Apple Seeks Simpler Royalty Payments for Streamed Music

Apple wants to simplify the more complex equations that determine just what, exactly, musicians make whenever their songs are played on streaming services. If successful, Apple's proposal will turn the screw on rivals like Spotify, as it will require them to pay more for services on which they aren't making a lot of revenue.

It's also likely that Apple won't have to follow the rules of its own proposal, as it has struck separate deals with music publishers to pay slightly higher rates than the norm—and likely higher than even those Apple proposed to the US Copyright Royalty Board.

Apple's proposal wasn't made public, but the New York Times reports that the version it received has Apple asking for a simple 9.1 cents for every 100 plays of a streamed song—and that figure dovetails nicely with the existing royalty payment figures of 9.1 cents for every time a song is "reproduced" in the form of a new CD, a vinyl record, or a downloaded MP3, etc. In other words, royalty payments owed for 100 streams of song would equal those owed for one digital download of said song.

The move would certainly simplify the payment process for streaming services like Spotify and YouTube, which currently have to pay varying percentages based on performance and mechanical royalties. It's a confusing system that can often leave musicians wondering where their cut of the pie is, and why it appears to be so small given that they're the ones making the music people stream.

However, Apple's proposal would also hit companies like Spotify pretty hard, as they would have to pay more for offering free streaming. As you might expect, the free iteration of Spotify's service doesn't make nearly as much as its subscription-based service. As a result, Spotify coughs up lower payments for its free streaming, since it's paying based on a percentage of earned revenue rather than a flat rate for streamed songs—not something many music labels and musicians particularly enjoy.

Recommended by Our Editors

Apple to Spotify: We're Not Giving You Special Treatment

According to Billboard, the three-judge panel on the Copyright Royalty Board is currently working to figure out how much rates for downloads and streaming will be for the time period of 2018 to 2022. A number of other entities should have also submitted their proposals by Friday, including the Recording Industry Association of America, streaming companies like Spotify and Pandora, and companies with streaming services like Amazon. We're curious to see if any of their proposals leak as well.