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Apple pitches flat rate for on-demand songwriter royalties to CRB

Apple logo black canvasApple has proposed a new royalty structure for streaming music, one that would be simpler but could create a financial pinch for freemium services. In a proposal to the U.S. Copyright Royalty Board, Apple recommended a system where all on-demand streaming services would pay songwriters a statutory rate of 9.1 cents per 100 plays.

“An interactive stream has an inherent value regardless of the business model a service provider chooses,” said Apple’s proposal, which was obtained by The New York Times. The current rate model includes different rates depending on whether the listener is a paid subscriber to the service or part of a free tier. The Times glossed that proposal as a direct dig at Spotify, where about three-fourths of its listeners use the free, ad-supported package. Such a system would be much more expensive for Spotify and other platforms with the same business model. Apple Music offers a three-month free trial to new members, but otherwise requires a payment to use.

The library for Apple Music was not negotiated with the statutory rates; instead, the tech major relied on its own direct deals. The Copyright Royalty Board is currently engaged in proceedings to set on-demand streaming royalty rates to songwriters for 2018-2022. Although Apple’s stance on the subject has unexpectedly become public, contrasting suggestions from Spotify, Google, Pandora, Amazon, and the RIAA are also likely being filed. Given how vehement the arguments (and reactions) were when the CRB made its decisions for the webcast royalties to labels, this debate will likely be intense as well.

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20 Comments

  1. I wholeheartedly agree with Senator Elizabeth Warren that Apple is using monopolistic-like actions snuff out their competition.

    Economic critics say this is a self-serving move that would hurt rivals and consumers and, in the long term, the music industry itself.

    www(dot)fortune(dot)com/2016/07/18/apple-music-industry-royalties-spotify/

    • Precisely why we need a more progressive Congress, one that will stand up for small business rather than huge corporations.

    • It’s only self-serving if the CRB takes the bait, and I have no reason to believe they will. But if they did, isn’t this proposal a good thing for songwriters? And aren’t songwriters part of the music industry? I don’t understand how more money would hurt the music industry. And there’s nothing “monopolistic” about making a proposal to the CRB. Anyone can do it. The only actual monopoly is the CRB itself. And, of course, SoundExchange.
      What we need is to get rid of “statutory rates” completely and let everyone negotiate directly. That’s what Apple does.

      • Read the article. It explains in detail why this proposal does more harm than good.

      • The article says it’s bad because the competition will be driven to bankruptcy. That’s why it’s monopolistic. A monopoly is never a good thing.

          • But once again, you’re assuming the government will do what one company suggests. It’s not going to happen.
            But the fact is that none of the streaming companies are making a profit with music. They’re all losing millions. So really, the music industry is the monopoly here, putting the streaming industry out of business. Maybe someone should regulate the music industry. Oh, right, they already did.

          • This is why many of people listen to the free tiers that many of these services offer: www(dot)musicbusinessworldwide(dot)com/almost-half-of-people-not-paying-for-streaming-music-say-its-too-expensive/

            Some cheaper pricing options is what these services need to offer to convert some people over to paid subscriptions. musicindustryblog(dot)wordpress(dot)com/2014/10/31/why-its-time-for-a-streaming-pricing-reset/

          • Precisely right, Ethan. If Spotify goes out of business because of Apple’s actions, people aren’t going to flock to Apple. They’re going to flock to whoever else pops up who offers a cheaper alternative.

          • This BigA person is a typical conservative. All they do is listen to money.

    • (speaks in sarcastic tone) It will be much better for the consumer when they only have a choice of Apple or Apple.

  2. So what will this mean for rates that small webcasters (those on StreamLicensing, etc.) pay?

    • As we currently understand Apple’s proposal, it would have no effect on non-interactive online radio streaming, such as StreamLicensing stations.

  3. Apple has no problem with artists or anyone else making money, but only as long as they can jack up the consumer price so Apple can make an outsized profit on it. Apple has never been altruistic. Apple’s only motivation here, is not artists making a profit, but rather getting a royalty scheme pushed through that benefits their business model. If it benefits the artists incidentally, I am sure they are not very opposed. Eventually, as they would gain market share in such an environment they would work to correct the anomaly that someone other then them is making money.

  4. Looks like they learned nothing from their ebook pricefixing scheme.

  5. If Apple truly wanted to pay artists and song writers more money, they would circumvent the labels and pay directly to the artists and songwriters. That’s where the largest loss of revenue is for musicians. People keep pointing at Spotify as if they are the evil ones but truth is they are working at a negative revenue and pay out almost $3billion a year to the music industry. Also, these artists aren’t trying to survive off of Spotify alone, that is just stupid. They are/should be on all streaming platforms if they really want to maximize profits. And many of them should break free from labels.

  6. Streaming is pro streaming… it has never been pro artist or writer… if you experimented enough to just see how the engine revs in that vehicle …you will have your engine removed …if anything doesn’t fit their game plan …they are smart enough to find other engines …unfortunately the close to only trade deal is on the positive side very meager…

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