Streaming services like Apple Music, Spotify, and others currently pay publishers and songwriters based on a complicated formula designed to pay out between 10 and 12 percent of streaming services’ overall revenue. That percentage is determined based on backroom negotiations with record labels and copyright holders, and is difficult for everyone involved because of a lack of standardization.
Apple wishes to simplify the whole process, by paying 9.1 cents per 100 streaming plays — essentially making each 100 streams equal the royalty rate of a single paid download. This would make accounting simpler industrywide, and create a transparency of payment never before seen in the digital music age.
But it would also seriously hinder industry members who like the revenue-based streaming model — players like YouTube and Spotify, who operate free ad-supported streaming. Because free services generate very little revenue, those services don’t have to pay out as much.
If Apple’s proposal were to become law, many free streaming services would be too financially hindered to remain in business. For labels and songwriters, this could actually be a good thing. Many industry members have expressed overt interest in curbing free streaming wherever possible, as it doesn’t make anyone any money.
Apple Music wouldn’t be hindered by new royalty decrees, as its service is and has always been pay-only. And musicians would likely enjoy a massive increase in transparency regarding pay-per-play, as even top pop stars weren’t privy to their label’s backroom negotiations with major services.
As of right now, the Silicon Valley company’s proposal is years from becoming reality, as the suggestion comes as the Copyright Royalty Board is in the early days of determining statutory rates for streaming music from 2018 to 2022.
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