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Among music streaming services, Apple already has a well-deserved reputation for being a friend to the music publishing industry, thanks to its generous payouts to artists and willing acceptance of royalty increases. Now, however, the company is taking even more steps to increase transparency and make sure artists realize just how good of a deal they’re getting from Apple Music.
In a letter sent out to artists last week, Apple disclosed that it actually pays out a penny per stream, and while that may not sound like much on the surface, it’s about double what Spotify pays out.
According to The Wall Street Journal (Apple News+ link), the letter was posted to the service’s artist dashboard and sent directly to labels and publishers, following a similar move by Spotify last month.
Of course, this is one area in which Apple doesn’t have to worry about losing ground to its chief streaming rival. While Spotify may have twice as many subscribers as Apple Music, it’s made a few big missteps in recent years when it comes to fairly compensating artists — moves that have made Apple look better simply by contrast.
Chief among these was an unprecedented challenge that Spotify and other major music streaming services like Google and Amazon made to a decision by the U.S. Copyright Board to increase the rate of royalties. While they filed an appeal opposing the increase, Apple simply refused to get involved, accepting the ruling without comment.
While the situation was arguably somewhat more complicated than just the increased royalties, the bottom line is that Spotify et al came across as greedy big tech companies who wanted to take money out of the mouths of artists. Music industry executives called the move akin to “bullying” and “declaring war” on the songwriting community.
Meanwhile, those same executives lauded Apple as a “friend to songwriters.” National Music Publishers’ Association CEO David Israelite added that “every songwriter and every fan of music should stand up and take notice” of the quiet courtroom appeals that Spotify and Amazon have been engaging in to deny songwriters and musicians their due.
Then, in the middle of what was already certainly bad PR for the streaming service, Spotify used the very regulations that it was opposing to demand money back from artists as a result of alleged overpayments. It was a move that the music publishing industry called blatantly hypocritical, particularly since if Spotify won its appeal it would end up having to give that same money right back to the artists.
So, it’s probably not a big surprise that Spotify is trying to spin its opaque variable lower royalty payouts to artists as actually better than Apple’s. In fact, Spotify launched a dedicated site last month in which it tries to make sense of the 800 different payout rates that it uses, based on subscribers on different plans and in different countries.
To be fair, Spotify does pay a larger amount of money to the music industry overall, but that’s simply because it has a far larger number of users — 345 million in total, with 155 million as paying Spotify Premium customers. While Apple hasn’t revealed any subscribers numbers since it crossed 60 million two years ago, most analysts peg that number somewhere around 72 million.
While Apple insists on an easy-to-understand “per stream” rate, Spotify simply says it doesn’t believe that’s “a meaningful number to analyze,” despite the fact that this is how artists prefer to calculate their earnings from streaming services. In fact, Spotify spends so much time trying to explain why per-stream rates are the wrong metric to use that it quickly starts to sound like they’re protesting a bit too much.
Unlike Spotify’s very public website, Apple’s open letter was sent exclusively to artists, however 9to5Mac has gotten its hands on it and shared the text. Overall, it shows that Apple is trying to focus on a fair and simply process that pays the same rate regardless of country or subscriber level, and while it’s not a flat rate, it does average $0.01 per stream. By contrast, Spotify’s system, when expressed as a per-stream rate, caps out at around $0.005 per stream.
We believe in the value of music and paying creators fairly for their work. Since we launched the iTunes Store in 2003, we have helped millions of artists and songwriters make a living from music. As the discussion about streaming royalties continues, we believe it is important to share our values. We believe in paying every creator the same rate, that a play has a value, and that creators should never have to pay for featuring.
Apple also notes that it doesn’t pay a lower rate in exchange for featuring artists or albums on Apple Music. Even though it offers over 30,000 “hand-curated editorial playlists,” these are built entirely on merit and artists are not ever asked to accept a lower royalty rate in exchange for being included in any of these.
At Apple Music, our focus remains on artists and songwriters and finding new and innovative ways for all creators to make a living from music.
According to the letter, Apple Music paid out royalties for more than five million recording artists around the world last year, which was an increase of one million over 2019. Since 2017, the number of recording artists whose catalogs have collectively generated royalties of over $1 million per year has increased over 120%, and there are more than twice as many artists making at least $50,000 per year.