Apple Fires Shots at Spotify with Latest Royalties Proposal

Last week American tech giant Apple quietly filed a proposal with the Copyright Royalty Board (CRB) to raise the streaming songwriting royalty rate up to a flat 9.1 cents per hundred streams ($0.00091/stream) with no loopholes like the ones that currently exist. The move serves as a direct shot at Apple Music‘s biggest competitor and reigning streaming champ, Spotify, which currently relies on it’s ad-driven free tier for much of it’s popularity– though the company broke the 100M user mark last month it only boasts about 30M paid subscribers; not even double the paid userbase of 1-year-old Apple Music.

Under the current laws, Spotify can pay out royalties as a percentage of revenue taken in, meaning that the royalty rate slides down as the number of free users continue to increase on the service (the same thing applies for YouTube and the way they pay out music royalties). From Spotify’s own website:

 

A little inspection reveals that the more streams Spotify serves, the less it has to pay out to artists(read: publishers and labels) and the more revenue it makes.

Though the filing was private Apple was purported to have stated “An interactive stream has an inherent value…regardless of the business model a service provider chooses” making direct reference to the model currently held by Spotify and YouTube. Though the comments won’t be taken into consideration until the CRB decides on the 2018-2020 streaming rates, it’s worth noting that Apple Music is itself immune from a decision either way since they negotiated directly with publishers to pay just above the current streaming rates ($0.0017 and $0.0022 per stream for non-subscribers and subscribers respectively). If such a proposal were adopted, it would most certainly mean big changes for Apple’s competitors. Apple Music is currently subscription-only with a free three month trial to start.

[source: New York Times]

Apple Fires Shots at Spotify with Latest Royalties Proposal