After a supposed “leaked contract” suggested otherwise, Apple has confirmed that Apple Music will pay music rights holders a slightly higher proportion of the service’s subscription revenue than its streaming music competitor, Spotify. Apple’s streaming service, which launches on June 30, will pay music owners 71.5 percent of its subscription revenue. Spotify, in comparison, pays music rights holders 70 percent of its subscription revenue. Both services, which cost subscribers $10 per month, also offer free options which pay music owners a much lower fee per stream. Notably though, Apple will not pay rights holders anything during the service’s three-month free trial period.
Apple exec Robert Kondrk confirmed the 71.5 percent rate to Recode today after Digital Music News wrongly reported that the service would pay rights holders just 58 percent of its subscription income. Kondrk suggests Apple’s slightly higher payouts are in place, in part, to compensate for its lengthy free trial period. The percentage of Apple’s payouts outside of the U.S. will be slightly higher still, averaging “around 73 percent.” The report also notes that music execs at labels with which Apple is working have confirmed the figures.
While both Apple Music and Spotify claim roughly the same percentage payout to rights holders, Apple hopes that it will have a larger subscription base — and therefore pay more to artists in the long run than Spotify. It will certainly be an uphill battle for Apple, though, as Spotify currently has 75 million users including 20 million paid subscribers.
Spotify has received much backlash from its free, ad-supported, on-demand service, but the streaming music service’s spokesman, Jonathan Prince, notes that Apple will offer free music as well through iTunes Radio and Beats 1 radio. “We pay royalties on every single listen, including trial offers and our mobile free custom radio service, and that adds up to approximately 70 percent of our total revenues, as it always has,” said Prince to Recode.
The payout percentages will only matter, though, if Apple Music successfully attracts subscribers en masse — and that’s a big if. The tech giant hopes that its brand recognition — and 800 million current iTunes accounts — will be enough to draw subscription numbers bigger than Spotify. Time will tell if that scenario plays out, and we’ll know a little better when the service launches at the end of this month.
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