Apple cautious about proposal for streaming music services to pay artists 50%

Apple has expressed caution about a proposal to increase the share of streaming music revenue paid to artists from the current typical 16% to a far higher 50% rate.

The British government has proposed a “complete reset” of the business model for streaming music, so that artists and songwriters are better compensated …

BBC News reports on the findings of a six-month enquiry by parliament’s Digital, Culture, Media and Sport (DCMS) committee.

“While streaming has brought significant profits to the recorded music industry, the talent behind it – performers, songwriters and composers – are losing out,” said Julian Knight, MP, who chairs [the] committee. “Only a complete reset of streaming that enshrines in law their rights to a fair share of the earnings will do” […]

In a report, they said royalties should be split 50/50, instead of the current rate, where artists receive about 16%.

Songwriters are paid even less than performers.

Pop songwriter Fiona Bevan revealed she’d earned just £100 for a track on Kylie Minogue’s number one album, Disco. “Right now, hit songwriters are driving Ubers,” she told MPs. “It’s quite shameful.”

The report says that services like Apple Music and Spotify should be treated in the same way as radio broadcasts, where artists are paid 50% of the fee.

Predictably, the music labels – which currently keep the lion’s share of streaming revenue – objected, claiming that the money they earn is then reinvested in new artists. More surprisingly, Apple signaled a cautious note.

Representatives from the streaming companies suggested they were “open-minded” about changing the royalty system, but noted that 70% their income already goes to labels, publishers and artists.

“It is a narrow-margin business, so it wouldn’t actually take that much to upset the so-called apple cart,” said Apple Music’s Elena Segal.

While it’s true that streaming services struggle to break even, let alone make a profit, the recommendation here would be for music labels to take a much smaller share. Indeed, the only streaming service that came under fire was YouTube, which pays less than a quarter of the amount paid by Apple Music.

Apple is the second-most generous music streaming service, after Tidal. A tweet this week suggested that Peloton pays much more than all streaming services, but that’s likely because it has to buy synchronization rights, which are significantly more expensive than simply streaming the music on its own.

What’s unclear is how YouTube was able to negotiate such low rates when so much of its usage is synchronization – that is, music used as a video soundtrack.

A survey last year found that almost two-thirds of streaming music subscribers would be willing to pay more if the extra revenue went to artists.

Photo: Omid Armin/Unsplash

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