Apple’s full letter to artists on Apple Music streaming payouts

In an open letter being sent to artists today (below), Apple for the first time broke down how it pays artists for streams on the service. It said the average play rate is $0.01 per stream, but it didn’t break down specific streaming rates that vary based on geography and discounted Apple Music plans.

Some of the highlights:

  • Apple said it paid an average of $0.01 per stream
  • And the same 52% headline rate to all labels
  • Royalties were paid out for more than 5 million recording artists worldwide in 2020
  • The number of artists that generated recording and publishing royalties over $1 million per year increased over 120% since 2017
  • The number of recording artists that generated over $50,000 per year has more than doubled.

Apple said the open letter will be part of a new ongoing series to keep artists informed:

Apple Music Insights: Royalties

This update, which is part of a new series of newsletters, looks at how creators earn royalties from Apple Music and how these have grown over time.

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.

We pay the same 52% headline rate to all labels.

While other services pay some independent labels a substantially lower rate than they pay major labels, we pay the same headline rate to all labels. This means artists can distribute music however they like, knowing Apple Music will pay the same rate. Sign with a label or stay independent; we believe in the value of all music.

We pay the same headline rate for all compositions.

Without songwriters, there wouldn’t be recordings. That is why we have paid every publisher and licensor the same headline rate within each country. It’s also why we have invested millions to optimize publishing operations to ensure songwriters are paid as quickly as possible.

Our average per play rate is $0.01.

While royalties from streaming services are calculated on a stream share basis, a play still has a value. This value varies by subscription plan and country but averaged $0.01 for Apple Music individual paid plans in 2020. This includes label and publisher royalties.

We do not pay a lower royalty rate in exchange for featuring.

Apple Music’s team of global tastemakers hand-curate 30,000 editorial playlists. These tastemakers select music based on merit and we do not ask anyone to accept a lower royalty rate in exchange for featuring. The same is true for Apple Music’s personalized playlists and algorithmic recommendations.

As a result of our commitment to these values, Apple Music paid out royalties for more than 5 million recording artists around the world in 2020, over 1 million more than in 2019. The number of recording artists whose catalogs generated recording and publishing royalties over $1 million per year increased over 120% since 2017, while the number of recording artists whose catalogs generated over $50,000 per year has more than doubled.

Like others, we have looked at alternative royalty models. Our analysis has shown that they would result in a limited redistribution of royalties with a varied impact to artists. Per play rates would cease to be the same for every play of a song. But more importantly, the changes would not increase what all creators earn from streaming. Instead, these changes would shift royalties towards a small number of labels while providing less transparency to creators everywhere.

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. With Apple Music, music fans around the world enjoy an uninterrupted ad-free experience while knowing their data is kept private and used only to enhance the overall music experience for them.

While Apple is stating that it’s paying out an average of 1 cent per stream and that it “believes in paying every creator the same rate,” it’s still unclear exactly how much artists are getting per stream and how Apple’s family plans and lower subscription rates in other countries might affect payouts.

What we don’t know is how Apple’s varying rates work to account for that average of 1 cent per stream. Some covering the news have noted that it’s around twice what Spotify plays out, but it’s unclear if that takes the varying rates into account or is just comparing averages.

Spotify has as many as 800 different payout rates based on lower subscription fees, paid vs ad-supported accounts, and more. In certain countries such as India where the monthly cost of a premium Spotify is closer to $1.50 US than the $10 US it is in the US, for example, artists would get paid out a lower per stream rate than in the US.

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