Apple Music stirs up the streaming payment debate with new claims

The streaming payment debate has been stirred up by Apple Music’s new claim it pays $0.01 per stream, which is double Spotify’s rate of roughly one-third to one-half cent per stream.

The US tech giant also says that its rate is the same for the major and independent sectors.

In a memo posted on its artist dashboard, Apple Music advises, “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.”

Apple Music asserts it pays 52% of its subscription revenue to record labels.

Spotify, in comparison, claims that it pays two-thirds of every dollar of revenue to rights holders, with 75% to 80% of that going to labels.

That breaks down to 50 to 53 cents on the dollar, depending of course on agreements between the service and different labels.

In an obvious swipe at main rival Spotify, it notes that the 52% headline rate applies 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.”

Spotify’s argues a per-stream rate is irrelevant because fans don’t pay per song, and services do not pay per stream but divvy up from a royalty pool.

It set up the Loud & Clear website last month to be transparent and explain to the music industry and the public how payment works.

Whole argument

The whole argument about the Spotify/Apple Music pay structure is muddied because of the way the two companies operate.

Spotify has both free and paid tiers, while Apple only caters for subscribers.

One has to factor in lower payment plans for families or students, which vary in countries, and discounts in newer markets.

In Spotify’s last financial posting in February 2021, it reported 155 million premium subscribers and 345 million monthly active users – a 24% and 27% respective growth year on year (YoY).

But despite growth in listeners and ads now representing 13% of revenue (up from 10%) the sharp-eyed folks at the Wall Street Journal noticed that due to discounts and deals, revenue per user fell by 8% to €4.26 (AUD$6.59) YoY.

Spotify still made a loss of €125 million ($193.5 million), down from the €209 million ($323.6 million) loss from the year prior.

As for Apple Music, its last quarterly financials in November 2020 – when it declared revenues of US$64.7 billion – indicated subscriber figures of 60 million. It is estimated to be now 72 million.

So Spotify argues it is paying lower rates on a greater amount of streams, while Apple Music is paying a higher rate but with fewer streams.

Current speculation is that Apple should introduce a free tier as it would bring its user figure to 150 million, but its official stance is that there will never be one.

During the British parliament’s hearing into the economics of music streaming in February, its music publishing head Elena Segal stated firmly ad-supported services don’t generate enough revenue to support a healthy overall ecosystem.

“It would also really go against our fundamental values on privacy,” Segal said.