Update, 6/15: Apple has now responded by saying they actually pay a much higher royalty rate.
Spotify has signed its share of dirty contracts, but they also pay 70% of subscription revenue back to rights owners, including indie labels and artists. “We pay out nearly 70% of our total revenue to rights holders,” the company flatly stated this year. “We retain approximately 30%.”***
***Update: this 70% figure has been thoroughly challenged by both commenters and numerous industry executives; Spotify appears to be paying the same (or worse) than Apple on streaming.
Sheriff Apple has something different in mind. According to contract details just leaked this morning to Digital Music News, Apple will be paying a sharp discount of 58% on subscription revenues earned on Apple Music, including individual ($9.99/mo) and family ($14.99/mo) accounts.
The contract also stipulates that on free trial and comp accounts, rights owners will receive 0%.
Apple Music, announced on Monday, officially launches on June 30th for iOS devices like iPhone, iPad, and Mac. Android is next, and Apple anticipates attracting 100 million paying subscribers.
This doesn’t include major labels (and associated publishers), who signed their own, first-run deals ahead of the announcement of ‘Apple Music’ on Monday.
And here’s the broader royalty section, for your reading enjoyment.
That’s the info I was waiting for. Thanks Paul.
I’m a bit surprised by this though coming from Apple…. It doesn’t sound too good..Why would it be even lower than their regular 70/30 usual cut from sales, when streaming is already such a low source of income for artists ?
it’s not lower. it’s the same as spotify. You get to the 70% of revenue figure by adding 58% for the label 12% for the publishing (usually in an agreement directly with the publisher or via a statutory license). DMN either doesn’t know this (which would be surprising), or chose not elaborate it because it didn’t make for worthy click-bait.
If they’re going to claim that this is the all-in rate and that this is an agreement for both sound recordings and publishing, they should publish the proof, because it is not in the sample they shared (actually makes several references to LABEL REVENUE SHARE specifically).
jeffserrano is absolutely correct; there is no story here. Globally, publishing rights tend to come in around 12%, so 58% is very likely the same rate that the majors get. I prefer not to believe that DMN would deliberately mislead its readers about this, but that does lead to the disturbing conclusion that DMN is confused about the difference between label rights and publishing rights. Not good.
Posts further below that try to account for the delta in terms of deductions miss the point entirely; deductions, if any, are taken out of the Subscription Service Revenue pool they refer to, before the % splits are calculated.
I asked Distrokid the following question:
“If I release and sell my songs on iTunes via your service, can I then opt OUT of all kinds of streaming – including Apple Music – entirely?”
And here’s the answer:
“Yes”
Nobody knows what other aggregators are going to do. But the fact that Tunecore won’t answer this simple question (and the fact that they instead use the opportunity to tell us how great Apple Music is) could indicate that their final answer will be “No”.
The three month free trial is concerning, especially for artists with new releases coming out this summer. Hope you artists didn’t like money! Apple will use your new records as a promotional tool for their service and you will receive nothing! Indie labels, hope you can afford not getting paid by Apple for three months!
Good thing the majors got to make these decisions for us.
It also would have cost Apple basically nothing to swallow the royalties on the 3 month trials instead of screwing indie artists and labels.
They’re not only screwing indies, they’re screwing everybody.
When you download a song today, Apple pays the owner $.70. When you download a song on June 30, Apple pays the owner $.015.
Artists will get $0.00 on June 30th since the fan will be in their free trial
Haha — yeah, you got me there.
“When you download a song today, Apple pays the owner $.70. When you download a song on June 30, Apple pays the owner $.015.”
Nonsense. The 3 months trial is for the streaming service ONLY. If you sell a song in July , you”re still being payed the same .70 as before.
“If you sell a song in July , you”re still being payed the same .70 as before.”
I’m not talking about selling songs, my friend! Apple doesn’t want you to do that anymore.
Again, the owner gets $0.70 when you download a song today, and that’s reduced to $0.015 from June 30. (Except the other poster is right; the owner actually gets $0.0 per download the first three months.)
What are you talking about? I have seen no evidence they are changing the paid download service.
“What are you talking about?”
Apple Music allows downloads for offline listening.
And yes, it’s going to pay you $0.015 per download instead of the usual $0.70.
Except you get a little less if you’re independent — and nothing at all during trial.
“A download by any other name would still sound as good, though not pay the same.” – Shakey W.
Downloads of content under a streaming plan for offline listening function differently from the familiar iTunes-style downloads. Offline downloads are “ephemeral”, meaning they exist as an optimization to allow listening in absence of a network connection. As such, they don’t allow exchange across devices, burning onto CD, saving in Dropbox, etc. Your only handle to them is via the streaming listener application.
““A download by any other name would still sound as good, though not pay the same.” – Shakey W.”
Haha, exactly…
“Offline downloads are “ephemeral”, meaning they exist as an optimization to allow listening in absence of a network connection”
Ephemeral, or not — what are the odds that you want to buy my song if you already downloaded it? 🙂
Interesting… will the ephemeral translate psychologically in users to “I already downloaded this?” Does it matter so much that you’re tied to that device to listen, since it’s probably the phone and you’re already tied to it? If the answers are “yes” and “no,” then yeah, 1.5c payout on an ephemeral download (further) screws rights holders.
There is no technological difference between streaming and downloading. It’s entirely a licensing thing.
What? There’s definitely a technological difference. That’s like saying that CDs and cassettes are the same technology.
“There is no technological difference between streaming and downloading.”
Well, that’s not entirely true.
But the end results for the fan are similar. That’s why Apple Music is going to bury iTunes.
At any rate, most fans today know that you can save anything you stream. It’s not rocket science…
I think you’re underestimating Apple’s grasp of digital streaming technology…expect that they will introduce a completely new proprietary realtime codec, exclusively for the stream player 🙂 The stream player will not offer download capabilities, and when they upgrade it to have that capability, it will start a purchase transaction through your Apple ID and leave the resulting MP3 in iTunes, just like how it works today. All “track auditioning” on iTunes will use the streaming service, and be counted as “a streaming event” for a particular artist…but only if the person doesn’t do something that stops the stream before the end.
Hopefully, everyone realizes that you must have a credit card backed Apple ID, in order to be a service subscriber. What’s tricky is that Apple Music WILL BE creating it’s own streaming content that features artists as part of the services’ daily promotion strategy, which IT WILL PAY ITSELF FOR…not the featured artist. Those promotional streams will play around the clock (24/7/365), racking up massive amounts of streaming revenue money for Apple Music itself! Lol
Finally, stream capture products (like Audacity, Soundflower, etc.) will never get the codec, so they’ll never be able to play a captured stream.
I don’t want people to think I’m revealing specs for the streaming service (mainly because I’m not), so that “All track auditioning on iTunes will use the streaming service” sentence, should really read “All track auditioning on iTunes will likely use the streaming service” 🙂
“The stream player will not offer download capabilities”
Wrong.
“Apple’s forthcoming subscription music service will indeed allow for offline playback of songs or videos.
[…]
That was a key question left unanswered during either Monday’s keynote presentation or the accompanying press release, but Apple confirmed the option to download content for offline use.
“As an Apple Music member you can add anything from the Apple Music library — a song, an album or a video — to your collection,” Apple said in a statement to Re/code. “And that’s just the warm-up act. From there you can create the perfect playlist from anything you’ve added. You can save it for offline listening and take it on the road.”
SOURCE: re/code and Apple
You are probably the same troll from the other thread, who still doesn’t get that conditional downloads tied to a subscription service are not the same as regular downloads from a download store.
Anyone can convert an audio stream to an mp3 file now, thanks to a number of online utilities. If it can be sent to a speaker, it can be written to a file. I wouldn’t mind paying for a subscription to a music site like Grooveshark if it had the same volume and variety of content, especially older, more rare songs that are hard to find. I was paying an annual $50 membership to Grooveshark before they were destroyed, and happy to do it, mostly because they offered an offline option, so I could listen when WiFi was unavailable.
Listeners want a flat fee, not a pay for song approach, if you keep insisting on that, you’re only going to encourage more listeners to find the songs they want for free, then you get nothing. Would you rather have a small percent of millions of $50 subscriptions, or just thousands paying a fraction of a cent per song?
Where are you getting this $.015 figure from? I don’t see any mention of ephemeral downloads above. Only Pro Rata shares of the wholesale price. Ephemeral downloads would be tied to the Apple Music app, and plays could be tracked in the app, then reported back to Apple when the user is online again, so I don’t see why it would pay any different than a stream.
“Where are you getting this $.015 figure from?”
Apple Music is going to pay 3 x Spotify’s rates, approx $0.015.
This means they’re going to pay the artists about 1/50 of what they pay today per download.
Just … why?
Apple makes money from hardware. For Apple, the difference (paying only 58% instead of 70% to independents) doesn’t even amount to pocket change – but it’s a huge deal to indies. Bad move.
Theory : could it be that it was the Majors who demanded that, for …some reason… ( to keep indie labels/artists from getting too big ? )
Sarah, I hope you’re aware that we expect you to save us from YouTube AND iTunes now… 🙂
Sarah, will RepX be able to handle ringtones and pre orders?
Ask and (if it’s reasonably viable) ye shall receive in a timely fashion. 🙂
Ringtones won’t come right away, but it’s basic stuff. You will likely get pre-orders first.
We’re a startup, so right now we have limited resources – we have to prioritize quite strictly on what we release at first; no one wins if we push things out too quickly and create a buggy site. We will launch with a core set of products and then frequently release new functionality (most of which is already ready to go). Order of release will primarily depend on what our early adopters want most.
For example, we always planned on offering live streaming. Someone asked us to do it now rather than later. Our live streaming product was developed, from scratch, 3 days later (not including testing, which can take a week or so). As we grow and have greater resources, we’ll get even faster.
Thanks for asking. 🙂
Oops, my co-founder Grant just corrected me: pre orders are “incredibly easy” and he’ll just do them now. So that functionality will likely be included in the launch.
“he’ll just do them now”
Cool — I love to watch this thing unfold in real-time. 🙂
RepX looks fascinating. I have a (probable) FAQ for the list: Where does your content come from? I’m inferring it comes from your professional-act “suppliers”; it would help to make that explicit. How many acts and tracks do you expect to launch with? Can you share the average recorded unit sales, streams/mo. and average live audience sizes of your acts? Good luck!
Thanks for the feedback, will modify the website to be clearer.
Anyone who holds the rights to professional-quality content can join and use RepX. We’re working with both labels and independent artists for our launch – which is really better described as quietly opening our doors (flashy “launches” tend to be disappointing – look at Tidal 🙂
As things get sorted out over the upcoming weeks, I’ll provide more specific information.
“The contract also stipulates that on free trial and comp accounts, rights owners will receive 0%”
rotfl — bye bye, Apple…
No, they receive 100% of revenue – which in the case of a free trial is the same as 0%. Just like Spotify.
Also note that Spotify’s ‘70% of revenue’ is calculated after sales taxes and other allowable deductions. You surely didn’t think it was 70% of the gross subscription? Taking total deductions at an average of 20% gives a 70% share remarkably close to 58%.
But the most important point is that even if Spotify paid out 100% of revenue on the ad-supported tier, it would still be far less than a 58% share on the revenue from a subscription service.
DavidB’s math is absolutely correct. Without being too punny, you have to compare apples to apples. $5.80 is very close to the net that Spotify pays.
Note: Students who subscribe to Apple Music pay less and the wholesale price on those subscriptions is 50% of $5.80. A Student can subscribe for 4 years under the discounted rate. So it appears that Apple is targeting younger people by offering this discount and that means 1/2 in the pockets of labels/artists.
David, can you offer some documentation on this? news at digitalmusicnews is the address, or post here.
that was from me
There are some figures on Spotify in this article:http://www.musicbusinessworldwide.com/poor-songwriters-how-hidden-costs-are-butchering-their-income/ Only for Europe I’m afraid.
I posted a link to an article, but it hasn’t yet appeared. Meanwhile, see the definition of ‘Gross Revenues’ in the Sony-Spotify contract, which excludes sales tax and various other items from the ‘gross’.
OK, will check that out. Well, the Sony/Spotify contract seems to be in a different stratosphere than this one, but comparison detail noted. Perhaps Spotify and Apple are both guilty of the lowly ’58’.
Paul,
Isn’t the “0 income” for three months way bigger news than the 58 %? This will ruin many smaller labels and artists and they can basically not release anything new these months. If you have invested a lot in a new album and release it during this period your investment will be gone.
This is very, very disappointing news for the business.
Ps. Spotify has a minimum floor for free tier which is about 60 % of the premium revenue. Ds.
Where do you get that last point?
The $0 income is nothing new. To my knowledge, free trials are always considered promotional on streaming services and there isn’t a payout.
“The $0 income is nothing new”
No, not when it comes to streaming. It’s all about the long tail.
(The reaaaaally long tail.)
No streaming service has ever had an unpaid free trial as long as 3 months…
Spotify does not have trial period. The free version is ad supported, so they give out royalties from day one.
Right now i have a three month trial from Spotify. It’s costing me 1 euro. Near as damn it the same as Apple
Actually, yes it is. I basically buried the lead on that one. This could completely devastating to artists, esp. since paid downloads (which net 70 cents per 99 cent download) are now effectively going to $0.00.
Paul, do you know if there is an opt-out from streaming ( even temporary ) or is it just mandatory if you”re on iTunes ?
Nina already answered that in her article Spotify + BBC Radio = Apple Music story:
“The new service lets subscribers stream any song from the iTunes catalog”
But — and this is a big but — I don’t know her source!
Then again, iTunes Radio does not allow windowing.
“The new service lets subscribers stream any song from the iTunes catalog”
I’m beginning to think that Nina Ulloa made that up.
I haven’t seen one source confirm her information — not even Apple!
This could be huge…
Worth looking into…
“Worth looking into…”
Please let us know what you come up with…
Another Anonymous posted a useful summary in another thread today:
“So, so far it’s seems that :
1) if you’re signed on a major, you have no choice, you”re going to be streamed.
2) If you’re an indie label directly in contract with iTunes, you may have an opt-out option in iTunes Connect.
3) if you’re an indie artist/label going thru an aggregator to ge distributed, no one knows….”
if you have the contract, please post the rest of it
So, $0 for everyone for Q3?
Why would anybody sign a contract like this?
Because you don’t have a choice if you want your music on the music service that is likely to be #1 within a year.
It won’t be #1 without artists.
Yeah! If enough artists refuse to sign on, maybe a better deal can be negotiated.
Too late.
The solution is a new service.
It won’t be on the list without artists.
Is this even legal?
We’ve got other problems to tend to
http://mobile.nytimes.com/2015/06/10/technology/2-states-look-for-collusion-between-apple-music-and-major-labels.html?referrer=
Wow, that seems completely backwards. The labels are abusing their monopoly power, not Apple!
We have 3 major labels that represent an clear monopoly. That’s not illegal in the USA, but using their monopoly powers to thwart competition and collusion certainly are.
So, these 3 labels have negotiated deals that are nearly identical (thank you favored nation clauses) with a number of new companies/services offering “music streaming” services. These monopolies used their existing catalogs to secure equity in these new companies. The terms of those deals effectively harm each of these label’s customers (aka the artists) but favor the labels themselves.
Taken one step further, these 3 labels have perpetuated a system that is opaque to the point that it raises legitimate questions about their desire to compensate rights holders. There is literally no single authoritative record of the rights holders associated with every piece of music recorded in this country. Every private company effectively records this information within their own proprietary systems. Every artist effectively has to accept their label’s accounting or exercise audit rights that are often a precursor to litigation.
I believe their is an increasingly strong case that the major labels have abused their monopoly powers in their effort to control the impact that streaming music services have on their existing business. I also believe that any serious attempt at reform should include a centralized, standardized accounting of all rights holders. Ideally, consumption information about the number of plays/purchases for each work would also be included so that artist could truly have an independent accounting to determine if they are being paid fairly.
Spotify doesn’t pay 70% of its royalties to sound recording rights holders, which is what this contract sounds like it’s for. The 58% is probably independent of publishing rates. Spotify probably pays between 50%(very small indie) and 60%(sony) of its sub revenue to labels/artists and rounds out the 70% with publishing fees.
Spotify also asks labels (including Sony) to eat the cost of promotional accounts
Also, these terms sound like they’re for subscriptions, not download sales, which likely remain at 70%
Yes it’s shitty, but it’s not sensational.
“it’s shitty, but it’s not sensational”
Agree. The sensational part is the $0.015 per download, instead of $0.7.
Exactly – if you include publishing royalties, it’d come to closer to 70% which is same as Spotify.
This is for the entire controlled composition, ie recordings and publishing. In the same contract, in earlier pages on downloading, the wholesale is 70 percent, like before. So you have 70 percent for downloads and 58 percent for streaming, same contract.
I don’t see the phrase ’58 percent’ anywhere.
I do see the number 5.8 (dollars) which would be 58 percent of a $10 monthly subscription. But I also see the word ‘minimum’ applied to the 5.8 dollar wholesale price. So the claim that rights holders will only receive 58 percent of revenue depends on the assumption that minimum = actual.
There seem to be two possible interpretations of all this. One is that all the record companies involved have accepted terms very inferior to those of Spotify (for subscription income. at least.) The other is that DMN has misunderstood a long and complicated legal document. Hmm, what are the odds?
Except that no PRO fees are due on downloads (labels pay mechanicals) and it doesn’t work that way for streaming.
Paul, controlled composition is a publishing term. The agreement sampled above is clearly a label agreement, given there are several references to the LABEL REVENUE SHARE and nothing about the composition is mentioned.
Paul, you must know that the 70% of downloads includes the mechanical (that the labels pay in the US) but the 58% on streaming does not (the platforms pay the mechanicals in all cases as they are the ones doing the reproducing). There is no way you do not know this.
This headline should be revised, but I suspect you’re so desperate for clicks that you’re going to do nothing at all. Hack work.
Do we know yet if every single artist whose music is in the iTunes store will also be available to be streamed AND available for offline download as part of the $9.99/month subscription? Because if so, Apple has essentially killed what was left of downloads. Sure, Spotify offered the same service – but that was Spotify. With the seamless integration into iPhones and Macs and access to the iTunes store, what sane consumer is going to spend $10-$15 on one album when they could pay the $10/month and download hundreds of records for not a penny more. I’m not one to halt progress, but unless they get a huge amount of subscribers who are actually paying after the free trial, then how in the HELL is anyone supposed to make ANY money off albums/songs ever again? I hate to jump on that bandwagon, but what?
“A download by any other name, would still sound as good, though not pay the same.” – Shakey W.
Downloads of content under a streaming plan for offline listening function differently from the familiar iTunes-style downloads. Offline downloads are “ephemeral”, meaning they exist as an optimization to allow listening in absence of a network connection. As such, they don’t allow exchange across devices, burning onto CD, saving in Dropbox, etc. Your only handle to them is via the streaming listener application.
I understand that, but it’s not that significantly different from iTunes and how most people listen now. The streaming application is on your phone, just like the music application, and so long as it’s available on your laptop as well, there’s not really a difference. If you want the tracks, you might as well just buy a CD.
Yes – but if I cancel my subscription, all “downloads” are deleted. When I buy or download, I can keep the files infinitely.
Why the quotes?
A download is a download. And users rarely cancel their subscription. Which means they keep their downloads.
So here’s the only difference between iTunes downloads and Apple Music downloads you need to understand:
iTunes pays the artists $0.7 per download — Apple Music pays the artist $0.015 per download.
It’s the exact same song. You can play it offline. As often as you wish. On the same devices.
But you don’t have to pay the artist. Isn’t that just brilliant?
0,7 per download are only paid once, whereas 0,00whatever are paid each month whenver the song is streamed as long as the subscription is active.
Ah, the long tail. 🙂
Newsflash for you, my friend:
The long tail is dead! It couldn’t pay your rent.
FYI, for the free radio service (which iTunes calls the Linear Radio Service), the rate is going to be fixed at $0.00177 per 5 minute song. Compare that to Spotify and Youtube per play…
You don’t compare that to Spotify or YouTube because they are different services (unless your comparing it to Spotify’s radio service).
This is the end….
It looks like it will simply become impossible to make anything but pocket change from recorded music anymore.
We needed something truly revolutionary, but instead Apple is destroying the livelihoods of so many recording artists.
This would have been revolutionary and would have shown that Apple actually values music: A fixed pay-out rate per play. Why should the selling price of music fluctuate with the quality of (mis)management of streaming services? By that logic, the electric company should accept my payment as a proportion of my income on any given month, rather than expect to bill be on my actual usage.
And another revolutionary thought: Maybe unlimited streaming plans need to go, or must be priced much higher. Limited streaming plans can exist at various price points.
“It looks like it will simply become impossible to make anything but pocket change from recorded music anymore”
No, music will find a way.
Most of us are in shock after epic Apple’s betrayal, but there’ll be alternatives soon enough.
I, for one, like what I’ve heard from RepX.
Especially the part where they’ll let us decide if we want to sell, stream, or both. They’ll start where you’re supposed to start, at the beginning, so they won’t have an Apple- or Spotify-sized user base right off the bat. But this isn’t 2005. Combine an unknown start-up with Twitter and Instagram, and you have instant access to huge crowds.
I don’t think Apple realize that. They’re getting old, and Steve Jobs has definitely left the building.
“epic Apple’s betrayal”
OK, these three words could — and should — be the headline of this article so we better get them right:
Apple’s epic betrayal.
“Apple is destroying the livelihoods of so many recording artists.” Nope, Piracy killed it a long time before. The only thing Apple can do now is just supply some band-aid.
You’re certainly correct about piracy — but there can be more than one killer.
And Apple Music is the worst attack on the music industry since Napster.
“And Apple Music is the worst attack on the music industry since Napster.”
I still fail to see how is that an attack on the music industry. If it wasn’t for iTunes, there wouldn’t even BE a music industry in 2015. It would have been plainly eradicated by Napster&PirateBay a long time ago. As for Apple’s streaming service, there are only two options :
1 – Kill all streaming services and leave only paid downloads. Good luck with that. Spotify has now ingrained the idea of having all the music in the world for a few bucks in the mind of the masses.
2- Have a company massively convince people to adopt streaming and pay 10$ a month for it, so that it would attain a critical mass and becomes somewhat profitable for artists. And if there’s one company able to achieve that, it’s Apple. And if it can’t, well we’re all pretty much doomed because no one can.
“If it wasn’t for iTunes, there wouldn’t even BE a music industry in 2015”
Exactly! So what’s gonna happen when Apple kills iTunes?
Or perhaps you think iTunes is going to survive? Care to explain how? Will prayers be involved?
(Also, do you buy lots and lots of Netflix videos these days? Really?)
“Exactly! So what’s gonna happen when Apple kills iTunes?”
The “killing” of iTunes is unfortunately inevitable. It’s not by choice. Just look at recent years numbers. Itunes sales are dropping year after year, they dropped again by 15% last year. And it’s not Apple’s fault. It’s the consumer’s fault, and it’s Spotify’s fault ( as well as Youtube) for having popularizing the whole idea of streaming. iTunes WILL die, and I lament it.
So what do you ? You do nothing and just let those iTunes sales drop every year until they come close to zero ? Or do you take the bull by it’s horn and see and if you can make that dreaded thing called streaming become profitable ? Apple KNOWS iTunes and downlaods will die whether they like or not. So at least they are trying to see if they can make it’s successor viable.
“It’s not by choice”
Guess it just looked that way.
Seriously, there’s always another way. Techies and pirates have prophesized the imminent death of downloads since day one, but millions of fans never got the memo.
“take the bull by it’s horn and see and if you can make that dreaded thing called streaming become profitable”
Right. I have to make a living though, and I can assure you it can’t be done from streaming.
But you already know that. Here’s what you said a moment ago:
“If it wasn’t for iTunes, there wouldn’t even BE a music industry in 2015″
Truer words were never spoken…
Point for debate: Apple is an accomplice to piracy, by having no DRM for music on their technology (iTunes, iPod, computers, etc). Meanwhile, there is DRM for TV shows, movies, etc.
I’m on your side, but DRM never solved anything. You can copy everything you can hear.
Google and the ISPs are responsible for piracy.
There were DRM on early iTunes files and people complained enough to have them removed.
Now, did DRM stop piracy ? Of course, it never did ! You can find any movie or TV show on the net if you search a bit, even sometime before they get officially released. So DRM does nothing but pissing customers who buy legit files but then can’t use them on any device they want. DRM punish legal users, not pirates.
If DRM doesn’t work, then why is it in place for TV and movies?
Apple investigated for antitrust violations:
http://www.nytimes.com/2015/06/10/technology/2-states-look-for-collusion-between-apple-music-and-major-labels.html
Wow, that seems completely backwards. The labels are abusing their monopoly power, not Apple!
We have 3 major labels that represent an clear monopoly. That’s not illegal in the USA, but using their monopoly powers to thwart competition and collusion certainly are.
So, these 3 labels have negotiated deals that are nearly identical (thank you favored nation clauses) with a number of new companies/services offering “music streaming” services. These monopolies used their existing catalogs to secure equity in these new companies. The terms of those deals effectively harm each of these label’s customers (aka the artists) but favor the labels themselves.
Taken one step further, these 3 labels have perpetuated a system that is opaque to the point that it raises legitimate questions about their desire to compensate rights holders. There is literally no single authoritative record of the rights holders associated with every piece of music recorded in this country. Every private company effectively records this information within their own proprietary systems. Every artist effectively has to accept their label’s accounting or exercise audit rights that are often a precursor to litigation.
I believe their is an increasingly strong case that the major labels have abused their monopoly powers in their effort to control the impact that streaming music services have on their existing business. I also believe that any serious attempt at reform should include a centralized, standardized accounting of all rights holders. Ideally, consumption information about the number of plays/purchases for each work would also be included so that artist could truly have an independent accounting to determine if they are being paid fairly.
OK, then.
APPLE’S EPIC BETRAYAL.
Am I missing something; what about the publishing (only a mention briefly here)? If they are paying 58% to the record label and 12% to the publisher/writer, that would surely be 70% to the rights owners?
This is for the entire controlled composition, ie recordings and publishing. In the same contract, in earlier pages on downloading, the wholesale is 70 percent, like before. So you have 70 percent for downloads and 58 percent for streaming, same contract.
This is wrong, and frankly embarrassing reporting. The 58% covers the recorded master rights, and is exclusive of publishing which is a completely different deal. Layer on publishing (likely another 12%), and the total being paid to rights holders is the same 70% you are referencing.
Since you seem to know authoritatively what you’re talking about, can you tell me who this contract is for? Who are the parties: Apple and… who? I’m looking at the whole 70+ page contract, I’m assuming you know what I’m referencing? Are you suggesting that the participants in the contract change from page to page? That’s very interesting legal work, not sure the top attorneys at Apple would do that, but please educate me.
What’s the definition of COMPANY in the document you have? Is it a music label, or is it a publisher? It would never be both… You’re seeing one side of the music rights equation (the label), and saying that’s all Apple is paying to rights holders is spreading misinformation.
It says it right in your screenshot multiple times; “Labels Revenue Share”… not “Rights holders Revenue Share”.
B3, you must be an overpaid attorney, you really know how to pontificate on an amazingly flimsy knowledge base. But this isn’t the Sandusky Circuit Courthouse, my friend.
“What’s the definition of COMPANY in the document you have? Is it a music label, or is it a publisher? It would never be both…”
Have you ever seen a contract between Apple and a major label? Right, the ones where the label conglomerate receives and pays out the publishing portion. Oh wait, I guess sometimes the ‘label’ and ‘publisher’ are the same thing! I know, like Universal Music Group, which encapsulates Universal Group Music Publishing. But that’s just the largest recording and publishing conglomerate (yeah, one thing) in the world.
You’re seeing one side of the music rights equation (the label), and saying that’s all Apple is paying to rights holders is spreading misinformation.
Thanks B3, you’re right. Would you mind educated our extremely uninformed audience on the details of this contract, of which you haven’t seen. Or even better, why not tell us which contract this likely is, given your highly detailed knowledge of the various types of contracts Apple administers to various rights holders.
“It says it right in your screenshot multiple times; “Labels Revenue Share”… not “Rights holders Revenue Share”.”
Go back to law school, B3. Or, actually, I think Hooli Enterprises is hiring.
Post the whole 70 page contract if you’re so confident. You won’t… but if you did it would take all of 2 minutes to find the section that states that Apple is responsible for any and all publishing payment/obligation. In other words, you’re ignoring an incremental payment that Apple makes to songwriters/publishers of roughly 12%
I guess “Apple pays 70% of revenues back to Indie Artists” doesn’t have the same ring to it… I see your point. Gotta create controversy!
Paul, post the proof that this agreement is for publishing and sound recordings to silence the naysayers.
Your audience is not as dumb as you think, though we have all been dumb enough to click.
Section (m) of definitions in the Subscription portion of the agreement states:
“COMPANY Content” means sound recordings and audio-video recordings (e.g., music videos) owned or controlled by COMPANY that COMPANY has cleared for use by ITUNES pursuant to the terms of this Exhibit L. COMPANY will not provide to ITUNES any recordings that have not been so cleared. Sound recordings that are not COMPANY Content delivered by COMPANY to ITUNES under this Agreement but that are owned or controlled by COMPANY (e.g., live recordings made by a COMPANY artist for ITUNES with COMPANY’s approval) that are played on and in connection with the Linear Radio Service (as defined in Exhibit M of the Agreement) will be treated as COMPANY Content under this Exhibit L.
You just proved our point. This is an agreement that covers rights to use the “SOUND RECORDINGS”, not the composition/publishing.
Possibly, though you know what a ‘controlled composition’ is?
but paul, it doesn’t say “controlled composition” it says sound recordings owned or controlled….
More educational reading for you Paul – https://rightclearing.uservoice.com/knowledgebase/articles/90129-what-are-master-rights-and-publishing-rights
I’m with B3 here. Doesn’t seem to include publishing rights at all. At least the information provided so far doesn’t give a clear picture.
B3, I’m seeing your logic here, despite the muddled confusion of this contract a top music industry attorney has pointed me to clauses that support exactly what you’ve been saying. The president of the NMPA has also informed me that there are separate publishing agreements that cover the extra amounts.
This may not add up to 70 percent exactly, but it looks close (perhaps 68.5%, or more) when recordings plus publishing (performance plus mechanicals) are considered. Apple has created mechanisms to handle those payments directly, and outside of this specific contract.
Oh I see, here’s the smoking gun.
“COMPANY Content” means sound recordings and audio-video recordings (e.g., music videos) owned or controlled by COMPANY that COMPANY has cleared for use by ITUNES pursuant to the terms of this Exhibit L. COMPANY will not provide to ITUNES any recordings that have not been so cleared. Sound recordings that are not COMPANY Content delivered by COMPANY to ITUNES under this Agreement but that are owned or controlled by COMPANY (e.g., live recordings made by a COMPANY artist for ITUNES with COMPANY’s approval) that are played on and in connection with the Linear Radio Service (as defined in Exhibit M of the Agreement) will be treated as COMPANY Content under this Exhibit L.
and yes those are hard to see bolded letters in the paragraph that spell publishing. bad joke. i’m out!
If this contract is written solely for controlled compositions, it wouldn’t address the multitude of songs that are not controlled by the recording artist. Until we see the full payout of Sound Recording Royalty + Composition Performance Royalty + Mechanical Royalty, this doesn’t give a full picture. Seems a bit misleading. I’d be willing to wager the sum payout of those royalties is around 70%…then again, it might not, but that still doesn’t mean it’s worse than Spotify. When Spotify says it “pays 70% to rightsholders” that doesn’t mean indie artists are getting that 70%. It just means rightsholders as a whole add up to 70%. Most likely, more goes to the majors, and who knows how they really calculated that number.
If you’re looking at the whole 70 page contract …. why aren’t you posting it?
Does a hardcore porno flick start with the money shot?
I’m another Anonymous, but this clause from the Apple Music contract sure looks like the money shot to me:
“Fees for Trials and Comp Accounts. For the sake of clarity, for Trial Users, and for Comp Accounts that ITUNES provides on a gratis basis, no license or royalty fees, including Fees, will be due to COMPANY.”
The 58% issue, not so much.
My thoughts exactly… artists will be making NOTHING this summer.
The truth is , there is no other so-called “revolutionary” model coming. We had almost a decade to come up with one. There isn’t. Period. Piracy and it’s Silicon Valley overloads have made sure to make as much damage as possible and make sure none will ever emerge.
So, either Apple’s streaming service succeeds in a spectacular way, or it doesn’t , and all musicians should start looking for a position in a Starbucks near them.
In 5 (a), it clearly says that the payout is the greater of two numbers, and the table clearly says “minimum.” It also later highlights the fact that there may be money deducted for subscriptions billed by third parties, making it clear that carriers or Google Play will be getting cuts. So, yes, maybe 58% is what will be left after a carrier gets their share, or Google Play takes their percentage.
The only way for iTunes to survive is for Apple Music to go Ping.
And that doesn’t seem likely, at first glance.
However, Apple needs to deliver:
* YouTube quality videos for all major acts
* Full licensing
* Complete iTunes catalog (i.e. Beatles)
* A handful exclusives (at least Swift, Rihanna and Perry or something like that)
Anything less, and Ek will tweet another ‘Oh, OK’ on June 30th.
Let’s hope for another epic Apple failure.
“However, Apple needs to deliver:
* YouTube quality videos for all major acts
* Full licensing
* Complete iTunes catalog (i.e. Beatles)
* A handful exclusives (at least Swift, Rihanna and Perry or something like that)”
1- Youtube quality videos : Yes you can post them , as well as photos, links to your website, etc.. All from your Apple’s Connect account.
2- Full licensing. Don’t know what you mean by that.
3- The Beatles . Nope, they don’t want to. They’re in a parallel universe of their own.
4- Handful of exclusives : Yep, there will be plenty on Apple Music, including “Fuck-Spotify-Taylor Swift” !
“Let’s hope for another epic Apple failure.”
Sure, let’s replace them with GrooveShark. Or Kim Dotcom. Much better.
“1- Youtube quality videos : Yes you can post them”
Not sure what you mean — the industry is all about videos now. Apple needs to license, host and stream videos if it wants to compete.
“2- Full licensing. Don’t know what you mean by that.”
Well, did they get the necessary licenses for all territories?
“3- The Beatles . Nope, they don’t want to.”
Ouch!
“Sure, let’s replace them [Apple] with GrooveShark.”
The difference being…?
The 58% I see is only per subscription – is there another section in the contract that outlines the streaming rates or is this really it?
The streaming rates are outlined in section 5. The total amount paid is calculated by adding the amounts laid out in sections 5(a), 5(b), 5(c), and 5(d). The 58% Paul is referencing is only a multiplier and only used if its total amount is greater than the label’s monthly pro rata share.
If 58% is the total payout to right’s-holders, where is the publisher/songwriter share coming from?
My thoughts exactly, in the US that’s a CRB-regulated 10.5% which, when paid, puts Apple back near 70%….
58% is not the total payout. Read all of section 5 that is posted above, not just the headline of the article which is grossly misleading and incorrect. They spell out the formula for how they are going to calculate royalties.
Sure, you are being paid 20% less for your music, but Apple can always argue that they are delivering 20% less of your music:
Apple Music To Stream At 20% Below Industry Standard 320kps
http://www.hypebot.com/hypebot/2015/06/apple-music-to-stream-at-20-below-industry-standard-320kps.html
One can also argue that 320 kbps MP3 is the same quality as 256 kbps AAC. And, frankly, is that worth complaining about? If anything, Apple is saving users money, by using less bandwidth.
“Sure, you are being paid 20% less for your music, but Apple can always argue that they are delivering 20% less of your music”
+1, haha!
Can we see the entire contract?
$5.80/user is more than what Spotify pays to the labels.
This seems to be 58% for the labels on the sound recording, but doesn’t include the 10.5% mandated for publishing (mechanicals and PROS) in the U.S., at least. Adding that back gets you pretty close to 70%.
It’s time to stop delivery of new music to I-Tunes, especially the new music streaming service. No Money equals no new music!
+1
This is idiotic reporting and link bait.
This is 58% to the recording artist.
I’m sure they also pay 12% to the composer.
Those are industry-standard terms. And guess what, they add up to 70%.
Spotify’s own propaganda screed, ‘Spotify Explained’, states that:
“Spotify negotiates our royalty economics with labels and publishers in each territory where we operate. Our current payment agreements lead us to distribute (~)approximately 70% of our gross revenues to master recording and publishing rights (both mechanical reproduction and performance) holders. The precise division between these types of rights holders varies by territory in accordance with local laws and negotiated agreements. In the United States, for example, statutes dictate that publishers receive ~21% the amount that master recording owners receive.”
So taking the US as typical, the publishers would receive approximately 70 x 21% = 15%, and recording owners would receive – wait for it! drum roll! – 55%. But I confess I don’t understand the minutiae of mechanical and performance royalties, and how they differ between download purchases and streaming. An analysis by someone who does understand, which I suspect is not anyone on DMN, would be welcome.
The publishing obligation for a streaming service is a complicated calculation that involves both a ‘greater of’ and ‘lesser of’ in the same formula. this covers both mechanical and performance royalties. keep in mind, this is specifically for subscription services that offer interactive streams. With respect to non-interactive streaming (i.e. pandora), only performance royalties are due for with respect to publishing.
So if you had any sense (or balls) you would at least sign this after the trial period. Seeing you’re getting ZERO from it.
For indie label owners, this from A2IM (referencing Digital Music News as its source): http://a2im.org/news/apple-music-discussion/
Take away: if you’re concerned about the deal terms, DON’T SIGN THE DEAL!!!
What is Apple going to do to you if you don’t?
1) They’ll huff that you’ll miss out on not having your music on the streaming service for launch. Yawn! Who cares if you’re not on a service that promises NOT to pay you (during the first 3 months).
2) They’ll threaten to take your music off of their download store. NOPE! They can ill afford to make that sort of threat given the open investigations into their abusive tactics.
3) They’ll apologetically explain that if you aren’t on the streaming service they won’t be able to offer you editorial promotional opportunities (eg. front page placement, spotlights, sliders, etc.) because, well, you know all of their platforms are “integrated” and they can’t feature an album or track on one platform if it isn’t available on the other…blah, blah… WHO CARES?!?! They’re going to be gutting your download revenue from July 1 to September 30 anyway. Sign this agreement as it is and you’re only helping them accomplish it faster without even getting the proverbial kiss before they f%@k you.
If enough don’t sign the deal, and are vocal about it to Paul and other media sources, believe me Apple will feel the pain and be compelled to do something that isn’t utter arrogance and dismissive of the value of independent music. Oh, and if you’re tied into an exclusive digital distribution deal with some distributor, make noise there too! Tell them how displeased you’ll be if they sign that BS agreement and if they moan that they have no choice call them out for the useless tools they are and again be public about this on DMN and elsewhere. Let’s see which coward indie distributors sign this crap!
“They’re going to be gutting your download revenue from July 1 to September 30”
Agree, that’s insane.
But the worst part is that Apple Music permanently reduces your download revenue from $0.7 to $0.015!
(Apple Music allows downloads for offline listening, but pretends these downloads are ‘streaming’ — and pays accordingly.)
“(Apple Music allows downloads for offline listening, but pretends these downloads are ‘streaming’ — and pays accordingly.)”
You can only listen to those off-line downloads as long as you’re paying your 10$ a month. Those are not traditional downloads, they stay within the app and disappear from your device once you stop paying.
Spotify’s off-line downloads works exactly the same.
Well, it’s really not that complicated, but please let me repeat how it works:
A download is a download. And users rarely cancel their subscription. Which means they keep their downloads.
So here’s the only difference between iTunes downloads and Apple Music downloads you need to understand:
iTunes pays the artists $0.7 per download — Apple Music pays the artist $0.015 per download.
It’s the exact same song. You can play it offline. As often as you wish. On the same devices.
But you only have to pay a tiny fraction of the price.
LOL. Months of Spotify-hate when they were paying 70% to rightsholders.
How’s the free market response of 58% sound, stupid whiny sons of bitches?
LOLz. This ALMOST makes me want to actually be an Apple customer again.
256kbps streams! Apple once again leads the way in shity sound and devaluing music!
Yay Apple, savior of the music business!\
(Oh, I never knew tears of laughter could be so sweet….)
Good on labels/artists that run their own download/streaming services. Like direct mailorder back in the day.. 100 direct known customers with a proper margin put more bread on the table than hundreds of thousands of indirect unknown customers delivering ultra tiny pay outs.
Yeah, giving my credit card info to each and every artist
website with its hand out sounds like a great idea.
Yes, it’s actually a very good idea.
And you give your credit card info to lots of stores already, so that’s not a problem.
Good points…
Yeah, good luck with that. Nobody’s gonna subscribe to dozen of artists / labels owned streaming service.
By the way, there is already Bancamp that let you charge what you want for dowload, even if they don’t have a streaming app right now. But the fact is that outside real music hardcore fans, nobody use Bandcamp. So unless you have a strong following in a die hard niche, that kind of “underground” distribution doesn’t work enough. Even that kind of artist still make at least 50% of their income from big services like iTunes, Amazon, Spotify…
“So unless you have a strong following in a die hard niche, that kind of “underground” distribution doesn’t work enough”
That’s not true anymore.
You can use Twitty and Insta for all kinds of piggybacking purposes today. Nobody cares whether your embedded Twitter videos are hosted on YouTube or RepX.
We are speaking about streaming service, not video, You still don’t understand the difference. Your embedded vids are not helping me when I want to build a playlist and listen to then on the go…
I really think you should stop trolling DMN and go study music business, tech and rights management. The amount of BS you’re spreading around here was already phenomenal, but since that Apple Music announcement it reaches a level never seen before. Go educate yourself man…
“We are speaking about streaming service, not video”
YouTube is the world’s most popular streaming service today — video is everything!
Get used to it.
Please stop with your video BS… If you did your homework, you’ll know that a lot of people don’t actually watch Youtube. They just use it in the background to listen to music. That’s why you have artwork videos or lyrics video that have millions of views event if they show a static image.
But you know what ? Youtube doesn’t let me create playlists with the ability to shuffle songs, order them by genre, artist, tempo… Spotify does, Apple Music will, and that’s why they are different services for different purpose. Can you understand something as basic as that ? No of course. You’ll keep posting the same comments again and again because you’re just a GIANT troll here.
I have been using a free online utility to strip out the audio from a youtube video and save it as an mp3. I’ve been able to recreate much of my Grooveshark collection this way.
I usually use the Windows Media Player to play the songs, but I too would like to find a software that lets me organize my mp3s into playlists, and basically replicate the Grooveshark shell. I would also like the ability to change the names of the files using a standard naming convention, like song name, artist, album, year, that sort of thing, without having to go into a Windows folder and do it manually, file by file.
Does anyone know of a good media player out there with an easy way to organize your mp3s?
And of course it’s all legal, somehow the artists and copyright holders are getting compensated for these songs you are downloading, right? Does Youtube pay royalties for every mp3 file you download? Does the 3rd party company stripping the audio and creating the mp3 file pay royalties?
Maybe you are writing out the checks yourself.
You and others like yourself who circumvent legal song-sharing sites this way are the reason artists here are so frustrated that they are not receiving just compensation for their work. Fractions of a cent here and there, now and then, because there are not enough people paying for the songs they stream and/or download. How do people like you expect artists to continue creating new work in the future, when their work is not properly paid for? It costs money to produce, properly distribute, and manage the infrastructure of legal sites that sell the songs you are downloading for free, not to mention the cost of scouring the net for songs that are found on sites illegally and making the proper filings to have them removed. And there’s all the legal costs involved over the years shutting down sites like Napster, Limewire, and lately, Grooveshark. More will follow, more will have to be shut down.
Shutting down sites like Grooveshark is not enough, there has to be more criminal prosecution for pirates like you who are getting away with circumventing the processes put in place by legitimate music-sharing sites to prevent piracy to begin with.
Yes, there will always be more technology somewhere on the net to enable people like you to download songs on any domain,legal or otherwise, for free, and more people will be doing it, and less people will be paying legal sites to stream and download music. But if it doesn’t stop, there will be less artists willing to sacrifice years busting their asses to create new songs to entertain you. High risk, hard work, and no reward… not a great outlook for the future of entertainment.
I’ve already said that I would pay (have paid for) a legitimate service, as I did for GS, if the volume and variety of content was at least as good as GS, but I would pay a flat annual or monthly fee for unlimited access to streaming and downloading.
I believe in supporting artists, it’s the giant media companies that bully and destroy good companies like GS, who were actually paying fees by the way, that I resent.
Most of my collection consists of older music that was produced long before anyone thought of the internet, there was no digital music back then. Many of the artists are dead and gone. And a lot of my collection I actually bought and paid for years (decades) ago, in the form of vinyl, cassette, or CD, or even mp3s more recently (that got lost subsequently). I’m just reacquiring a lot of it.
So don’t judge me! Instead of crying about online piracy and the future of the entertainment industry, why don’t you put your heads together and figure out a way to make everybody happy. There has to be a balance.
And incidentally, most of your parents were probably not even born yet when I was buying music with my own hard earned money; I have grandkids that are millennials.
Apple like many DSPs fail to realize that A LOT of indies talk to one another. I’m hearing from literally dozens of mid sized to large indie labels (and some distributors even) that they are NOT going to sign this license with Apple. It’s funny to me how good they can be at programming and marketing and yet so blind or dumb when it comes to strategy.
Heard the same with Youtube, never stopped them to go online… What is their plan B ?
Apple probably secured major label deals + biggest indie deals. If you’re already on Spotify, Deezer and others services, it don’t see the issue… Now if you don’t want to be on streaming service at all… good luck !
“I’m hearing from literally dozens of mid sized to large indie labels (and some distributors even) that they are NOT going to sign this license with Apple”
Same here, this won’t end well.
“It’s funny to me how good they can be at programming and marketing and yet so blind or dumb when it comes to strategy.”
They always go blind and dumb when you-know-who leaves the building.
Have we seen anywhere that you can opt out of streaming if you’re on iTunes?
That’s THE question as of right now…
According to Nina, there’ll be no windowing: “The new service lets subscribers stream any song from the iTunes catalog”
The good news is that nobody seems to confirm that. The bad news is that you can’t opt out of iTunes Radio today — why would Apple Music be any different?
Then again, you probably can’t stream Beatles. So there’s obviously some amount of windowing going on (I doubt Apple will celebrate the birth of Apple Radio by removing Beatles from iTunes).
And Apple would never make an absolutely crucial option like windowing available for superstars only.
Would it?
“celebrate the birth of Apple Radio”
…excuse me, that should obviously be “the birth of Apple Music”…
I haven’t, but this is a comment from another article here so it might be possible to opt out:
“There is currently an option to opt out of Apple Music. In the rights and pricing section in iTunes Connect, there’s a “Cleared For Apple Music” box that is separate from the standard “Cleared For Sale” box. So, as it stands now, you can have your music available for download and not streaming. Of course that could change in the future.”
Unfortunately, that other user didn’t provide any links or documentation, and iTunes Connect is only available if you have 20 albums or more on iTunes.
…oops, I wasn’t talking to you, ‘There is something…’ 🙂
Definitely buried the lede here.
ZERO royalties for 3 fucking months of streaming is fucked up.
Haha, yeah you can say that again.
Man, what a year! All my heroes straight down the shitter. YouTube, iTunes…
Fortunately, I’m not alone. (Hint: “Typical niche artists make $700k a year”.) 🙂
Paul how is “Pro-rata” defined?
Better late than never. it’s predecessor Beats Music was doing the same thing by not paying artists during their trial subscriptions. Of course, THEIR trial subscriptions were only two weeks long. NOT THREE MONTHS.
http://kareempowell.blogspot.com/2014/11/apple-beats-music-and-artist-royalties.html
David Byrne: ‘The internet will suck all creative content out of the world’ ..IT ALREADY HAS ITS FUCKED BIG TIME..
lol
We screw ourselves by placing our cards in their filthy hands and therefore playing their trumped abusive cheating games ….. the entire business system is MADE for well dressed hypocrites and mob servants …. they bought up everything on the internet to control and rip everyone odd….. it’s an institution system of complete low IQ crap , why do we keep dreaming for nothing… wake up
Who do these monkeys think they are,they should take a closer look at themselves in the mirror and realize they should up in trees in zoology confines howling , with prison guards sticking bananas up their asses
The entire industry is fixed …. for example I need music equipment to make better quality recordings…. heres the catch , I must have 2 million dollars of methane insurance to be even eligible to apply ….. don’t you see ?
it’s all fixed nicely up for the poor man to kiss the money man’s ass …… this is a very disgusting …. music or any kind of environment for that matter ………… and they say we are in a society? of what ? may I ask …. it’s a complete manure habitat with gorillas as additions to this sealed off enclosure compound! 2 million dollars… what’s that? what that have to do with music ????????
I have a small record label and this past month had 55,000 streams through Spotify. We got paid by Spotify 0.004 which is less than what Spotify claims to pay in all of their press releases.
For anyone that’s interested to read more on this subject, here’s a very detailed post on how the royalties break down from spotify, apple music and other streaming services: Is Spotify Evil? An In-Depth Assessment
Here’s an article explaining much more about how spotify, apple music and other streaming services share royalties: Is Spotify Evil? An In-Depth Assessment