Suggestions that Apple will pay music owners just 58% of subscription payments for its Apple Music service are not true, says the company. Robert Kondrk, the Apple VP who has been working with Eddy Cue on negotiating deals with music labels, says that company actually pays a little more than the industry-standard 70% figure.
In the U.S., Apple will pay music owners 71.5 percent of Apple Music’s subscription revenue. Outside the U.S., the number will fluctuate, but will average around 73 percent, he told Re/code in an interview. Executives at labels Apple is working with confirmed the figures.
The 58% number doing the rounds earlier this month appears to be based on a misunderstanding: that’s the usual cut for the label, which owns the recording; the publisher, which owns the rights to the song itself, gets a 12% cut. Add the two together, and you get the 70% number that is standard for streaming music services.
But the most interesting revelation to me was that Apple is not paying music labels a single cent for tracks streamed during the three-month free trial period …
Most free music streaming – current market leader Spotify included – is paid for by advertising. The music labels and publishers still get their 70% cut of that revenue. What Apple is offering is a completely free trial, without ads, lasting a full three months. During the time, according to Re/code, Apple won’t have to hand over a single cent to the labels.
Kondrk says that deal was why Apple will pay slightly more than the standard 70%: it’s the quid pro-quo for the lengthy free trial. AT&T customers were also last year offered a three-month free trial of the Beats Music service, perhaps setting a useful precedent.
There have also been suggestions that Apple was pressing labels to engage in anti-competitive behavior in respect of competing services. The European Commission, the DOJ and FTC are all investigating claims that Apple pushed labels to withdraw support for free, ad-funded services (read: Spotify) as part of the contract negotiations for Apple Music. Universal, one of the labels named in the allegations, said that no such agreement has been reached, nor would it be. The statement notably stopped short of denying that the idea had been discussed.
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“During the time, according to Re/code, Apple won’t have to hand over a single cent to the labels.” – seems more than fair, because during that time Apple won’t make a single cent either, right? But at the end and like labels have done with iTunes, they will make a massive amount-o-cash. Where’s the issue?
“There have also been suggestions that Apple was pressing labels to engage in anti-competitive behavior in respect of competing services.” – to me the question is, is this anti-competitive at a level that is deemed illegal? All companies are anticompetitive. Microsoft for years has had OEMs wrapped up with windows only options on PCs, and only as of the last few years has Linux been an option, which is only here and there.
If the spotify doesn’t like it, put your big guy pants on and change your business model to no-ads. If the labels don’t like, tell Apple to go away. Who really seems to win here with the DOJ dinging Apple, is yet again, the music labels who can peddle their wares to spotify and Apple in whatever way they want.
Considering how much power RIAA and labels have, that’s probably the real reason this article is making headlines.
“If the labels don’t like, tell Apple to go away.”
You don’t seem to understand economics. Apple is too big for this to happen.
This is at the bottom of the Apple Music page: 1. Requires initial sign up. At the end of the trial period, the membership will automatically renew and payment method will be charged on a monthly basis until auto-renewal is turned off in account settings
Does that mean you can’t cancel the trial and you will be charged at the end of it? I can’t find any info on cancelling the trial before the 90 days expires. If Apple is going to charge you at the end, regardless of your decision, that’s not exactly free. Maybe you know Ben. My daughter wants to try it out but if I am going to be charged, then she’s not doing the trial. Any updated info would be helpful.
Sounds to me like you simply go into account settings and switch off auto-renewal at any point during the trial.