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Ludwig Van
Toronto Montreal

THE SCOOP | Apple Music Takes On Spotify With Penny Per Stream Claim

By Michael Vincent on April 20, 2021

How many musicians does it take to screw in a light bulb? Two. One to screw in the light bulb, and another to say, “He’s already being screwed by Spotify.”

It’s no secret Spotify has made some enemies with artists for their paltry $.003 and $.005 per-stream royalty rate. To put the rate into context, you’ll need about 1M streams to make between $3,000 and $5,000. Outside the world of streaming, selling 1M copies of an album is certified gold status.

In a surprise announcement from Apple Music sent in a memo to industry leaders this week, Apple Music is raising per-stream royalty rates to a whopping $.01 per stream.

“As the discussion about streaming royalties continues, we believe it is important to share our values,” they wrote.

It’s complicated

While this sounds like good news for artists, the catch is in the fine print.

It has to do with how Apple calculates the penny-per-stream. The model works on a pro-rata model, whereby royalties are calculated based on Apple Music’s total earnings from streaming. How this works is that Apple Music pays the same 52% headline rate to all labels at the end of set time frame. In other words, like Spotify, Apple Music pays the rights holders (usually records labels) first.

  • The streaming service also pointed out that it refuses to “pay a lower royalty rate in exchange for featuring” — which is something Spotify started doing last year.
  • In November, Spotify announced that it could be incentivized to include songs on new personalized Discover playlists, by giving rights holders the option to take a lower percentage for the chance at more exposure.
  • But many onlookers have questioned the pro-rata model, as a whole, over the years.

The times, they are a-changing

The Apple Music memo comes at a time when the likes of Hipgnosis Songs Fund and Primary Wave are making a major play by buying up the rights to legacy artist catalogues. In 2017, primary Wave bought the rights to Glenn Gould. Just over the past few months, Fleetwood Mac, Neil Young, Shakira, John Lennon, and Dire Straits have all sold the rights for their work. With publishing rights at historic lows, this is a classic buy low sell high — with companies reaping the rewards.

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