Suggestions that Apple will pay music owners just 58% of subscription payments for its Apple Music service are not true, says the company. Robert Kondrk, the Apple VP who has been working with Eddy Cue on negotiating deals with music labels, says that company actually pays a little more than the industry-standard 70% figure.
The 58% number doing the rounds earlier this month appears to be based on a misunderstanding: that’s the usual cut for the label, which owns the recording; the publisher, which owns the rights to the song itself, gets a 12% cut. Add the two together, and you get the 70% number that is standard for streaming music services.
In the U.S., Apple will pay music owners 71.5 percent of Apple Music’s subscription revenue. Outside the U.S., the number will fluctuate, but will average around 73 percent, he told Re/code in an interview. Executives at labels Apple is working with confirmed the figures.
But the most interesting revelation to me was that Apple is not paying music labels a single cent for tracks streamed during the three-month free trial period …
Most free music streaming – current market leader Spotify included – is paid for by advertising. The music labels and publishers still get their 70% cut of that revenue. What Apple is offering is a completely free trial, without ads, lasting a full three months. During the time, according to Re/code, Apple won’t have to hand over a single cent to the labels.
Kondrk says that deal was why Apple will pay slightly more than the standard 70%: it’s the quid pro-quo for the lengthy free trial. AT&T customers were also last year offered a three-month free trial of the Beats Music service, perhaps setting a useful precedent.
There have also been suggestions that Apple was pressing labels to engage in anti-competitive behavior in respect of competing services. The European Commission, the DOJ and FTC are all investigating claims that Apple pushed labels to withdraw support for free, ad-funded services (read: Spotify) as part of the contract negotiations for Apple Music. Universal, one of the labels named in the allegations, said that no such agreement has been reached, nor would it be. The statement notably stopped short of denying that the idea had been discussed.
