NY Post: Apple offers royalties to labels and publishers that are half of what Pandora pays

NY Post: Apple offers royalties to labels and publishers that are half of what Pandora pays
Earlier on Thursday, we told you that Apple's streaming music service is being delayed by slow negotiations with record labels and music publishers. A story that surfaced in the New York Post explains this in more detail, with one source saying that Apple wanted to tie the streaming service with the launch of the Apple iPhone 5 last September. According to the story in the Post, the problem with the negotiations has to do with Apple's tough negotiating stance.

One of the richest companies in the world with $137 billion in its piggy bank, Apple is said to be offering the record labels and publishers a royalty rate of 6 cents for each 100 songs streamed. That is half the 12 cents that the leading player in the industry, Pandora, pays. The standard set by the Copyright Royalty Board is about 21 cents per 100 tunes streamed, close to the 22 cents paid by iHeart Radio. The highest figure is paid by Spotify at 35 cents per 100 steamed songs.

With Apple planning on offering its service for free and displaying ads from its iAds mobile network, the record labels and music publishers want the streaming fees from Apple, an upfront payment, and a percentage of the ad revenue according to the Post's sources. And those with the music rights have the advantage because without the content, there is no service. Getting a deal done will be determined by how badly Apple wants to start this service and the concessions it is willing to make.


source: NYPost, MacRumors via TUAW

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30 Comments

1. Droiddoes unregistered

apple being a bunch of greedy, entitled, unreasonable d***bags that do NOT play well with others? Breaking news.

5. PapaSmurf

Posts: 10457; Member since: May 14, 2012

Pity. The standard is 22 cents, and Pandora pays 12. Apple has $136 billion and they want to offer 6 cents. What greedy bas----- they are.

7. timtimity

Posts: 196; Member since: Aug 13, 2012

Record label: The offer you've made is far too low. Apple: You should be grateful. Dealing with Apple is an honor. Record label: Get out of my office.

10. JeffdaBeat unregistered

Here's the twist. Apple (and Amazon and Google) pay artists far more than Spotify and Pandora. My band gets 70% of what we sell on iTunes (same with Amazon and Google), but only get a cent or two from Spotify or Pandora. Now, what do you think your average label pays their artists for CD sales?

15. Slammer

Posts: 1515; Member since: Jun 03, 2010

Well Jeff, If Apple gets their way, you should expect even less in your pocket. As a musician myself, I consider this a major insult to us. This will drive down the payout even more. The record labels are already the evil dealer. Now you have Apple bargaining down to placate their bank. Guess who is going to get the shaft? I'm no fan of how the labels work but I'm certainly not a fan of being a low paid prostitute either. John B.

23. JeffdaBeat unregistered

Alrighty, so here's the deal. I don't often rag on labels. The reason why labels pay their artist almost nothing per album sold is because the label is the one that fronts the money for the recording. Indie labels will pay upward of $50k while majors can pay upward of $200k (probably more). They front that money and the artist has to pay it back, hopefully through sales. Now you say if Apple gets their way, we should expect less. Maybe Apple from a few years ago when iTunes was the only successful place to download music (legally). Nowadays with Amazon and Google in the mix, they can't break the rule they created. Otherwise, bands will take their music off of iTunes and direct them to other online stores. You say that Apple taking royalties from labels is an insult? Remember back in the day when labels had to pay to get their music into Best Buy, Tower, or Virgin? I pay pay a company called TuneCore $50 a year to put my music on iTunes. I'm sure Best Buy was charging labels far more than that to put music in their store...yet this is an insult? For $50 my unsigned band can have our music hypothetically downloaded by anyone in the world and Apple is insulting us? Folks can say what they want about Apple, but iTunes is probably the BEST thing that could happen for independent and unsigned artist. It gives you a store front that reaches across nations. If you're a signed musician, more power to you. If you're signed to a major label, even more power to you. You were going to get f**ked regardless of Apple paying royalties to your label. Your label wants their money back and will do what they can to recover it through your sells. The only way you make money is touring or merch. But for artists like me who have a great following, but aren't signed, iTunes is amazing and we even make a good amount of money even with Apple taking 30%. Some successful artists are getting so tired of dealing with labels, they are going unsigned. They control their music. Control their costs. And don't have to deal with paying everyone. If you're tired of your label, but you have a huge following, stop paying the middle man. On the flip side...go with Pandora. Enjoy the few cents they pay you per song.

31. Slammer

Posts: 1515; Member since: Jun 03, 2010

Jeff, I gave you a thumbs up because your comment was genuine and candid. However, I question the value you have placed on the 70/30 relationship. 30 percent to Apple seems steep when you factor in that they aren't contributing to YOUR hard work. You could easily place your art on Facebook or YouTube for a lot less and potentially have the same results. You are doing all the booking of gigs, providing merchandising, sound, lights, recording and cutting of CDs, legal tender of rights and protection, PR events, contractual requirements, marketing and promo shots Etc. Yet, Apple gets 30%? And, if you are paying others to do what I've listed, then that makes it worse dude. No label deal here due to the nature of direction. My band is a cover act. Add to the fact that my age kills all dreams of going any further. But, I have spent countless hours in studios over the years and have shared the stage with some well known artists. Artists where their music is still heard today thanks to well written material and subsequently, the power of the labels. You should be very afraid of the music industry right now. It's in bad shape and in chaos. While I do have reservations of the label companies, I will be perfectly frank here. I can't really blame them. They don't have anything to sell long term. There is no way in hell that my Nieces and Nephews are going to be listening to current billboard songs 20, 10, or even possibly 5 years from now. So, while eliminating the middle man is an option, your 30% contribution to a company that is doing nothing in promoting and supporting your act in the essentials I pointed out, is equally paying a middle man that many of my artist friends have acheived for much less. My friend is touring with Daughtry as Guitarist, Keyboardist and co-writing. Amazing opportunity. Done through YouTube and networking through American Idol. Never would've happened through itunes. Itunes is great for post notoriety. But, the labels have the power and control to push the acts to mass market. Apple isn't going to stop what they're doing and push Jeffdabeat. They just want their 30%. However, I do wish you well. Enjoy gigging while you can. John B.

12. Droiddoes unregistered

This EXACTLY.

2. appleDOESNT.com

Posts: 456; Member since: Nov 19, 2011

lol! Evil apple strikes again. what punks, really... lol The only people that make money off apple is apple, greediest company in the universe bar none...

3. PapaSmurf

Posts: 10457; Member since: May 14, 2012

6 cents for every 100 songs? Apple is basically flicking the middle finger to everyone with their "negotiation."

4. _Bone_

Posts: 2155; Member since: Oct 29, 2012

There's an incredible stock-saving lobby going on with all the Apple news upon the reduced verdict and Samsung's kick-off campaign. But even with that I predict Apple stock going under 400 come May. You may save this post.

16. Aeires unregistered

AAPL hit a 52 week low a few days ago. Where are the analysts who swore it would be over $1k at the beginning of this year?

27. _Bone_

Posts: 2155; Member since: Oct 29, 2012

Jumping on the Google bandwagon it seems.

6. PhoneAddiction

Posts: 79; Member since: Nov 07, 2012

Does Apple want people to hate them? What's crazy is how people back up Apple's arrogance by saying, "It's cool or it's bc they know they're the best." Terrible

8. Joshing4fun

Posts: 1245; Member since: Aug 13, 2010

While I don't like Apple at all, I think it's hilarious when people call Apple greedy. Its business in a capitalistic society. They're only doing what every other business would if they could. While its not "fair", its perfectly acceptable.

9. joey_sfb

Posts: 6794; Member since: Mar 29, 2012

Hogging all the wealth in one place is greed. They don't spend the money in advertising, in research, like their competitor which will result in money being pass back to consumer. Smaller companies earn less each day when dealing with mega corporate like apple till they can't sustain themselve, they eventually fold and mom and dad is back on the street. This is the result of an unbalanced economy. Powerful Mega Corp that require regulation to set things right. Can you still be their Fanboy if you don't have money to buy their products?

13. Droiddoes unregistered

I have to disagree with you on apple not spending money on advertising. I am constantly seeing ads by them advertising "new" features that have been Android standards for years (noise cancelling mic, panorama shot etc).

21. joey_sfb

Posts: 6794; Member since: Mar 29, 2012

Recently they did advertise. When they are doing well in 2008 to 2010. They are a snob and believe in free product endorsement. 138 billions hogged up in one place not benefiting anyone!

17. Aeires unregistered

Greed is never acceptable. While there's sound business practices, hoarding money and grossly over charging for products is never the right way of doing things. If you knew anything about how capitalist societies function, you'd know that the money needs to continue flowing, not sitting in off shore banking accounts, waiting for the end of days or whatever other crazy reason Apple insists on saving it for.

11. nikenturd unregistered

I guess Apple learned a lot from the Chinese huh....

14. Joshing4fun

Posts: 1245; Member since: Aug 13, 2010

Haha I'm not a fanboy. I hate Apple products. And always have. I even stated that. I'm just saying don't hate the player, hate the game. And I do hate the game and player but I don't hold this against them. Why is everyone a fanboy if they're not hating on Apple 24/7?

22. wumberpeb

Posts: 453; Member since: Mar 14, 2011

Agreed. Easy to hate them but they're probably just low balling it to start, all part of the bargaining process... ...but it's still Apple. Someone's going to cave, and it likely won't be them

18. gallitoking

Posts: 4721; Member since: May 17, 2011

is this attitude by Apple that got no carrier crap on the iphone.. Apple is a proven winner and guaranteed results..

28. PapaSmurf

Posts: 10457; Member since: May 14, 2012

Gallito, please stop.

19. InspectorGadget80 unregistered

Who gives a damn how rich they are. Pandora just ask a billion more dollars if they want your service

20. Hemlocke unregistered

Businesses aren't people. They are collections of people, but its not the same. Apple is not greedy, they are prudent. They don't answer to the labels and the RIAA, they answer to their customers who buy their products (Google's customers are ad agencies, not you) and their shareholders. They have a fiscal responsibility to get the best deal possible. Why can they ask for better terms than Pandora? They make the labels more money and they have a MUCH larger installed user base. This is just basic economics.

25. Taters

Posts: 6474; Member since: Jan 28, 2013

Um Apple made their 100 billion from bucking economic rules. Why do other companies have to follow them when Apple doesn't. Apple has money and the comoanies should ask for more.

29. Hemlocke unregistered

Sorry, economics just doesn't work that way. Greater economies of scale = less dollars spent. That's why the SGSIII costs roughly what the iPhone 5 does to produce, even though the 5 should cost much more to build. Reversing the situation, Apple could build the SGSIII for less than what Samsung can because of Apple's economies of scale.

24. Taters

Posts: 6474; Member since: Jan 28, 2013

Damn Apple and their greed.

30. Reluctant_Human

Posts: 913; Member since: Jun 28, 2012

The whole music industry is flawed in the business model and greed. It's just a mass exploitation of artists and consumers.

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