Apple's New Music Royalty Proposal Would Make Streaming Costlier for Free Services Like Spotify

[EricTheHalfBee]

Quite simply because not all users would already be at the 1 year point, and Apple won't allow Spotify to charge users different prices depending on how long they've been subscribers for. It's either all or nothing. Plus if they charge 15% rather than 30% then Spotify would be making even LESS money.

There's nothing illegal with Apple colluding with record labels on a decision that 100% is based on destroying it's competition? Apple KNOWS that this would destroy Spotify's free tier and this is what they're after. They don't want competition and they're doing all this in the name of the artist. As if anyone is actually stupid enough to actually believe that.

Another clueless post. As I already posted previously (and you must have missed based on the stupidity of this comment), Apple simply sent in their proposal. Google, Spotify, Pandora and others are also submitting their proposals. Please explain to me how Apple is "colluding" when all the players in this market are also submitting their proposals.

So has Apple changed the App Store rules so Spotify can charge existing customers a different monthly rate than new customers? If someone has been paying $13/mo for Spotify for over a year shouldn't they now be paying $11.50/mo?

Also I don't think it's a coincidence that the Siri API doesn't work with music apps. I have no doubt a lot of people are using Music because of Siri integration and if Spotify or someone else was able to offer it they'd switch. It wouldn't surprise me if the Siri API is never opened up to music apps.

This applies to both of you. Again, I'm SO SORRY to disappoint a pair of obviously concerned Apple users, but Apple DOES ALLOW multiple subscription price points. Including ways to keep existing subscribers at their current rates or change them to a new rate. Apple has the ability to upgrade, downgrade or crossgrade subscriptions. So Spotify users who previously paid $12.99 can be moved to a new plan that costs $10.99 (for example). New users could still pay $12.99 since they'd be on the 30% cut.

Seriously, did any of you even bother to think or check out Apples policy on this before posting? I was able to find this information in 30 seconds.

As to Siri, why should Apple allow Spotify to use this? So in addition to you wanting Apple to allow freeloaders like Spotify to make purchases through in-App without taking their usual cut, Apple should ALSO allow other companies full access to their key features as well? Unbelievable.

 

[polbit]

Sounds simpler and fairer; kicking Spotify and Google is just an added side bonus ;-)

Yes, it's awesome when a company comes up with a scheme that could hurt competitors. I mean, as consumers, what else would we want! Less choices! Yes!! Fantastic bonus!!!

Some of these comments are downright nauseating...

 

[ginkobiloba]

Well, we can go back and forth on this all day. When a record company approaches a band, they negotiate and then sign that band to a deal. That deal, historically has been......we hand you a pile of money and then you owe a us a predetermined amount of albums, say 3-4. As a artist, you've been paid, you get nothing, or next to nothing for album sales. The label has paid you for three albums and the label will pay to send you on tour, the label will pay to promote you and the albums. If you demand to get money from album sales that would come in through publishing rights, don't want to sign those over to the label???? Good luck getting signed. Now if....and its a gigantic if, 3 of the 4 albums you make become smash hits, then you can renegotiate on your next deal, or go to another label. But now you have been in the music industry after putting out four albums, lets say 10 years. How long does the life of a band last? How many smash hit albums do you have left in you?

I don't think I 've heard of any record deal , even the worst of the worst, where it it written that the artist will not be entitled to get any royalties from the sales of the CD. That simply doesn't exist ( unless it's a work for hire contract, like for film and TV composers ). I don't even think it's actually legal to try drafting such a contract.

What a record company tries to do when they want to con the artist, is by way of recouping costs. That means they will tell him that all the costs invested in promo/recording etc.. will be first recouped from the artist royalties until their investment is fully paid, only then can the artist start getting his 5% ( or whatever he signed ). The company will then tries to prove that they have this huge , continuously ongoing investment and cost that keeps being deducted from his royalties, and therefore he can never make a dime.

As I said, unless your a major act like U2, who got hardly anything for Boy, October,War, and Unforgettable Fire, Not until Joshua Tree did they start to get paid from Album sales. And when I say that, I mean enough to make a living. They made a living on touring and merchandise up to that point.

I don't know where you got that from. Joshua Tree was their first major hit and made them rich, but they did make a living from their early albums thru their royalties. Not only that, but they even bought the copyright of all their music from the record company after the release of "War", wich sold very well too and renegociated even higher royalties.

 

[wovel]

Well, this is completely wrong. Streaming is part of the major music market now, so choosing not to stream (unless you're a MAJOR artist) is incredibly detrimental. Especially for independent artists, making money through music sales is a main source of revenue. Increasing the amount of money an artist gets per stream to this extent would be a massive help - streaming is the future of music, and companies need to start paying out more.

p.s. artists DON'T choose to make their income from tours and merchandise, they HAVE to because streaming has knocked off a large portion of their income because it pays out so poorly.

Only artists that are really, really bad at math have their songs on the radio but don't allow streaming. Even free streaming services pay artists exponentially more per listener (yes I did too use that word correctly) than radio play.
[doublepost=1468680113][/doublepost]

You don't wanna call it theft? Lets call it a rip off, lets call it milking the userbase, a disservice to the music industry and a disservice to artists. 0% profits on Mac from Spotify, 30% profits on iOS at the expense of artists. It's as clear as that and it's wrong. So please Apple, don't even try to pass this off as you caring about artists.

It's about greed and killing the competition's free tier.

How is that 30% at the expense of artists? Spotify charges that 30% to the person that chooses the convenience of using the in-app purchase.

 

[smacrumon]

No. The goal of a (publicly traded) business is to maximize profit (i.e. shareholder value). That may, or may not, be through making the best products and services available. Apple, clearly, doesn't make the best products nor services available, yet is a massively profitable company, mostly though other means. There is literally nothing illegal in what Apple is doing. Again, it is anti competitive, but it's not illegal in any U.S law. I can't stress that enough: yes, it is definitely anti-competitive, but it is not illegal. Anti-competitive behavior is not illegal in and of itself. Now, monopoly and cartel agreements are other story. There is nothing in this proposal that would violate any anti-trust law.

Anti-Trust is NOT the same thing as anti-competitive.



There's absolutely nothing illegal with what Apple is doing.

The only, possible, twisted way this could be illegal is from this:https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/dealings-supply-chain



So, Apple just has to say 'Look, we know it may hurt Spotify, and make it more difficult for free streaming services exist, but we're giving artists more money! Which, is a pretty good tradeoff. The only thing the government could say in return is 'offering consumers free music is more important that giving artists more money' which is not going to happen.

Free music is dead.

"maximize profit (i.e. shareholder value)" actually means not engaging in anticompetitive behaviour and a discriminatory platform and exposing the company to legal action which reduces profit and reduces shareholder value.

 

[Michael Goff]

"maximize profit (i.e. shareholder value)" actually means not engaging in anticompetitive behaviour and a discriminatory platform and exposing the company to legal action which reduces profit and reduces shareholder value.

Agreed. Luckily, this isn't anti-competitive.

 

[Chupa Chupa]

Sounds simpler and fairer; kicking Spotify and Google is just an added side bonus ;-)

Kicking Spotify and Google is a bonus because? Getting rid of competition is good for consumers? (Disclosure: I use Spotify free as my main way to explore non-live music. I will not pay to rent music. I think it's the Gen X gene that prevents me from doing so).

The % of income mega stars make on royalties is minimal compared to their touring income that their "singles" support. What the squeezing out of advertisement supported streaming does is push out the smaller artists who need to get heard and also may not be a label's marketing priority. (Lack of marketing priority doesn't mean an artist isn't talented, it means maybe it doesn't feel it's mainstream enough).

Apple is not proposing this to support artists. It's doing to curry favor with music labels who hate free streaming and also as a tactic to gain marketshare b/c apparently it's music braintrust is out of ideas other than Robber Baron style business tactics. This helps artists on the face but in reality the labels will suck all that back into their coffers they way they do their accounting. Consumers definitely will be hurt.

 

[thermodynamic]

Touché, Apple. What a stroke of genius: propose to offer more money to the music industry while putting the squeeze on the competition.

Genius - until you're the competition. Then what, blame the political party you dislike because they're the one and only cause?

Why the heck is the government involved in music royalties?

Why the heck do lobbyists bring in government involvement? You cannot have it both ways if you want a truly "free market", surely?
[doublepost=1468680714][/doublepost]

Agreed. Luckily, this isn't anti-competitive.

Until those make it such. Depends on the details. Price manipulation is one obvious example of being anti-competitive.

 

[GoodWheaties]

According to spotify average per stream rate of 0.006 cent paid per play, 1million plays would pay out $6000

0.006 cents not 6 cents

https://www.spotifyartists.com/spotify-explained/#how-does-spotify-make-money

FYI that's actually only $60-$84 per million plays not $6000+

 

[2010mini]

Indeed. This move by Apple is 100% geared towards diminishing Spotify's free tier which is hurting Apple music, which in turns is hurting Apple's profits. 0% is about giving money to artists.

Anyone that thinks otherwise please explain to me how Apple can care about artists when they are stealing 30% from Spotify every month and keeping the entire thing, no a penny of that is going to artists. Even 15% is outrageous.

On Mac Apple steals 0% from Spotify.
On iOS Apple steals 30% from Spotify.

0 justification, all profit and greed-driven.

Stealing? Seriously??? Are you stealing your salary from your employer? If your employer is struggling, do you offer to take a pay cut? No.

It's their store. They spend money on it, not Spotify. They drive business to Spotify by being in their ecosystem. So Spotify has benefited greatly from Apple not the other way around. People don't buy Apple products because they can get Spotify. Should Apple then give away their store for free? Spotify is the one that needs to negotiate for better terms instead of trying to fight with public opinion. But they can't because they have been operating at a loss for years. And because they haven't been able to turn their free users into paid users.

 

[MacFanatick]

I wonder if this has anything to do with the rumored Tidal aquisition... Tidal was founded on the premise of high quality streaming but also fair compensation for the artists. I'm holding out hope that Apple will expand their catalog by buying Tidal and also offer content in the MQA format.

 

[69650]

I don't agree with Apple trying to put the competition out of business, because if they do there will be no incentive for Apple to improve Apple Music. Look what happened with iTunes - there is very little competition and so iTunes has gotten worse every year.

 

[leroypants]

It's beyond pathetic how the zealots and drones try to claim Apple is doing this to benefit anyone other than Apple.

 

[Tsuchiya]

Apple is king at dressing up their own self interest as higher ideals.

 

[LordVic]

I never realized how many people thought businesses were moral, benevolent, entities until I read this thread. Why in the world would any business be moral or benevolent?

This is disturbing mentality that is growing today, and shame on you or anyone else who continue to repeat this. Absolute shame.


Corporations are made up of people, human beings. Employees, customers and the society that they operate within.

Yes, their goal is profitable but to claim that they should be allowed to without ethics or morals to achieve this is pathetic. These companies aren't being run by some a-moral robot AI, they are being run by human beings. And when these human beings are willing to put others beneath them, and use immoral and unethical means to take advantage of people, while hiding behind corporate banners, they should absolutely be taken to task for it.

This stupid An Raynd mentalityof "I got mine so screw everyone else" that seems to be prevelant today as some sort of legit excuse for being *******s is despicable.

 

[MacFanatick]

It's beyond pathetic how the zealots and drones try to claim Apple is doing this to benefit anyone other than Apple.

Apple is a publicly owned company with a fiduciary responsibility to it's stakeholders - every business decision should be in an effort to increase the share value. What's wrong with that???

 

[mantan]

Apple is a publicly owned company with a fiduciary responsibility to it's stakeholders - every business decision should be in an effort to increase the share value. What's wrong with that???

I think the problem a lot of people have is how some customers blindly support Apple vs fill in the blank company. Consumers should think about what's best for them as a consumer, not what's best for some incredibly profitabile fortune 50 company.

Some of the early posts in this thread were cheering on Apple trying to stifle competition. They lose sight of the text competition is GOOD for them as a consumer.

Apple was hugely successful by making unique products that were worth a premium to the customer. In this case they are just trying to squeeze out customer options from more successful companies to get the revenue for themselves. Totally understandable...but not something any of us should be happy about.

 

[H2SO4]

Are Apple paying the artists that have content on Apple Music 9.1c/100 right now?

 

[newyorkone]

There's no place for a free tier with apps like Spotify and Youtube, and it won't last with or without this decision. Artists are getting royally screwed, and quite frankly I'm not sure why Spotify and Youtube can get away with it.

Free belongs with apps like basic Pandora (radio style music consumption). If you get to choose the songs that you play, then you should pay for it. It's the only fair option for the artists.

 

[tech3475]

I'm guessing Apple are trying to avoid another price fixing lawsuit.

In the past I've used Spotify free and youtube as a 'try before I buy' option or to listen to music legally which I had no interest in buying, so in my case it could cost sales/revenue down the line.

 

[newyorkone]

I think the problem a lot of people have is how some customers blindly support Apple vs fill in the blank company. Consumers should think about what's best for them as a consumer, not what's best for some incredibly profitabile fortune 50 company.

Some of the early posts in this thread were cheering on Apple trying to stifle competition. They lose sight of the text competition is GOOD for them as a consumer.

Apple was hugely successful by making unique products that were worth a premium to the customer. In this case they are just trying to squeeze out customer options from more successful companies to get the revenue for themselves. Totally understandable...but not something any of us should be happy about.

Operating at nearly $200mil loss is not competition. It's stupidity. Spotify will probably get bought out at some point, and Youtube will survive, and I agree that competition is good, but not at the expense of royalties to artists. It's unfair that Spotify and Youtube have a free tier. Not unfair to Apple. Unfair to the artists.

 

[AppleScruff1]

Another clueless post. As I already posted previously (and you must have missed based on the stupidity of this comment),

When all else fails, resort to insults.

 

[trifid]

Operating at nearly $200mil loss is not competition. It's stupidity. Spotify will probably get bought out at some point, and Youtube will survive, and I agree that competition is good, but not at the expense of royalties to artists. It's unfair that Spotify and Youtube have a free tier. Not unfair to Apple. Unfair to the artists.

Why? The free tier has advertising and limitations, it's comparable with radio. Are you saying radio is also unfair to artists?

 

[Tech198]

Of course, all this could just be due to the "sudden" interest of Spotify not liking Apple.

Seems like Apple's really jealous because Spotify can get more subscribers due to a free option. and Apple users must cancel.

 

[PRO Musician]

Apple has submitted a proposal to the U.S. Copyright Royalty Board calling for a simplified way to pay songwriters and music publishers for streaming music, according to Billboard. While the change would benefit labels, artists and publishers, it would make it more difficult for streaming services like Spotify to continue offering free tiers.

Apple's suggested rate is 9.1 cents per 100 plays, which would make the songwriting royalties for 100 streams equal to the royalties for a single song download. However, the change would make it more expensive for companies like Spotify and YouTube to offer free music tiers.

The current system sees streaming companies paying songwriters and publishers between 10.5 and 12 percent of their revenue using what Billboard terms a "complicated formula." The money is then divided into public performance and mechanical royalties, which is then paid to publishers and "collected societies." Currently, Apple and other streaming music providers don't have to pay publishers the statutory rate set by the Royalty Board because they can negotiate their own deals. However, negotiations between publishers and streaming services would start at a different place should Apple's proposal become rule.

The Copyright Royalty Board, which is made up of a panel of three judges, is still in the early stages of determining potential statuary rates for 2018 to 2022 so it's unclear whether Apple's proposal would take hold or ever come to be.

While Apple Music has garnered about 15 million paying subscribers in the year since its launch, rival Spotify has twice as many, with the company citing Apple's entrance into paid music streaming as a boon to its business. Despite user and revenue growth, Spotify continues to operate at a loss due to expensive royalties and revenue sharing with music labels, with recent losses growing 10 percent to $195.7 million.

Article Link: Apple's New Music Royalty Proposal Would Make Streaming Costlier for Free Services Like Spotify

So you want to force artists to tour to make money because you have somehow decided that's what they all want anyway, and then complain that you have forgotten how to use a radio.