There’s no denying that streaming music (and streaming media in general) has become the go-to way to consume content for a lot of people. Which means it really matters how much a service pays towards the folks putting content on those services.
Update (04/16/2021): Apple has published its full letter to artists, and, indeed, the original report was right on with what Apple made official today. It didn’t break down any specifics, so there are still some questions lingering, but, for the most part, it appears Apple is leading the charge when it comes to paying out for streamed music via Apple Music.
You an check out the full letter at the bottom of this article.
The original article, updated with the full letter, continues below.
According to a letter that Apple aims to share with artists today via Apple Music for Artists (via The Wall Street Journal), the company pays out more than its primary competitor Spotify. Specifically, it turns out Apple Music pays one cent per stream. Based on the original report, that means Apple Music pays roughly double what Spotify pays per stream, with the largest streamer doling out one-third to one-half penny per stream.
Interestingly, that one penny per stream payout appears to be the “norm”, but the report also cites industry experts that say those payments can dip below that, too.
Apple’s letter notes that the payments come from the company’s streaming revenue. The letter says Apple pays out 52% of subscription revenue, or about 52 cents per dollar, to music rights holders and labels. In turn, those entities pay artists based on existing negotiations and contracts. So while Apple Music technically pays out one cent per stream, artists might not see that full amount.
It’s worth noting that while Spotify and Apple Music are direct competitors, they are very different services. Namely, Spotify has an existing, gigantic ad-supported option that doesn’t rely on monthly subscriptions from users. Apple Music does not have such an option. What’s more, Spotify has more than 340 million total users, with 155 million paying for Spotify Premium.
Meanwhile, Apple Music’s last report on that matter saw the service at “over 60 million” back in June of 2019.
Do you use Apple Music because it pays out more towards artists and labels and music rights holders? Or is that something you don’t really take into account when considering where you listen to your music?
Over at 9to5Mac, the publication was able to get their hands on the full newsletter that Apple sent out to artists today. You can check it out below. But, the major takeaways are what was confirmed in the original report: Apple Music pays out one penny per stream, on average. It doles out the same 52% headline rate for all labels, whether or not they’re a major label or an indie label. And, the number of recording artists that generated $500,000 per year has doubled as of recently.
Here’s the full letter:
This update, which is part of a new series of newsletters, looks at how creators earn royalties from Apple Music and how these have grown over time.
We believe in the value of music and paying creators fairly for their work. Since we launched the iTunes Store in 2003, we have helped millions of artists and songwriters make a living from music. As the discussion about streaming royalties continues, we believe it is important to share our values. We believe in paying every creator the same rate, that a play has a value, and that creators should never have to pay for featuring.
We pay the same 52% headline rate to all labels.
While other services pay some independent labels a substantially lower rate than they pay major labels, we pay the same headline rate to all labels. This means artists can distribute music however they like, knowing Apple Music will pay the same rate. Sign with a label or stay independent; we believe in the value of all music.
We pay the same headline rate for all compositions.
Without songwriters, there wouldn’t be recordings. That is why we have paid every publisher and licensor the same headline rate within each country. It’s also why we have invested millions to optimize publishing operations to ensure songwriters are paid as quickly as possible.
Our average per play rate is $0.01.
While royalties from streaming services are calculated on a stream share basis, a play still has a value. This value varies by subscription plan and country but averaged $0.01 for Apple Music individual paid plans in 2020. This includes label and publisher royalties.
We do not pay a lower royalty rate in exchange for featuring.
Apple Music’s team of global tastemakers hand-curate 30,000 editorial playlists. These tastemakers select music based on merit and we do not ask anyone to accept a lower royalty rate in exchange for featuring. The same is true for Apple Music’s personalized playlists and algorithmic recommendations.
As a result of our commitment to these values, Apple Music paid out royalties for more than 5 million recording artists around the world in 2020, over 1 million more than in 2019. The number of recording artists whose catalogs generated recording and publishing royalties over $1 million per year increased over 120% since 2017, while the number of recording artists whose catalogs generated over $50,000 per year has more than doubled.
Like others, we have looked at alternative royalty models. Our analysis has shown that they would result in a limited redistribution of royalties with a varied impact to artists. Per play rates would cease to be the same for every play of a song. But more importantly, the changes would not increase what all creators earn from streaming. Instead, these changes would shift royalties towards a small number of labels while providing less transparency to creators everywhere.
At Apple Music, our focus remains on artists and songwriters and finding new and innovative ways for all creators to make a living from music. With Apple Music, music fans around the world enjoy an uninterrupted ad-free experience while knowing their data is kept private and used only to enhance the overall music experience for them.