Apple Music reveals its revenue share with labels

Apple has confirmed that within the US, Apple Music will pay rights-holders 71.5% of its subscription service, while countries outside the US will pay an average of 73%.

In an interview with Re/code, Apple executive Robert Kondrk stated that together with label executives, Apple is working on these figures for their new streaming service.

The figures come after a copy of an Apple Music contract was leaked online, revealing that Apple was to pay just 58% of its revenue to music rights holders.

Apple Music’s confirmed rates now place the streaming service on par with its competitors, who also issue a standard average of about 70% to artists. Spotify, for example, pays out 70% of their revenue and have reportedly issued over $2 billion in royalties since 2008.

However Apple, along with major label executives, has been vocal against Spotify’s freemium model.

“We want to accelerate paid subscription,” said Lucian Grainge, CEO of Universal Music Group.

“Ad-funded on-demand is not going to sustain the entire ecosystem of the creators as well as the investors.”

In March, Rdio confirmed to TMN that its free service received support from rights holders.

“We believe that the ad-supported radio model is good for the industry because both artists/labels and composers/publishers are paid per play – and radio isn’t a replacement for listening to what you want. That can only happen via purchasing music or a subscription.”

The streaming service also confirmed that they paid over 70% of its revenue directly to rights holders. This is split between the artist, label, composer and publisher, and has existed this way within the music download business for over a decade.

However, Apple has not confirmed whether the 70% will go towards songwriters or recording artists, since these payouts are left to the label’s discretion.

Guvera, on the other hand, told TMN that they did not reveal the percentage figures they pay to artists.

No revenue will be paid to rights-holders signed to indie labels during Apple Music’s three-month trial period. This has caused a rift in negotiations with indie labels, especially as Apple have not yet confirmed whether the free trial will begin on June 30 and end on October 30, or whether individual start dates will be issued to each new subscriber.

The head of a large independent label commented to Digital Music News that they would withhold their artists unless Apple offered a better deal.

“I don’t need to call Apple to tell them, “deal with this, or you’re looking at more than 70% of the indies holding out.” This is just very clearly a raw deal.”

Apple Music is set for a worldwide launch on June 30th.