chump change
chump change

Apple Wants A Big Bite Out Of Musicians' Incomes

The rule book on music streaming royalty payments often comes across as some kind of bad comedy sketch... but it is fast turning into a horror story.

Digital Music News reports on a leaked document purporting to show that Apple Music is offering indie labels knockdown royalty rates on subscription revenues. As if this isn't bad enough, the Cupertino gadget maker sitting on $194B in cash also wants its royalty payments waived in the free 3-month trial period when it launches on June 30.

According to the tech daily, and also reported on in Music Business Worldwide, a 58% royalty rate on subscription revenues is comparable to what Spotify is paying the indie labels today, but this doesn't make it right — and it certainly doesn't assuage the feelings of a great many recording artists receiving royalty payment cheques that amount to little more than chump change.

The leak is more grist to an already simmering feud the creative communities have over accounting practices employed by the major labels. Specifically, artists and music publishers want to know how the majors treat multi-million dollar advances paid to them for licensing catalogues to new streaming entities such as Apple Music.

The murkiness of the world of music streaming has become so pronounced that government regulatory bodies in Washington and Brussels are wanting answers. 

Simmering in the background is an even bigger battle over the royalty splits that streaming companies pay to record labels and artists, versus music publishers and their composer/writer clients.

Last year iTunes accounted for three-quarters of all digital music sales — $6.9B, of a total market of around $9.3B (Asymco). With Apple shifting its core business in music from iTunes to music streaming subscription fees, a lot of people, including investors, are feeling mighty nervous. As the Barrett Strong song goes, "Money don't get everything, it's true, but what it don't get, I can't use. I need money, that's what I want." It's a refrain an increasingly belligerent chorus is singing these days.

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