Despite swift change by Apple, the tech giant has yet to reveal royalty rates for streaming music

Despite swift change by Apple, the tech giant has yet to reveal royalty rates for streaming music
Taylor Swift took Apple to task for its original decision not to make royalty payments to artists, writers, producers and record labels during Apple Music's three-month free trial period. In her open letter to Cupertino, the star made it clear that she wasn't being a rabble rouser just to line her own pockets. Maybe she didn't come out and say it like presidential hopeful Donald Trump did, but Swift insinuated that she is wealthy and doesn't need the money like a new performer might.

While Swift was the big winner in the eyes of the public following Apple's decision to reverse its plans, the Cupertino tech titan also managed to score some points with Mr. and Mrs. John Q. Public for its willingness to turn on a dime. Speaking of dimes, the Wall Street Journal says that Apple has yet to figure out how it will divide Apple Music royalty payments. Apple will hold aside 71.5% of revenue for royalties. This is higher than the 70% of gross paid out by rivals like Spotify. 

Music streamed via Spotify during its 99 cents a month promotional period results in half of the royalties normally paid. And the ad-supported free tier of service pays out 20% of the regular rate. Of Spotify's 60 million subscribers, 45 million use the free ad-supported tier. In December, the streamer paid out $25.7 million in royalty payments to artists, writers, producers and record labels for songs that were streamed to listeners paying $10 a month for its premium service. Music streamed to those using the free tier earned royalty payments totaling $5.8 million.

The bottom line for Apple is that Swift's insistence that Apple pay for streaming music, even during the free three-month trial, will cost it millions of dollars and increase the price it pays to offer Apple Music. But Apple has $193 billion in cash, which means it won't take a huge hit in the pocketbook. At the same time, Apple will continue to have an outstanding reputation among famous artists like Taylor Swift. The latter even took time to praise Apple in her open letter even while disagreeing with the company. Apple's 180 degree change also cements the Cupertino company's reputation as a friend to Indie labels and the artists they record.

While Apple changed its mind, Taylor Swift did not. Her album "1989" will remain excluded from Apple Music based on her decision.

source: WSJ

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18 Comments

1. javy108

Posts: 1004; Member since: Jul 27, 2014

Swift is right, no one works for free per 3 months, specially for artist that does have only 1-hit wonder... Their musicians and they sell their music, artists are no asking free iProducts from Apple, Apple should not ask them music for free.

4. magnanimus

Posts: 565; Member since: Mar 29, 2013

Absolutely right. To be honest I didn't think Apple would cave in to such demands considering their "if you don't like it, then buzz off" mentality.

19. almostdone

Posts: 449; Member since: Sep 25, 2012

Apple caved in because they did not want bad publicity at the launch of their new streaming service. They need a good start to compete with rivals like spotify.

6. Athene

Posts: 72; Member since: Jun 22, 2015

Why must PA always be highly uneducated when reporting news? Apple had several interviews and explained the new royalty rates for the trial, as well as attaining the current rate and not changing it. Something that I would suggest, is a little research. This was all over one of the internets biggest news sources last night, Reddit.

17. Alan01

Posts: 640; Member since: Mar 21, 2012

FYI. According to the Wall Street Journal, which was the source of the story, Apple hasn't even decided how to split the royalties, nor have they passed along any type of calculation to the writers, producers, artists etc. From the WSJ: "Apple declined to say how much it plans to pay during the trial period, though it said the rate will increase once customers start paying for subscriptions. In the first three months of the service’s life there will be no subscriber royalty rate on which to base the rates. The company could find other ways to calculate a rate and is expected to share its plans with music companies soon." Next time, please read our story completely before tossing around your bogus insults. Regards, Alan F.

18. Athene

Posts: 72; Member since: Jun 22, 2015

I read your story, sir. Like my comment said, a little more research and you would have been a little farther than WSJ in having some answers, because they were posted last night. PS: No intended insults Mr. F, just frustrated lately in the lack of quality of some stories. Definitely not what PA used to be 3+ years ago up to when you launched. Regards, A loving PA reader

9. dimas

Posts: 3404; Member since: Jul 22, 2014

I'd like to see apple burn a little investment for apple music. Since they got bigger accounts than some developing countries, it's good to see if they take risk on giving out bigger royalties to artist.

* Some comments have been hidden, because they don't meet the discussions rules.

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