Apple Proposes Greater Royalties for Songwriters

Apple has long been a friend of the music industry. It has built relationships with the likes of Taylor Swift, the Black Eyed Peas and U2 and now it’s proposing that musicians get a bigger piece of the pie from streaming services. Apple’s proposal, which was not made public by the company but was obtained by the New York Times, said that musicians ought to get 9.1 cents per 100 streams of each of their songs.

Apple’s proposal is for the Copyright Royalty Board to set “statutory rates for downloads and interactive streaming services from 2018 to 2022”. It will either make streaming services costlier or force them to pay a greater percentage to the artists than they already are (let’s face it the latter is less likely to happen). Spotify, Google, Pandora and the RIAA were all supposed to hand in their proposals by Friday too. This new proposal is specifically for streaming services, since regulations for recording royalties are separate.

Increase in Streaming Services, Source: Statista
Increase in Streaming Services, Source: Statista

Since regulations for songwriting rates paid by streaming services are increasingly complex, it makes it very hard for artists to know whether they’re getting a raw deal. The 9.1 cents/100 streams proposal will intensely simplify that. But there’s a catch, obviously. It won’t actually apply to Apple Music. Since Apple has direct deals with artists and they (the artists) are quite happy, the artists probably won’t object either. Apple Music has allowed artists to receive 71.5% of the revenue generated by the $10/month subscription it offers in the US and 73.5% of the revenue outside the US. This revenue bump for artists is probably for the 3-month free trial period offered by the service. This model has received praise from artists Taylor Swift and Drake.

Streaming Services Vs Digital Music Downloads, Source: Statista
Streaming Services Vs Digital Music Downloads Vs Physical Sales, Source: Statista

Streaming services have started becoming more popular than music downloads for a while now. YouTube, Spotify, Soundcloud, Deezer, Google Play Music, Pandora and Apple Music have all started raking in subscribers by the millions in the last few years. And the music industry has had bones of contention with some of these services. YouTube, they say, doesn’t pay enough in royalties to the musicians and Spotify’s Freemium model, which allows users to either pay for music or stream it for free with ads, has also attracted the ire of the music industry and artists. Both companies have pushed back, saying they’ve paid billions to the music industry.

Streaming Services Subscribers, Source: Statista
Streaming Services Subscribers, Source: Statista

Apple has been embroiled in a battle with Spotify over the latter’s app in the App Store. Spotify added a pop up in a new version of its app that informed subscribers that they could get the service for $9.99 instead of the App Store $12.99 fee if they signed up on the web. This was against Apple’s regulations so it blocked the update. Apple has also criticized Spotify’s Freemium model and maintains that artists should never have to be forced out of their pay cheques.

Apple Music currently has 15 million subscribers compared to Spotify’s 30 million paid subscribers and 70 million free listeners.