Apple Responds: ‘We Pay 71.5 Percent of Streaming Revenue Back to Artists…’

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Apple Music will be paying 71.5 percent of streaming revenues back to rights owners, at least after a three-month, free-access period (when royalties will be zero).   That beats Spotify by at least 1.5 percentage points, and it’s not 58 percent, according to Apple, despite that figure surfacing in a recently leaked in a Apple contract.

“In the US, Apple will pay music owners 71.5 percent of Apple Music’s subscription revenue,” Apple iTunes Content Vice President Robert Kondrk told Re/Code this morning.  “Outside the US, the number will fluctuate, but will average around 73 percent.”

The details are getting extremely confusing, though that’s become de rigueur for streaming.  In the same contract, Apple outlines a 70 percent payout for a-la-carte downloads, which includes publishing payouts, yet the publishing component isn’t included for the streaming portion.  That led to the clearly-stated 58 percent figure, though subsequently, the head of the National Music Publishers Association (NMPA) David Israelite informed Digital Music News that Apple is paying publishing royalties separately on streaming through separate transactions and contracts.

The higher number was subsequently backed up by top music industry attorney Steve Gordon, who pointed to an aggregate mechanical and performance publishing payout adding to 10.5 percent.  “They’re handling publishing themselves now on streaming,” Gordon confirmed.

(Actually, 58+10.5 doesn’t quite add up to 71.5, but it does solidly add up to fugghedaboudit.)

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Meanwhile, one figure remains totally unchallenged by Apple: zero.  That is, zero percent during a three-month, free trial window.  That’s the payout the Apple made very clear in the same contract, a move that could result in serious pullbacks by leading independent artists and labels.

As of this morning, Apple has made no concessions on its $0 free-trial royalty structure.

Image by Ryan Somma, licensed under Creative Commons Attribution 2.0 Generic (CC by 2.0).

8 Responses

  1. Anonymous

    Seems plausible. Sustainable? That’s up for debate.

    I find it kind of surprising Apple doesn’t just eat the cost for 3 months. Their profits are so high right now it wouldn’t even show on their quarter and the amount of good publicity they would have received would have paid for itself. Instead they get bad publicity and damaged industry relations to save a few bucks. Apple’s greedy nature is glowing bright.

  2. Ray

    The contract that you posted that states no royalties will be paid during the trial period is just referring to the royalties generated from the sound recording. It does not pertain to the publishing money generated. Apple is still required to pay the performance royalties and the mechanical royalties during the trial period. The publishers would go crazy if that was the case, and the labels (especially smaller labels) can’t sign off on that right unless they own every song they distribute.

  3. breatyfilk

    It does not pertain to the publishing money generated. Apple is still required to pay the performance royalties and the mechanical royalties during the trial period

      • sarah

        Apple’s direct agreements with the labels have nothing to do with the publisher reporting requirements.

  4. Anonymous

    Here’s the important part, though:

    “a three-month, free-access period (when royalties will be zero

  5. Versus

    That promises nothing. The streaming revenue is an unpredictable variable.
    There should be a fixed payout per stream.