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Businesses Music The Almighty Buck Apple

Apple Will Pay More To Streaming Music Producers Than Spotify -- But Not Yet 141

Posted by timothy from the first-three-are-free dept.
Reader journovampire supplies a link to Music Business Worldwide (based on a re/code report) that says Apple's new Apple Music service, after a trial period during which the company has refused to pay royalties, is expected to pay a bit more than 70 percent of its subscription revenue out to the companies supplying it, rather than the 58 percent that some in the music industry had feared. Notes journovampire: "If 13% of iOS device users in the world paid $9.99-per-month for Apple Music, it would generate more cash each year than the entire recorded music biz manages right now."
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Apple Will Pay More To Streaming Music Producers Than Spotify -- But Not Yet More

Apple Will Pay More To Streaming Music Producers Than Spotify -- But Not Yet

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  • 0x4650 (Score:4, Interesting)

    by gnupun ( 752725 ) on Tuesday June 16, 2015 @09:53AM (#49920983)

    Suppose a subscriber does not listen to any music for one month and still pays $9.99. How will Apple distribute the 70-80% proceeds of the $9.99 to the copyright holders?

    • Re:0x4650 (Score:4, Interesting)

      by TheMegaLoser ( 708880 ) on Tuesday June 16, 2015 @09:57AM (#49921003)
      Without knowing: All money goes into the same pot and gets divided per what's listened to totally. There's no point in doing it per user.

      • Re: (Score:2)

        by jrumney ( 197329 )
        Of course, administration of the pot consumes 80% of the remaining revenue after Apple's standard 30% cut, which is entirely taken from the artist's cut as "promotional expenses".

      • Re:0x4650 (Score:5, Interesting)

        by AmiMoJo ( 196126 ) on Tuesday June 16, 2015 @11:26AM (#49921661) Homepage Journal

        They will do what everyone else does. Pay based on total plays for all users, give the money to the recording industry bodies responsible for distribution in each country, and let them handle it. It's a huge scam because to actually get on a streaming service and get paid you have to sign up with a record label that is a member of the local distribution body, you can't just go to Spotify and get paid directly.

        That's why YouTube is a more interesting platform for most musicians. You can get paid just by having a bank account, you don't need to be with a record label. It's a shame Google's music streaming service isn't the same.

      • Re: (Score:3)

        by teg ( 97890 )

        Without knowing: All money goes into the same pot and gets divided per what's listened to totally. There's no point in doing it per user.

        Many artists in Norway is asking for this to happen. The reason? If you look at the listening patterns, they would get a much bigger share of the pie. Those who listen to music and often want to listen to Norwegian artists with which they have a long relationship, tend to listen to fewer songs per month than those who play it more as background noise, using generated playlists etc. Thus, with a per user scheme their slice of the pie wouldn't be marginalized by teens using spotify 10 hours a day.

    • Re:0x4650 (Score:5, Interesting)

      by Imazalil ( 553163 ) on Tuesday June 16, 2015 @10:01AM (#49921031)

      I'm guessing that the money would still go to the record companies who would just keep for themselves.

      I do hope that Apple has it worked out that this doesn't happen. Not that I want Apple to sit on an even bigger pile of cash, just if musicians aren't going to get the money, I don't want it to go to the record companies.

      • Re: (Score:3, Insightful)

        by MitchDev ( 2526834 )

        Just get an mp3 player, rip your discs (used music shops and garage sales are great for bargain hunting), no internet connection required, no monthly fee

        • And nobody can delete or disable your files remotely. But please, this is 2015. Use AAC instead of MP3.

          • Why? MP3 works fine, and most of us have hearing so damaged they can't tell the different between a 192+ MP3 and the CD it was ripped from.

            • Why? MP3 works fine, and most of us have hearing so damaged they can't tell the different between a 192+ MP3 and the CD it was ripped from.

              Good point, I've been working on device that runs a simple cross-browser live-streaming app. After taking a close look at RTSP which requires a client player or a plugin, as well as HTML5 and the cluster f**k that is the <video> tag. I concluded that the most cross browser way to do this without involving a crappy plugin is with websockets and MPEG-1 plus JavaScript MPEG decoder on the browser end. This has earned me a number lectures about how I'm a luddite but the thing is that MPEG-1 still achieves

            • From what I recall when I was doing video/audio transcoding back in the day MP3s have something wonky in their timestamping / framing that makes it horrendous when it comes to converting it to another format. AAC or OGG would be a much better choice from that standpoint.

              • Ah, yeah, I was just thinking form a "convenient to play" format. If you are doing more technical stuff and the MP3 format doesn't provide the tech spec options you need, it makes perfect sense.

          • And nobody can delete or disable your files remotely. But please, this is 2015. Use FLAC instead of MP3.

            FTFY

            • Re: (Score:2)

              by dave420 ( 699308 )
              So you can't listen to it in many devices, and takes up a shit-tonne of space on any device capable of playing it... yay?

            • And nobody can delete or disable your files remotely. But please, even though this is 2015, MP3 is still good enough for most people

              FTFY

          • I've gone back to CDs and purchasing individual songs. Streaming is cheap up front but after a while I found I listen to a lot of the same music usually so its more cost effective for me to buy the music.

            Also, streaming music in 5pm traffic doesn't work at all. For me in my town anyway. Spotify just spins. I have a major network and LTE. Maybe its just my area but I find this unacceptable.

            • I've gone back to CDs and purchasing individual songs.

              You still have one giant step to take on your journey:

              http://www.digitaltrends.com/m... [digitaltrends.com]

              • Re: (Score:1)

                by KGIII ( 973947 )

                I do miss the tonality, I think the word 'warmth' applies, from tubed amplifiers. I did buy a sound card that had tubes. It was not as good as I hoped. Okay, so it was rubbish and I was displeased. I bought a new amplifier (not so very long ago) that was also tube fed. Alas, that was not so good either. My neighbor gave me his very old Telefunken and I cleaned out the system, ran through it, soldered a loose power line, replaced the tubes, and I am happy again. I would have happily paid him but he insisted

          • And nobody can delete or disable your files remotely.

            At least until the RIAA starts using drone strikes.

          • But please, this is 2015. Use AAC instead of MP3.

            I'm down with ogg, yeah you know me.

      • Re: (Score:1)

        by Anonymous Coward

        This is no different if you bought a CD, the labels will get the bulk of the money. How much the performers get is based on their contract with the label and how much the label is spending on marketing and if there has been an advance of money for production costs. Unless the performer self publishes or works with a label that is more equitable, they will end up getting pennies on the dollar. A band can go platinum and still end up owing their label money.

        Concerts and merchandise is how musicians make a liv

        • You're absolutely wrong if you think popular music labels don't make money from merch and shows. TThe "artists" that are signed to the big house labels are basically enslaved. Sure they make millions of dollars, but just imaging how many more millions they'd make if SONY BMG or Island/Def Jam didn't take 80 percent off the top.

          • Indie label also provide booking, promotion, and merchandise supply chains for artists but their contracts are not as all inclusive and the services are more limited than big name label's. My brother is in a band on an indie they got distribution and promotion for their album {commercial and college radio play} but nothing else they work with various booking and promotion services for live events and have a separate supply chain for merchandise.

            • Re: (Score:1)

              by KGIII ( 973947 )

              Some friends and I had a song that got college radio play. It is not too hard to do that on your own, just send them the disk and they will probably play it, eventually. Our song was actually requested a few times (other than when we requested it). Yes, we were young, full of angst, and really stupid. I will include some bad lyrics for you - I bet I can still play it. I bet I am not going to.

              Working Title - By the Godlings. (yes. really. we were... umm... creative)

              I went off to school today,
              Told my teacher

        • Concerts and merchandise is how musicians make a living. The labels don't see revenue from these ventures, This is why it is important to support people by going to their live shows and buying their merchandise.

          And use https://bandcamp.com/ [bandcamp.com]

          • ...and that's why most musicians can't make a living doing it. Concerts and merch make big money if you're playing stadiums. If you're playing small venues, just breaking even is often considered a "good night." The cost of gas for the van alone can wipe out a good night's take, unless you're only playing locally.

            It's rough out there. A lot of fun, don't get me wrong, but it's a tough way to make a living.

            • ...and that's why most musicians can't make a living doing it.

              No, that's not why. Most musicians can't make a living doing it because most musicians simply aren't that good.

              Most artists can't make a living at it. Most actors, novelists, poets and dancers can't make a living at it.

              A lot of fun, don't get me wrong, but it's a tough way to make a living.

              It should be tough. Not that many people are special. But if you're good, you can definitely make a living as a musician without signing your life away to

      • Re: (Score:2)

        by Righ ( 677125 )
        This is what's going to happen, because it's what happens with Spotify and other services. The record companies will pay their artists based upon royalty rates * sales - fees. Only the larger artists will ever be able to offset the fees and the record companies will continue to pocket the proceeds generated by 'minor artists' (which actually includes all the major artists of the past who are no longer selling in sufficient weekly volume). Jay-Z and Madonna will get richer of course, but Roxy Music (for exam
    • An even easier solution: Apple just keeps the money. They don't have to pay copyright fees on songs not played. But all of it depends on the contracts Apple have the music labels.

    • Re: (Score:3)

      by dave562 ( 969951 )

      That is an interesting question. When I was consulting, I worked for one of the accounting firms in Santa Monica, California that tracks the royalties paid to artists for their songs. Now granted this was back in 2006, but the model at the time was pennies per song. The radio stations were required to track the plays and reimburse the labels, who then reimbursed the artists.

      While Apple may set aside a whole slew of money to pay out from, I have a suspicion that the pennies per song model will stay in pla

  • 13%?? Keep dreaming (Score:4, Insightful)

    by master_kaos ( 1027308 ) on Tuesday June 16, 2015 @09:57AM (#49921001)

    Between family share plans, people who have multiple devices, and people who have zero interest in apples streaming platform, there is no way they will get a 13% paid subscription rate.

    • Reminds me of the several companies I've come across who's business plans were almost literally - "if we just get 1% of China". Funnily enough, none of them succeeded.

    • Re: (Score:3)

      by cdrudge ( 68377 )

      That was never Apple's goal. That was just the pie in the sky calculation the article made using extremely optimistic numbers of 1b devices. It stated that Apple's goal was eventually 100m users. I think that's plausible although the number of paying subscribers I think will be just a small fraction of that.

    • Why? The people who load up on monthly bills like that are either rich, or are in debt up to their asshole and in denial about it.

    • Re: (Score:2)

      by AmiMoJo ( 196126 )

      Also, 13% doesn't seem to take into account the overheads. What they pay out will be a percentage of the what is left after tax and fees.

    • Re: (Score:1)

      by tobcar ( 4150445 )
      Please send the money to me instead. I will ***eventually*** pay back 90% to artists. (after I bought everything I want and accumulate sufficiently ridiculous wealth.)
  • Maybe I'm just not "getting it" but I'm trying to see what the value added is in this service. I already have Amazon Prime and with it I get a nice free music service that does a good enough job. Do they have artists no one else has?

    • Re: (Score:3, Funny)

      by Anonymous Coward

      Yeah I don't get it either. I mean YOU have Amazon Prime, therefore EVERYONE must have Amazon Prime! What was Apple thinking??? They should have just asked you!

      • Re: (Score:1)

        by burnetd ( 90848 )

        Not only that, I have Amazon Prime and I don't get any free music service as it's not available in most countries.

  • there'd be no need for tinkers

  • Not for me... (Score:3, Insightful)

    by Lumpy ( 12016 ) on Tuesday June 16, 2015 @10:22AM (#49921155) Homepage

    I refuse to pay for any service that rewards the scum that is the record industry. Free services only for me or my own music ripped off of used CD's.

    I am the record industry's worst nightmare, someone that buys CD's but only second hand. It's the best way to steal from them.

    • Agreed.
      (no mods points currently)

    • I love the way you turn their own lingo against the record companies in your post.

      But as every upstanding citizen knows, suffering is the sign of morality! Buying second-hand is giving in to the evil temptations of compromise; the priests of Order of the Invisible Hand will tell ye that "if you do'nt like don't buy!"

      It is only the blessed copyright holders that may tell you what is a fair and working market.
      True creative genius comes from group thinking, control and monetization.

      Why do you hate The E

    • Re:Not for me... (Score:4, Insightful)

      by N1AK ( 864906 ) on Tuesday June 16, 2015 @11:34AM (#49921721) Homepage
      I think you're giving yourself too much credit. Who sells CDs second hand: People who buy CDs, including people who buy them new; and what do they do with the money raised by selling music... at least partly use it to purchase new music.

      You're the music industries worse nightmare in the same way the guy who buys 2nd hand cars, and indirectly keeps the new car and trade-in markets going, is Ford's worst nightmare: In. No. Way. At. All.

      • I think you're giving yourself too much credit. Who sells CDs second hand: People who buy CDs, including people who buy them new; and what do they do with the money raised by selling music... at least partly use it to purchase new music.

        Yeah, but what if Lumpy *only* bought 2nd hand CDs he knew were shoplifted?

      • You're the music industries worse nightmare in the same way the guy who buys 2nd hand cars, and indirectly keeps the new car and trade-in markets going, is Ford's worst nightmare: In. No. Way. At. All.

        Au contraire mon frere. You seem to be under the delusion that reality actually matters. What Ford sees is that you are not buying a new car so each second hand sale is a direct loss to them. Apparently, figuring out that the second hand market enables certain people to buy more new cars than they normally would be able to is not part of their math. Same with CDs.

  • Comment removed based on user account deletion

    • The top five songs are played far more often than twice a day.

    • The word artist should be completely removed from the vernacular of big music. This music is not art, this music is a product, plain and simple. People who listen to actual artists (read: musicians) tend to actually buy records and songs directly from artists. Even small labels like relapse records and earache (I used to be a big metal head) have turned into production lines, churning out countless albums by bands with "brutal" names and unreadable logos, generic sounding metal that fits neatly into a box

    • Nowhere is this more obvious than American pop music and radio. the same 5 songs are played, 15 times a week, for 3 months in a concerted effort to sell a product or vision.

      Here's an easy solution that will both help you and fuck them at the same time: stop listening to radio.

    • That's where Beats 1 radio and Connect come in. The music on Beats 1 is specifically curated to stop this problem and Connect is meant to allow up and coming artists to upload music and interact with fans.

      I don't think Connect is going to be a success by any measure but I think that Eddy Cue's team cares a lot about that particular problem.

      If you look at the business model, selling 10 dollar a month subscriptions is going to run dry if you're just going to play the same songs over and over again from the sa

  • Tim promises.

  • why is this even a thing? (Score:3)

    by hypergreatthing ( 254983 ) on Tuesday June 16, 2015 @10:36AM (#49921273)

    Seriously, who cares? Poor starving artists don't get paid? Then they should sign for better royalty rates. Spotify/apple/pandora does not set the rates which artists get paid. That's all up to the record labels and the artists who have contracts. There's the whole other mess associated with the government approved collection agencies which only gives money to member artists. If you create something and it's played seldomly and it's not part of any big label, then fat chance you'll see even a penny.
    The idea isn't to give starving artists any extra money, it's to give the copyright holders even more cash through streaming.

  • ...the company refused to pay royalties... (Score:4, Insightful)

    by xxxJonBoyxxx ( 565205 ) on Tuesday June 16, 2015 @10:42AM (#49921317)

    >> ... a trial period during which the company has refused to pay royalties...

    How, exactly, did they get away with millions of unpaid plays that at the same time we're reading a story about the royalty police going after a mom-and-pop restaurant for a song or two?

    • Because they negotiated it in advance. It's not really that Apple "refused to pay royalties", but that they negotiated licensing terms such that they aren't required to pay royalties under specific circumstances.

      The summary is poorly worded.

      • Re: (Score:2)

        by Kjella ( 173770 )

        A better analogy would be "dealer gets supplier to bankroll first shot is free campaign on promise of bigger future earnings". It's just two business partners looking to maximize profits, they're in this together to get you hooked.

        • A better analogy would be "dealer gets supplier to bankroll first shot is free campaign on promise of bigger future earnings".

          You're implying that Apple's music service will be so good that it's addictive. If so, good for Apple.

          It's just two business partners looking to maximize profits

          Oh no! Businesses trying to have a successful business venture!

    • Re: (Score:2)

      by suutar ( 1860506 )

      Apple can afford defense lawyers.

      And they actually show up to court instead of allowing a default judgement, but mostly the money.

    • Because they were offered it in exchange for paying tens of billions of dollars in the future.

      Linking this to people who pirate/steal is just trolling.

  • That's my problem (Score:5, Insightful)

    by quantaman ( 517394 ) on Tuesday June 16, 2015 @10:42AM (#49921327)

    "If 13% of iOS device users in the world paid $9.99-per-month for Apple Music, it would generate more cash each year than the entire recorded music biz manages right now."

    I sure as hell don't purchase $120 in music per year, even when the CD was king I doubt many ever did.

    So why do they suddenly expect us all to start spending as much on music as the most vociferous consumers?

    $3-5 monthly, $36-60 per year, that's a price point where subscription services start making sense to me.

    • Re: That's my problem (Score:3, Informative)

      by AvitarX ( 172628 )

      The subscription services are worth about double or triple what I used to spend on music.

      The "radio" (hand picked, and automatic), and the music exploration features additionally have value.

      I used to spend about $5/month for music (from ages 23 -30 or so, before then it was more, since then, subscription service, also more), I happily pay $10 for the subscription.

      It seems unlikely they'll go much lower, unless they cut deals with the cell phone carriers or some such, though I suspect you could be correct, t

    • Re: (Score:2)

      by mspohr ( 589790 )

      Are 13% of iOS users dumb enough to pay $9.99 a month for Apple music?

    • I sure as hell don't purchase $120 in music per year, even when the CD was king I doubt many ever did.

      I sure as hell didn't spend $96 a year on last year's movies and TV shows, but when Netflix let me choose from a large number that I could easily watch on my game system, TV, and all mobile devices, I started spending that.

      You can't compare spending money for one item with spending money to temporarily access millions of items.

    • There are already tens of millions of people paying this amount. So people will certainly pay. The question is how many will pay this amount? I think the business model for streaming music is still in flux.

      I personally think $120/yr for access to all music in the world at all times is absurdly good value...but it is a luxury that not everyone wants to afford.

    • I sure as hell don't purchase $120 in music per year, even when the CD was king I doubt many ever did.

      So why do they suddenly expect us all to start spending as much on music as the most vociferous consumers?

      $3-5 monthly, $36-60 per year, that's a price point where subscription services start making sense to me.

      Maybe they aren't targeting you? I'd be lucky to spend $100/year on CDs when I was fresh out of school and earning $200/week. Now I earn 10x times that $120/year is peanuts for all the music I can eat.
      I don't own anything Apple and avoid it where possible, but they have a market. They target the top 10% of the high disposal income earners (not necessarily high income), who are constantly looking for new shiny to blow their cash on. I think they'll do alright.

  • Why pay $10 for apple music, which is streaming, cannot use offline, when Netflix is only $8?

    Price seems excessive.

  • " after a trial period during which the company has refused to pay royalties"

    My understanding is that they're not refusing. They are in fact paying 12,000% royalties during the free trial period.
  • If they refuse to pay royalties then how can they legally provide the music?

    • Re:Wait a fucking minute. (Score:5, Informative)

      by nine-times ( 778537 ) <nine.times@gmail.com> on Tuesday June 16, 2015 @11:12AM (#49921541) Homepage

      When they say, Apple "refused to pay royalties", they're giving a false impression that Apple is supposed to pay royalties, but they refused. In fact, they negotiated a deal with record labels so that they wouldn't have to pay royalties during their "free trial" period. Customers aren't paying Apple during that period, and Apple isn't going to pay record labels, but that was all negotiated with record labels in advance.

      • The royalties are a percentage. They're not charging. What's 71% of nothing?
        • Royalties don't always mean a percentage of money earned. I forget what all the deals are, but for example, I believe songwriters often get a set amount of money (not a percentage) every time a song is played publicly, even if no money is earned from the playing of the song. There are lots of different deals, depending on whether it's a specific negotiated contract or an ASCAP thing....?

          Like I said, I don't remember. That was never my field. But I believe Pandora, for example, has to pay for every time

  • Anybody know how much Google forks over for All Access subscribers?

  • Back in the Napster days, a flat license of something like 2+ Billion dollars was offered to get this same sort of thing started...

  • "If 13% of iOS device users in the world paid $9.99-per-month for Apple Music, it would generate more cash each year than the entire recorded music biz manages right now." --Apple will be lucky to have 1% of its entire user base sign up for this service. You have to consider that 13% of all iOS users include lot of people with multiple devices, such as personal and work iPhones, iPad and per Apple policy you can have authorize up to 5 devices in your family to use your paid apps and I would imagine Apple M

  • after a trial period during which the company has refused to pay royalties

    How nice for them. They've "refused to pay royalties".

    is expected to pay a bit more than 70 percent of its subscription revenue out to the companies supplying it

    And by "the companies supplying it", they mean, "fuck the artists".

    • And by "the companies supplying it", they mean, "fuck the artists".

      Um that's how the business works. Company signs artist, promises the world in exchange for the ownership of their work. From that point on any future deal has to go through the company that now owns the work.
      The only way that this will change, is when musicians follow the path of software developers. Release your work for free on the Internet and good work will get noticed. Good artists will build a profile then can then start charging for their work. There's no reason why Artists can't deal with the likes

      • The only way that this will change, is when musicians follow the path of software developers. Release your work for free on the Internet and good work will get noticed. Good artists will build a profile then can then start charging for their work.

        https://soundcloud.com/ [soundcloud.com]

        There's no reason why Artists can't deal with the likes of Spotify or Apple Music directly, but unlike developers who tend to be smarter than average, artists tend to be at the stupid end of the spectrum, and hence will continue to be taken

  • I don't even want to guess.

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