Looking to spank Spotify, Apple proposes new flat rate royalty plan for music streaming

Looking to spank Spotify, Apple proposes new flat rate royalty plan for music streaming
Looking to land a blow to its music streaming rival Spotify, Apple has sent a proposal to the U.S. Copyright Royalty Board that would change how royalties are calculated. Obtained by the New York Times, Apple's plan would pay songwriting royalties of 9.1 cents for every 100 times a song is streamed. The proposal would replace the current complex formula used to compute these payments.

Whether it was by design or a coincidence, one of the music streamers that would be affected the most by Apple's proposal would be Apple's chief music streaming rival Spotify. The latter is the industry's biggest player with 100 million subscribers. 30 million pay $9.99 a month for 'premium' service while 70 million listen for free using an ad-supported tier. It is this free tier that would be affected the most by Apple's proposed royalty plan.

Unlike Spotify, Apple doesn't have a ad-supported plan for Apple Music. On the other hand, Apple does give iOS and Android users a one-time three-month free trial. Once the three months is over, the paid service kicks in. Apple's proposed flat-rate royalty plan would affect Spotify's ad-supported service, making it more expensive to run. 

Royalties are a huge expense for music streamers to pay. For each $9.99 that Apple receives from its paid subscribers each month, $7 goes to songwriters, performers, producers and the music labels. How hard is it to make money streaming music? After being in business for 10-years, Spotify has yet to report a profit.


Besides Apple, other companies like Spotify, Google, Pandora, Amazon (and the Recording Industry Association of America) were expected to send in their own proposals to the Copyright Royalty Board. The Board is looking to replace the confusing and complex system now in use, with a new and simple formula to cover downloads and interactive streaming services from 2018 to 2022. The deadline to file was yesterday, and the Board has not released any of the proposals.

source: NYTimes

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84 Comments

1. Unordinary unregistered

They already have "spanked" Spotify. At this rate Apple Music will developer to be what took Spotify a friggen decade to be, and more.

2. tedkord

Posts: 17302; Member since: Jun 17, 2009

Yes, less than half the subscribers is some spanking. This is Apple being Apple, trying to fix prices rather than compete.

4. Unordinary unregistered

Look at Spotify's subscriber charts equal to what Apple has right now, back then lol. Oh boy, and you call people blind. LMAO.

13. tedkord

Posts: 17302; Member since: Jun 17, 2009

What does back then have to do with anything? Look at them both now. And let Apple compete, instead of trying to fix prices (as usual).

21. Unordinary unregistered

You and your upvoters need educational assistance xD

24. tedkord

Posts: 17302; Member since: Jun 17, 2009

No, you need to stop trying to spin. You claimed Apple had already spanked Spotify. Spotify demonstrably has millions more subscribers, and Apple feels compelled to try and fix prices rather than compete directly with them. That is not a spanking by any definition, even when looking "back then."

36. TechieXP1969

Posts: 14967; Member since: Sep 25, 2013

First off, Spotify created the streaming music genre. Apple comes and reaps the benefits of what someone else started. What's funny is the same thing Q0ple got pissed about when Microsoft did it to them. The same with smartphone. Apple rushed to.make an impporvwment tat was already coming. GOOGLE and the OEMS come and reap from what Apple rushed to start. But at East all the OEMS compete on the open market Yes Samsung did get busted with others for trying ro price fix tvs. But they still competed too. Apple wants to make money the easy way. Let someone else make it popular now, they come and steal it and use the power of their name to run the other guy out. They don't believe in sharing. Remember their philosophy about IBM. They want to get rid of Bug Brother because they wanted to be Big Brother. Apple has got to sustain themselves because they no longer yet again have the hardware advantage. They are now realizing what Bill Gates said years ago. The money isn't in the hardware, it's in the software. Once the hardware reaches its pinnacle and offers nothing new, the money from it will die. That is why a Microsoft avoided the hardware business for years. OEMS in the hardware business aren't making the money that did back in the 80s and 90s. Apple is not going to be making the money's it's been making either. The Mac is been hanging from a thread for years. The iPad sale shave deop. IPAD sales have drop. IPHONE sales have dropped. Apple needs to secure a software and services platform to keep their hardware brand alive or it will die. Ask IBM about that! IBM tried to establish a software and services platform for their brand. OS2 failed vs Windows. Lotus was killed by Office. Where is IBM now? That is where Apple will be. MICROSOFT established themselves on software and created a brand everyone else needs to survive. When you make people need you, you prevent them from being able to leave you. Bill Gates knew this and tried to educate Jobs who wouldn't listen.

38. kiko007

Posts: 7493; Member since: Feb 17, 2016

What exactly are Android OEMs "reaping" from their efforts (with the exception of Sammy ofc)? Debt? And you've got the meanest double standard I've ever seen. Samsung tries to price fix as well, but they were "just being competitive" am I right. If that were Apple, you'd be rolling in your twin bunk bed (with SpongeBob sheets becuz reasons) screaming "Those mothaf**kas dunn' went too far......evil!!!!!" akin a toddler. Glad to know you're too biased to be rational. BTW, Apple stocks are at a 4 month high, they expect to ship an all-time number of iPhone 7 models, and their service revenue has doubled within the last two years. MSFT makes less than Apple every quarter, why are they your go to? Aren't you the same person shafting MSFT mobile efforts at every opportunity? What changed your tune? Regardless, your opinions are worthless because they lack common sense. Yes, what Apple is doing is morally questionable. No, they don't need todo this to succeed. They already make twice what Spotify does per stream, they're just s**tting on Spotify's grave at this point.

39. Unordinary unregistered

Actually, Pandora has. Stopped reading after that stupid sentence lol.

59. JunitoNH

Posts: 1946; Member since: Feb 15, 2012

That was stupid, Spotify wasn't even around back in the day.

67. trojan_horse

Posts: 5868; Member since: May 06, 2016

But his point still stands!

46. Settings

Posts: 2943; Member since: Jul 02, 2014

Do you translate your comment from ur native language to english?

58. JunitoNH

Posts: 1946; Member since: Feb 15, 2012

Actually Pandora, Rhapsody, and others were around before Spotify.

54. Leo_MC

Posts: 7190; Member since: Dec 02, 2011

Fixing prices is illegal and there's no indication that Apple is doing such a thing.

64. tedkord

Posts: 17302; Member since: Jun 17, 2009

That's what the Apple militia said during the ebook investigation.

22. kevv2288

Posts: 290; Member since: Jul 30, 2015

Yeah because back then streaming music was still new and not alot of people liked it yet. If spotify came out now it would have this many subscribers right away too

31. vincelongman

Posts: 5677; Member since: Feb 10, 2013

I hope Apple Music/Tidal fail and get shut down I usually love more competition But Apple/Tidal are paying off artists for exclusives deals, which IMO is very anti-consumer They should focus on improving thier app and offering more features, instead of taking content away from together competition

33. kiko007

Posts: 7493; Member since: Feb 17, 2016

Anti-consumer and Anti-competitive practices are two separate issues. One carries it's own doctrine that's enforced by Anti-trust laws. The other is a symptom of rising prices, but is not against any laws. Neither of the Music outlets you mentioned are doing anything with by paying artists, but what Apple is doing happens to be strong arming the competition to spend more and make less. Besides, exclusivity IS a feature for better or worse. Neither business will fail, because they hold just about all the leverage within the streaming business.

34. kiko007

Posts: 7493; Member since: Feb 17, 2016

*Wrong* Let me make it clear, I don't like what Apple's doing here. Paying songwriter's more is all well and good, but it appears that the folks in Cupertino are trying to destroy Spotify (literally) by doing this. Granted, Spotify has been "outspoken" about their displeasure with the premium they payto stay in the App Store, but Apple should be above totally annihilating everyone monetarily. Namely since they don't have to do this in the first place.

37. TechieXP1969

Posts: 14967; Member since: Sep 25, 2013

Except they do. From Apple perspective. They want every market to themselves. When Microsoft tried to share the market, Apple.suwd them that's why Microsoft tried to drop them on they heads and they did. They did the same to Adobe, Samsung and even Intel. All the ones who's @$$ they went back and kissed when they were struggling. Who was the first they've an too when Jobs came back? Then after PPC failed, who did they go running too. Apples own office suite is a complete failure. Apple.is terrible at software, hardware isn't gonna last. Now they are trying to offer services to support their platform without using a 3rd party. Something Gates tried to get them to do years ago.

40. kiko007

Posts: 7493; Member since: Feb 17, 2016

They don't. They could literally bankrupt Spotify right now if they wanted to, and it still wouldn't make a difference to their (Apple's) bottom line. Apple makes more money from Spotify than Spotify makes money from Spotify basically, and that's still pennies to Apple. Also, you know nothing of the tech world if you think hardware is going anywhere anytime in the near future. There is quite possibly a ten year gap between the this moment, and the next "smartphone" level revelation. As long as that's the case, Apple's gonna dominant profits, and maintain second to Samsung in individual market share.

57. vincelongman

Posts: 5677; Member since: Feb 10, 2013

Yep, I didnt say it was against any laws Just that Apple/Tidal are taking content away from their competition Which is bad from a consumer pov

3. ctdog4748

Posts: 797; Member since: Mar 05, 2016

Apple, once again winning. Spotify has obviously failed as a "business", since it can't even generate a profit. Don't hate on Apple for the fact that Spotify is run by a bunch of incompetents.

5. Unordinary unregistered

I wouldn't go as far as calling them that... Spotify is a very solid company and they did music streaming right, when no one else was in town. Don't hate.

20. ctdog4748

Posts: 797; Member since: Mar 05, 2016

I'm not hating, just stating facts. If the people running a business can't figure out how to generate profit, then they are incompetent. Spotify can not last forever just breaking even, or being in the red.

48. tedkord

Posts: 17302; Member since: Jun 17, 2009

I just reread your comment. Still can't find the fact.

15. tedkord

Posts: 17302; Member since: Jun 17, 2009

Obviously, with many more subscribers, and Apple feeling the need to fix prices rather than compete, Spotify must have really failed.

41. TechieXP1969

Posts: 14967; Member since: Sep 25, 2013

Apple.isnt going to make a profit either. They are using it to keep you fools stuck on your iPhones and iPad's and hosting you sign up. Their is no profit in streaming. If Apple can stick you to Apple Music. Then they stick you to IOS. Sure it's available le on Android, but we don't need it. Everything Apple if offering on Apple Music is free. There is no money is streaming because they play th3 same crap on the radio. Only a goober would pay to listen to something to can hear for free. Apple is going to lose sales on selling music and albums which is why they moved to subs. Because Spotify, MS, Google and others offer this and it killed Apple sales. Now they want to cut everyone else out of what they started. Apple didn't start the music business, they rode of the market creates by Sony, the same company u who made the iPhone. Steve Jobs said of Microsoft thst they have no original ideas. Look at Apple. I cant wait until all this stealing of others ideas, to backfire in their face. When Apple finally falls, they ain't never getting back up and the industry will finally move forward.

42. kiko007

Posts: 7493; Member since: Feb 17, 2016

I hate to keep telling you this, but Apple already does make a profit streaming. Their isn't any money in "free streaming" which is what Spotify does. Over 70℅ of their users don't have an active subscription. Blame Spotify for it's losing money, not Apple.

45. tedkord

Posts: 17302; Member since: Jun 17, 2009

They're isn't much money in free streaming, but Spotify has millions more paying subs than Apple, at the same monthly cost and a slightly lower royalty rate. Therefore, likely if Spotify isn't making money, neither is Apple.

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