bit hypocritical of you, when you want to pay less then 10 bucks a month for unlimited music!
[doublepost=1504751998][/doublepost]

Where's Taylor Swift during this darkest hour?

Must not be controversial enough this time to stage a publicity stunt over.

What's Taylor Swift got to do with this,..the artists are still being paid the same!

 

[Michael Scrip]

Awesome news. Greedy artists are getting paid way too much for making content. Only the management and infrastructure people should be entitled to profit.

This is nothing new.

If you sign a record contract... you're lucky to get 10%

The other 90% goes to the labels, marketing, management, producers, songwriters, etc.

If you think that's unfair... then you shouldn't have signed a record deal in the first place!

 

[macTW]

"How horrible!! Doesn't pass on to consumer AND rips off artists!"

 

[Glassed Silver]

This is nothing new.

If you sign a record contract... you're lucky to get 10%

The other 90% goes to the labels, marketing, management, producers, songwriters, etc.

If you think that's unfair... then you shouldn't have signed a record deal in the first place!

I don't think that is anything anyone should smile over other than label people and their shareholders.

It's a damn disgrace and we all know it.

Glassed Silver:ios

 

[Michael Scrip]

I don't think that is anything anyone should smile over other than label people and their shareholders.

It's a damn disgrace and we all know it.

Yes... it's a disgrace.

But the music industry has been like this since... forever?

We all know record labels are the devil... yet people still sign record contracts.

That's what I was talking about.

 

[Robert.Walter]

I have a different take on this.

The lower rates are in exchange for faster growth. The record label execs, as wells as the Apple execs, want growth.

It could very well be that Apple does something to both pull subscribers from the competition as well as organically grow, like, for example, including Apple Music free for a year on the premium iPhone pro/8.

Given that this agreement was made ahead of next week’s event, I wouldn’t be surprised.

 

[Glassed Silver]

Yes... it's a disgrace.

But the music industry has been like this since... forever?

We all know record labels are the devil... yet people still sign record contracts.

That's what I was talking about.

Because historically they had little choice if they wanted to do music for a living.

Nowadays you can self-publish digitally with little to no barrier to entry, but nonetheless a label provides a lot of help to get popular and be able to live from your passion, however musicians have very limited leverage against them.

Like, are you genuinely surprised that labels can use the power they have?

Glassed Silver:win

 

[Michael Scrip]

Because historically they had little choice if they wanted to do music for a living.

Nowadays you can self-publish digitally with little to no barrier to entry, but nonetheless a label provides a lot of help to get popular and be able to live from your passion, however musicians have very limited leverage against them.

Like, are you genuinely surprised that labels can use the power they have?

No... I'm not surprised the labels use their power against the artists.

The whole industry is screwed up. That's what I'm saying.

The comment I originally replied to said "Only the management and infrastructure people should be entitled to profit..."

I pointed out how the artist only gets a tiny percentage of the money made... and the rest goes elsewhere.

I'm not celebrating how the artists get screwed... but I can't help them if they sign a bad deal.

What do you expect when you sign a contract that says 90% of the money goes to someone else?

We both know it sucks... but what are we gonna do?

In the time it took me to type this comment... three new artists signed a terrible record contract. C'est la vie.

 

[itsmilo]

Where's Taylor Swift during this darkest hour?

Must not be controversial enough this time to stage a publicity stunt over.

Havent you heard? The old Taylor is dead

 

[0098386]

Where's Taylor Swift during this darkest hour?

Must not be controversial enough this time to stage a publicity stunt over.

That's some weird chip on your shoulder.

 

[samcraig]

Shame on both companies for reducing the amount artists will get when they barely get anything from streaming to begin with.

 

[thisisnotmyname]

That's wondeful, content creator make even less while Apple makes even more money.

Your spite is misplaced. Look into the labels and their business model.

 

[kyjaotkb]

This is nothing new.

If you sign a record contract... you're lucky to get 10%

The other 90% goes to the labels, marketing, management, producers, songwriters, etc.

If you think that's unfair... then you shouldn't have signed a record deal in the first place!

10% sounds very low, royalty rates are generally about double that I'd say. But nevermind - artists signed to a major label get an non-refundable advance. Meaning they get a cheque of, say, $500K or $1M and they commit to produce 3 albums with the label.
Giving away advances is the most efficient way for the labels to secure the rights for rising artists... but it is also very risky. Labels end up losing money on 80% of the artists they have paid an advance too i.e. 80% of them do not recoup the advance. Record labels are in some ways imilar to private equity. A few "exits" finance the whole structure.
[doublepost=1504790644][/doublepost]

Shame on both companies for reducing the amount artists will get when they barely get anything from streaming to begin with.

Look at the US or UK top forty now. How much do you think these guys are making? How much from download and CDs? Streaming has restarted growth in the music industry. Label's margins are tighter than ever. Artists are abolutely benefitting from streaming, saying otherwise is absolute nonsense!

 

[samcraig]

10% sounds very low, royalty rates are generally about double that I'd say. But nevermind - artists signed to a major label get an non-refundable advance. Meaning they get a cheque of, say, $500K or $1M and they commit to produce 3 albums with the label.
Giving away advances is the most efficient way for the labels to secure the rights for rising artists... but it is also very risky. Labels end up losing money on 80% of the artists they have paid an advance too i.e. 80% of them do not recoup the advance. Record labels are in some ways imilar to private equity. A few "exits" finance the whole structure.
[doublepost=1504790644][/doublepost]

Look at the US or UK top forty now. How much do you think these guys are making? How much from download and CDs? Streaming has restarted growth in the music industry. Label's margins are tighter than ever. Artists are abolutely benefitting from streaming, saying otherwise is absolute nonsense!

Sorry - but I disagree. Having worked in the industry and know many people who are in it - they make pennies. Some TOP artists might make some decent change from streaming. But their nut comes from concerts. But the major majority of artists make barely anything on streaming.

IE (from a friend of mine and latest numbers)

Spotify pays $0.00437 a stream, Apple Music pays $0.00735. So based on the model of 20 tracks, 14 cents for the entire album.

And that's in total - not just the artist's cut.