Apple Reportedly Offering Half of Pandora's Royalty Rate for Streaming Music Service

[ctdonath]

Wow, so many people trash Walmart for try to get the lowest price for their products, yet it seems to be ok for Apple to try to undercut the market, by a large amount.

Way to sweep those generalizations. Plenty of people are supportive of Walmart (follow the money, vote with the wallet), and plenty of people are trashing Apple for this.

TallManNY has the best explanation: Pandora is operating at a loss paying $0.12/hundred, so obviously offering that (or more, like others operating as walking dead) is a non-starter. Around $0.10/hundred is the likely break-even point, and between seeking an actual profit & starting at a viable point for negotiations, $0.06/hundred is a good place to start. That's not "undercutting the market by a large amount", that's pursuing a viable business plan.

 

[NeverhadaPC]

These streaming services are a threat to the Music consortia / agencies build up pre-internet days, when promoting was labor-intensive. Now indie-artists can submit content to iTunes and with streaming service from Apple earn additional income.

I have no background in music economics, but 6 c per 100 streams seems a little low. If 1,000,000 streams of your songs occur each day (which seems excessive), you earn $600/day which is $220,000/year (great!). But if that number is just 100,000 streams per day (seems decent), your earnings plummet to just $22,000/year. Hardly enough to justify/complement your labor as a musician.

What are stream numbers for non-blockbuster singers? 100-1000 streams per day? That's basically pocket change.

 

[gnasher729]

They could be low-balling the price by selling the fact they do operate one of the largest, if not THE largest, digital music library around. By having such a service they could market it in such a way to entice labels that music sales will go up as a result of the service and the streamlined approach.

I wonder if 6 cent per 100 songs is low enough so that Apple can afford to just make this available for free to all users of iDevices. In that case, it would be very little per song, but millions of millions of people who have the service available and can use it at no cost. And if it is streaming and no downloading, users would be limited to about 15 songs per hour or 0.9 cent per hour, so it would be cheap enough to offer for free.

Who gives a sh** about the artist? They knew what they were signing when they put their name on the contract.

6 cents is a fair deal. No on else can deliver a streaming service that becomes the defacto standard like Apple can. They should go no higher than 8 cents.

The music industry is ran by a bunch of morons that know how to snatch defeat from the jaws of victory with alarming regularity.

Six cents per hundred songs. If that was offered by a company that looks for customers paying x dollars per month, then it is very low. If the songs are offered by Apple for free to all iDevice customers, then it is worth looking at and might be a better deal than 12cents/100 from Pandora. Another possibility is making it a free addition for all iTunes Match customers, or any customers that spend a certain amount on the AppStore.

No what they are banking on is this explanation. Pandora is going out of business based on the prices for content you are charging them. So don't compare our offer to theirs, because theirs is a temporary illusion. Now Pandora and Spotify have special places in the marketplace with investor capital can be used to fund the companies at a loss, potentially for a few more years. But eventually that ends. Apple is suggesting that this is price point where a real company can come in and resell the content and make money.

If Apple can say "your iDevice will play any song for free when you are in the range of WiFi, or for bandwidth cost in the range of 3G", that will sell iPhones and iPads and iPods.

 

[The Bulge]

These streaming services are a threat to the Music consortia / agencies build up pre-internet days, when promoting was labor-intensive. Now indie-artists can submit content to iTunes and with streaming service from Apple earn additional income.

I have no background in music economics, but 6 c per 100 streams seems a little low. If 1,000,000 people stream your songs per day (which seems excessive), you earn $600/day which is $220,000/year (great!). But if that number is just 100,000 streams per day (seems decent), your earnings plummet to just $22,000/year. Hardly enough to justify/complement your labor as a musician.

What are stream numbers for non-blockbuster singers? 100-1000 streams per day? That's basically pocket change.

Some people work their asses of for 22 000/year and this only one revenue stream for an artist.

Do you think musicians and bands are special in some way that they are entitled to milions by design?

 

[xyster]

Apple, don't become a content owner!

Whatever Apple does, I hope it resists the "logical" urge to use its piles of cash to buy music companies outright.

Becoming a media company is what killed Sony and others. Priorities change and innovation drops to the bottom in media companies whose sole purpose is to maintain the status quo for the benefit of their business model. It's a backwards looking enterprise by its very nature.

Comcast is now showing early signs of it vis a vis their recent acquisition of NBC/Universal and the resulting internet censorship put in place over the last few weeks. Comcast is likely going to kill itself trying to maintain its media unit's business model.

 

[ctdonath]

Eh? Apple has no audience what so ever as they dont have a streaming radio service!

An audience of the better part of a quarter-billion people is just an iOS update away. I'm sure the software is ready to roll out the day after the ink dries on the contract.

 

[Plutonius]

Pony up, Apple! Stop being so cheap!

You can pass any extra cost to your customers and they would never complain .

 

[ctdonath]

What are stream numbers for non-blockbuster singers? 100-1000 streams per day? That's basically pocket change.

Compare the numbers for apps and books, esp. "self-published" ones not involving a major studio/publisher providing a serious advertising department. Profits are, on the whole, miniscule. Competition is fierce, competitors prolific, audience limited, differentiation minimal. Supply-and-demand strikes again.

 

[JAT]

Eh? Apple has no audience what so ever as they dont have a streaming radio service! Lets hope they dont at that rate!

I think "audience" in this discussion refers to the music store that sells more music than anyone else the last few years: iTunes.

Whether that can translate into a viable streaming service is beyond my ability to predict.

 

[NeverhadaPC]

Some people work their asses of for 22 000/year and this only one revenue stream for an artist.

Do you think musicians and bands are special in some way that they are entitled to milions by design?

How do you incentivize participants to your streaming service, if you are basically asking indie artists to play for free? I need to see the numbers for streaming charts, but I doubt that 95% of artists would make more than $1000/year from such a service. That's like 2-4 gigs and hardly an incentive to continue giving Apple your music.

No one is entitled to anything but access to opportunities (education) and safe living (healthcare, safety).

 

[dBeats]

hmm, 22¢/100 songs with a user base of 1 million people or 6¢/100 songs with a user base of 200 million.....

 

[CJM]

I get Spotify premium for £5 a month. You'll have to pry it from my cold dead hands.

 

[The Bulge]

if you are basically asking indie artists to play for free?

Then don't. Go grab a spade and see how the alternatives feel.

 

[ctdonath]

Whatever Apple does, I hope it resists the "logical" urge to use its piles of cash to buy music companies outright.

Understood. Methinks is quite aware of this, and hasn't gone their despite success of iTunes and iBooks. is focused on their core competence: selling hardware. Operating systems, apps, services, etc all exist for the sole purpose of creating a compelling ecosystem which persuades customers to buy more hardware. And by "hardware" I mean the completed product, not the components thereof - uses its piles of cash to persuade other companies to produce next-generation components at commodity prices in short order; rarely buys other companies outright, and then (it seems) just to access what amounts to patents.

seeks this streaming service just to get more people using iDevices more often by making it a dead-simple integrated behavior of the hardware. There is no apparent interest in owning the content, just in ensuring customers want to access it, and access it via hardware.

 

[samcraig]

The flip side to this is that Apple would also have to "prove" their service as better to gain a loyal following. It's not just enough to have the ability on their devices. Otherwise people won't migrate off of Pandora/Spotify/etc.

And Apple, while great at many things, also has occasionally faltered (like many companies) when it has come to launching brand new services.

 

[ctdonath]

How do you incentivize participants to your streaming service, if you are basically asking indie artists to play for free?

Artists already do play for nigh unto free, and customers aren't willing to pay more.
Supply and demand.

lay for free? I need to see the numbers for streaming charts, but I doubt that 95% of artists would make more than $1000/year from such a service. That's like 2-4 gigs and hardly an incentive to continue giving Apple your music.

But if they don't participate in such a service, they won't get anything from it, and don't get the exposure needed to attract more gigs.

Don't underestimate the motivation of a possible viral "wow, you gotta hear these guys! fire up iStream and listen!" At worst, it's the old lottery ticket theory: cheap to get in, you can't win if you don't. Probably won't win, but the prospects of winning are tantalizing.

 

[Jalopybox]

Honestly, I don't care what Apple pays as long as the service is good and offers variety at a good value to us... the consumer.

Bring it on and more!

Spoken like a true child labor law violator.

 

[Jibbajabba]

Most people seem to have the impression that all the money goes to the artist. In fact, in some cases the song writer earns more than the artist himself. Some artists probably see less than 50% of the revenue coming from songs only.

 

[nuckinfutz]

Most people seem to have the impression that all the money goes to the artist. In fact, in some cases the song writer earns more than the artist himself. Some artists probably see less than 50% of the revenue coming from songs only.

They're not even getting that. Back in the lofty days of CD sales an artist was lucky to get a dollar per CD sold. That's less than 10%.

People are under the fallacy that artists live by music sales alone and that's not the case unless you're a megastar. If you want to make money as an artist you need to tour tour tour.

 

[el-John-o]

You know Apple did this with iTunes as well. Significantly undercut everyone else (digital download or CD) per song, but ended up revolutionizing the music industry and actually INCREASING the amount of money the artists and producers end up with in their pocket. Perhaps Apples massive, massive market share in music could make 6 cents per 100 more valuable than the 21 cent/100 average?

 

[maslan123]

Pandora is not on every device. It CAN be installed and you can bet that the vast majority of all users do not even know what Pandora is. Same goes for Spotify.

In addition Apple has a global iTunes store, which is still expanding rapidly and both Pandora and Spotify are restricted to specific regions. Also both Pandora and Spotify have a smaller music database than Apple.

Still applies - the "base" will be larger with Pandora - hands down.

 

[derbothaus]

Honestly, I don't care what Apple pays as long as the service is good and offers variety at a good value to us... the consumer.

Bring it on and more!

I forget how insensitive Popeye is. Surprising, really.

 

[radiohed]

I subscribe to Pandora and love it. I hardly listen to my iTunes library now. I would be very interested in a streaming service if the price is comparable to Pandora. . Knowing Apple it will be "only" $199 per year.

 

[Popeye206]

I never said I was. But I also don't post things like "Honestly, I don't care what Apple pays as long as the service is good and offers variety at a good value to us... the consumer. "

I guess I care enough about the arts to not just care about what the service is - but that it's fair. Or at least not "raping" artist. Not saying this model is/does. But I don't just care about what it does for me.

p.s. I am not a recording artist. Nor a professional artist. But I am many friends who are. So it's an important issue to me.

I don't disagree with what you're saying... I'm very much in favor of paying for what I enjoy... I want artist to continue to do more and get paid for it.

My only point was I was glad to see Apple working on this... I hope they can deliver such a service. What price they pay will be determined by what the industry is willing to allow... and looking into deeper, it appears that streaming music is not a huge source of revenue anyway and anything that Apple does is adding to, not taking away.

 

[kuwxman]

Looks like Pink forgot to dye her hair in the picture related to this story. Oh, that's Justin Bieber? Could've fooled me.