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

[wingsabre]

I think if Apple really expect 6 cents per 100 plays with much more flexibility than Pandora, then it's essentially a middle finger to the music industry. There's low balling an offer, and there's a insulting offer. It's too low, and the only way I see the music industry accepting that is if Apple somehow has a fallback deal where they have to guarantee certain increase in iTunes sales due to this deal, and if they don't meet the increase, the rates goes up automatically or apply Pandora like limitations.

 

[HenryDJP]

Just because we DISLIKE his music, his attitude, his personality, etc. doesn't mean we HATE him, it means we dislike his music, his attitude, his personality, etc.

Oy vey, . Are you serious with what you wrote? Uh, sir, here's the definition of "hate". Double check the meaning of words before you post.

 

[samcraig]

Oy vey, . Are you serious with what you wrote? Uh, sir, here's the definition of "hate". Double check the meaning of words before you post.

Did you read what you posted? Maybe you missed the first few words. It said "intense or passionate"

But really - you're going to quibble about Bieber now?

 

[wingsabre]

Oy vey, . Are you serious with what you wrote? Uh, sir, here's the definition of "hate". Double check the meaning of words before you post.

Hate and dislike don't mean the same thing. Hate is a degree of dislike. Just like detest, abhor, loath, and abominate display different intensity of dislike.

Just like I abhor Justin Bieber's maturity, but I'm indifferent to his music and everything else about him.

 

[you people smh]

In other news, Turns out the media industry is greedy!

el oh el!!!!!!

 

[Lancer]

Please, enough with that ridiculous fool Bieber.

1+

Please next time you do a music story use a better 'artist', someone that can actually sing, and not turn up 2 hours late to a concert!

As for streaming music, that would be a nice addition but personally I don't know how much use I'll make of it.

 

[BHP41]

That's business. Apple has the upper hand here and they know it. Pandora is doing horrible as a business and it's because they bent over for the record labels. Apples not going to. They already sell billions worth of albums and songs each year on iTunes. You add a radio that's embedded into each iPhone and that number will only grow. The labels know it, Apple knows it. It's only a matter of time before they give in again.

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So much for all the noobs who claim that Apple is only interested in profits and doesn't care about the artists.



/s

It's a business. Record labels have been ***** artists for years and will continue to do so.

 

[iChrist]

This should be the flagship feature in iOS7. It could be a true game-changer.

Yeah, a watered down, platform locked, version of Pandora will be an even bigger hit than Maps was.

You are funny man.

 

[GenesisST]

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

Here's my "6 cents"... (he he, I think I'm funny...)

6¢/100/200m might advantage big name "artists"... Might not be as good for small for indie artists.

I guess it would depend on how users can actually get to new music. I like Pandora for this, I play something based on my tastes and what I know and then I get surprises and discover new stuff.

Also, and I haven't really read the article, might be 6¢/100 songs regardless of the time a song player... If it plays 3 seconds, then I skip it, that might still count towards the 100 songs...

I think Pandora stops after a while when there is no user interactions, so that also limits royalties. With iTunes streaming, it might not be the case and that would also increase revenues.

Lots of "ifs" and things we don't know.

But personally, I'm all for better royalties for artists, especially for small indie bands as there are truly some gems out there, but still don't know. (There can be lots of crap too)

But we all know that whatever's accepted in the end will likely not advantage artists...

 

[AaronEdwards]

That's business. Apple has the upper hand here and they know it. Pandora is doing horrible as a business and it's because they bent over for the record labels. Apples not going to. They already sell billions worth of albums and songs each year on iTunes. You add a radio that's embedded into each iPhone and that number will only grow. The labels know it, Apple knows it. It's only a matter of time before they give in again.

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It's a business. Record labels have been ***** artists for years and will continue to do so.

So, because record labels have been ***** artists for years, Apple can ****** them even harder? Including the independent artists that don't have a record label ***** them...

 

[Mackan]

No content deal for their TV, and no content deal for their music streaming service. I don't think Apple gets what they want anymore.

 

[shinji]

Another famous example is Lady Gaga - 1 million streams of 'poker face' on Spotify and she made about $160. If that had been 1 million downloads she would have made $100,000.

But not everyone who streams the song on Spotify would have been willing to pay $1 for it, or buy the CD. If that had been 1 million downloads through torrents, she would have made $0.

We don't really know how much the availability of music streaming services cost or benefited Lady Gaga in total because we have no idea if more people being able to hear the song meant more people seeing her live in concert, or if it was primarily people who would've pirated the song anyway, etc.

Again, you may not feel any sympathy for these really high earners, but think about the little guys, they just are not getting anything of any note at all from Spotify....

Smaller indie bands aren't getting much at all in royalties from streaming services, but they are getting much more airplay and visibility than they would have traditionally on the radio or TV. The recommendation system, shared playlists, and social nature of some of these streaming services does lead to new people being introduced to music they never would've heard before. Maybe a portion will then decide to see them live, buy merch, buy the download, etc.

Even CD sales and downloads aren't really that much when you haven't been elevated to stardom by record labels. But the more people who hear and like your music, the more who will come to see you live.

I do sympathize with the artists, but they still have touring, and streaming/downloads are the future (present?) of music. Consumers are unlikely to pay substantially more to stream music.

 

[Sweetfeld28]

I say they should buy Pandora. I couldn't think of another app that has more pull than it, maybe iheartRadio, but I doubt it. [well ok, Spotify but they aren't going anywhere]


Besides, even though Pandora is a good company, they haven't made very much money if any at all. I just think Apple and Pandora would benefit from each other.

Apple: Marketing, Money, iCloud Streaming/Storage, iTunes

Pandora: Brand awareness, currently installed on many phones, appliances, and within Automobiles. Assets, and Streaming capabilities, and Knowledge.

Just to name a few.

 

[Eric E. Schmidt]

two turntables and a microphone

in us$bn, trend shows traditional music sales (light blue) count for less than half of industry's revenue as artists turn to the stage (blue blue) for cash.

 

[Meandmunch]

Pony up, Apple! Stop being so cheap!

There are over a hundred million iPhones out there potentially ready to download and start using the hypothetical iStreaming service. Lets say just 10 million of them start using the service and each one listens to 100 songs (extremely modest estimate) a month, thats $60,000,000 Apple shells out a month for 12 months is $720,000,000 pumped into the record industry. Again a very modest estimate. It will be over a billion per year easy.

 

[TallManNY]

Interestingly, I was on a course this week where we had to look at how the music industry operates. General consensus at the end was that the streaming model currently doesn't work for either the record company or the artist. Just to clear a few things up. On a normal CD sale or album download (averaging out to 10 songs per album), the artist makes anywhere between 30c and 1$ (depending on their bargaining power with the record company. Shania Twain famously negotiated 40% royalties on one of her albums)). The record company makes roughly $1.70 profit on a CD and slightly more than this on a digital download (difficult to be precise as its usually reported as revenues, rather than profit, for this but again, the good guesstimate is in the region of $2).

So, if we take the example of Adele (ok this is an extreme example but it gives you an idea of the numbers involved), in the last two years she has sold 26 million 'albums' (mix of CD and download). That equates to about $25M in royalties for her (indeed she probably received more as she writes her own songs, but we'll keep it simple for now). That equates to roughly $50M profit for the record company. Not bad I hear you say, and I would agree. However, here comes the 'issue' for the record companies and the artists. To receive the same amount of profit in that two year timeframe, the record company would need 25 BILLION streams of Adele songs (or 2.5 billion albums if you want to keep it that way). Its worse for Adele as the artist royalties fall to about a third that the record companies get (rather than the roughly half in the CD and download systems). So Adele would need over 35 billion downloads to get the same profit.

Now, I know, we're talking huge (crazy?!) numbers here for profit, but equate this back to your Indie band, or even another 'successful' artist (Adele had the top-selling album last year at 18M copies, the second placed album was 8M copies), and you'll see that the numbers do drop off quite significantly especially outside the top 10 or 20 albums.

Another famous example is Lady Gaga - 1 million streams of 'poker face' on Spotify and she made about $160. If that had been 1 million downloads she would have made $100,000.

Again, you may not feel any sympathy for these really high earners, but think about the little guys, they just are not getting anything of any note at all from Spotify....

Sorry, very long winded post, but the take home message is that, streaming services need really massive numbers to work.

Oh, and Spotify lost $59 million in 2011 (not sure about 2012).

Crazy train that is exactly right. And when folks are listening to their free pandora and spotify they are less likely to buy songs on ITunes. So the artists are being crushed. And it isn't even that they are losing to a better business and the free market. They are losing to businesses that are themselves putting themselves out fo business. But due to a quirk of capital allocation they are funded for years and can do this at a loss for years. Eventually shareholder and investors will be left holding the bag. But lots of artists will be hurt in the meantime.

But as a consumer, things are great for me.

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1. I thought iOS users were more willing to pay for things than Android users
And yet here here we have the next step after iTunes Match, that allowed iOS users to exchange their pirated songs for better versions.

2. I thought Apple cared about artists? And yet here Apple is spitting in the face of artists.

3. I remember the threads a while ago with a lot of people hating on Spotify, and how little they argued that it paid artists. Yet it looks like Spotify is paying ten times what Apple is offering per stream. But it's Apple so it's all ok.

Hilarious.

But the point is that Spotify is just going to go out of business. It has its funding as they go for market share. But no plan to actually make a profit. As long as spotify or pandora is giving away the product for free, no one can make money in this industry.

 

[NeverhadaPC]

There are over a hundred million iPhones out there potentially ready to download and start using the hypothetical iStreaming service. Lets say just 10 million of them start using the service and each one listens to 100 songs (extremely modest estimate) a month, thats $60,000,000 Apple shells out a month for 12 months is $720,000,000 pumped into the record industry. Again a very modest estimate. It will be over a billion per year easy.

It's a nice way of putting it. However, it's a zero-sum game. Anyone who switches from streaming Pandora/Spotify/etc to streaming iRadio wouldn't count in your calculations (and actually would count as a loss to record industry: 6c vs. 12c/21c)... so your numbers are overestimating how much Apple will add to record industry (in new revenue). 1 song = 1 song.

 

[AppleSauce007]

On the face of it, 6 cents per hundred songs seems absurdly low compared to the other services. But I assume Apple is banking on its massive user base, as if they're buying in bulk. I can't imagine the recording industry going along with that price. I could see that as a low-ball offer, with the actual amount ending up higher.

Exactly. The Apple user base for ad supported music streaming would be much larger than the current global iTunes user base because it is free. The labels are bing short sighted. They should at least strike a deal with options to increase the base price if the user base does not materialize as expected.

They can either stream the music and make money or don't stream the music and make nothing. I say stream the darn music already.

 

[BHP41]

So, because record labels have been ***** artists for years, Apple can ****** them even harder? Including the independent artists that don't have a record label ***** them...

I don't think Apple has anything to do with the artist. It's the record companies that decide the amount in the contract. Maybe they have dealings with the independents that don't have a label. And I'm sure they would jump at the chance to be in iTunes. Apple has positioned themselves strongly in the music business. They changed the way everyone discovers and buys music. The labels will cave eventually.

 

[macs4nw]

Pony up, Apple! Stop being so cheap!

That's just only good business practice, bargaining for the best possible deal. With the size of their installed user base, they'd be negligent towards their shareholders, not to do this.

Besides, are you willing to pay more for iTunes Match (which it is reportedly going to be bundled with), or are you willing to suffer through more commercials, to make-up for the added cost of higher streaming fees?

 

[Gym Hellwig]

Streaming radio sucks. Nobody wants it.

Streaming music ala Spotify, Rdio, XBOX Music, Deezer, etc. is the future.

That's just only good business practice, bargaining for the best possible deal. With the size of their installed user base, they'd be negligent towards their shareholders, not to do this.

Besides, are you willing to pay more for iTunes Match (which it is reportedly going to be bundled with), or are you willing to suffer through more commercials, to make-up for the added cost of higher streaming fees?

Let's just cut to the chase; Apple is being idiotic. I hope the record companies freeze them out for this lowball offer.

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They can either stream the music and make money or don't stream the music and make nothing. I say stream the darn music already.

Or they can freeze Apple out and stay with companies who are paying better (Mirosoft, Google (in the near future), Deezer, Spotify, etc.)

They don't need Apple. Streaming sites are going to eat iTunes for lunch. The data is clear.

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If the artists aren't making enough money than they should goto school and get a new job like the rest of us do. Why are they any different than us? Besides the $.06 they are talking about is from Apple alone. They willl get paid from other avenues of distribution also, and lets not forget when you are streaming a song and you decide you want to hear more of that "unknown" artist, one click, sign in and you just bought the album from itunes and more money goes to the artist. I would jump on this deal if I were them.

So if some random guy offered you $1.50 per day to clean his house from top to bottom (taking roughly 7 hours), would you accept that deal?

Nobody should ever accept such a crappy deal. Apple is insane if they think anyone would accept so little money.

 

[macs4nw]

.....I hope the record companies freeze them out for this lowball offer.....

Not likely; no one can afford to ignore such a potentially HUGE stream of revenue. The content owners might be miffed, but they will negotiate.

 

[adder7712]

Justin Bieber is a good enough deterrent for me not to use their service.

 

[the8thark]

C'mon MR Bot?! Put a pic of Adele, or someone notorious for being good not some wanna be. Change the article picture please.

What? From one random crap singer to another random crap singer?

 

[MadDawg2020]

Looking through these comments its pretty obvious most of you have never negotiated for anything before.

This is a first round in what will likely be dozens of bid offers, and Apple (or anyone else) would not be doing their jobs if they did anything else except start low and gradually work your way up to meet somewhere in the middle.

Its how pretty much every negotiation in history has worked.

I would suspect that given what Apple can offer and maybe come up with creative ways to use its resources to work a deal in its favor, mainly a widely fanatical user base and access to a good percentage of the mobile devices in use, Apple stands a chance at doing a bit better than Pandora.