Apple Proposes Simplified Royalty Scheme for Music

August 08

  Last month Apple proposed a radical change to the way musicians are paid when their music is streamed online, and the suggestion could hurt rivals like Spotify and YouTube which are offering free streaming.

Right now it is not very clear how royalties are calculated. Every streaming company negotiates its own secret deals with rightsholders. The amount paid out varies per country, and per song.

Apple wants to simplify the current system, according to a copy of the filing obtained by Billboard. The company’s proposal to the Copyright Royalty Board suggests a simple, “all-in” statutory rate that would be “fair, simple and transparent, unlike the incredibly complicated structure that currently exists.” It suggests a rate of $0.00091 per interactive stream, or 9.1 cents per hundred plays. The songwriting royalties for 100 streams would equal those for one download, which has an appealing simplicity.

But Apple's proposal isn't just a noble attempt to fix the music industry The new royalty scheme would mean that any streaming services that offer free streams would have to pay out a much higher amount of royalties, as it would be calculated per play, not as a percentage of revenue. Apple Music doesn't have a free tier, of course.

The proposal by Apple isn't likely to happen overnight, though. It's still early days for the Copyright Royalty Board, and any of its decisions would only come into force at 2018 at the earliest.