Apple Music Pays Industry Standard Subscription Revenue Fees to Record Labels

Apple plans to charge between $9.99 and $14.99 per month for its upcoming on-demand Apple Music service, with 58 percent of its subscription revenues going to record labels. For every $9.99 Apple collects from subscribers in the United States, it will pay out $5.80 to labels. Additionally, Apple pays approximately 12 percent to publishers and/or songwriters, leaving the company with somewhere around 30 percent of the revenue from the Apple Music service.

The figures come from a leaked document shared by Digital Music News earlier this week. In its article, Digital Music News erroneously suggested Apple was paying less to music labels than other streaming music services like Spotify (after failing to take into account the publisher's fee), but as it turns out, the 70 percent that Apple pays out to rights holders is on par with the industry standard.

applemusiccontract58excerpt
In some circumstances, the fees provided to rights holders can vary, such as when student accounts are involved or when the Apple Music service is provided through a third-party service like Google Play or bundled into a carrier package. During Apple's three-month free trial period that it provides to all subscribers, it is not required to pay any fees to rights holders.

Profit sharing and value concerns often cause a lot of tension between streaming music services, record labels, artists, and other rights holders. Many artists have complained about the low fees they receive from streaming music services, primarily those with free streaming tiers. Taylor Swift famously pulled all of her music from Spotify last year, claiming that by offering music for free, Spotify was undervaluing her work.

With Beats Music and Rhapsody you have to pay for a premium package in order to access my albums. And that places a perception of value on what I've created. On Spotify, they don't have any settings, or any kind of qualifications for who gets what music. I think that people should feel that there is a value to what musicians have created, and that's that.

Apple does not offer a free ad-supported tier for its on-demand streaming music service, choosing to supplement instead with an accompanying radio service. Apple has even allegedly urged record labels to cease offering deals to services that do offer free ad-supported listening tiers, like Spotify and YouTube.

Apple's focus on paid-only music is unsurprising, given the current state of the streaming music industry. Spotify recently announced 75 million users and 20 million paid subscribers, but Spotify continues to operate at a loss. With more than 800 million iTunes accounts with credit cards attached at its disposal, Apple Music could quickly become one of the most profitable streaming services, as long as Apple can draw in customers.

Apple Music launches on June 30 as part of iOS 8.4.

Top Rated Comments

Reason077 Avatar
77 months ago
How long before record labels are irrelevant?

Artists and publishing companies must be looking at that 58% cut the labels are getting and wondering why they don't just go direct to Apple and Spotify to distribute their content.
Score: 23 Votes (Like | Disagree)
ChrisCW11 Avatar
77 months ago
Lets get one thing clear; the true purpose of Apple Music in the long term, as amicable it may be to persist in wanting to be the leader of music services (remember Ping?), is for Apple to have a world-wide radio broadcast system. And in this sense they've already won, easily: Up the date, to the second broadcasting alongside every single other person that has an iOS device.

The music streaming stuff is just a revenue stream for Apple; the channel to communicate with everyone, in real time is the real goal and honestly everyone is already a part of it.

This is the new world. Welcome. :apple:
I really could give a rats ass about hearing someone babbling inanely from LA, NY or London. If I listen to the radio I want local content, news and things that are relevant around me. I even listen to local music talent that would never show up on Apple Radio. On my iPhone I don't need a person to announce a song or boil down important global issues into trite single liners. Not even sure what a global DJ is going to say?

Just play music and shut up, I don't need to pay money to hear someone tell me what song played. Personally I think Apple's "Global Radio" is a contrivance of a bygone area.
Score: 11 Votes (Like | Disagree)
HurtinMinorKey Avatar
77 months ago
Artists will soon be able to, as part of the connect feature of AM.
If you think Apple Music will have the effect of mitigating label market power, you're going to have a bad time.
Score: 9 Votes (Like | Disagree)
farewelwilliams Avatar
77 months ago
but how will Kanye afford another car?
Score: 9 Votes (Like | Disagree)
Paradoxally Avatar
77 months ago
How long before record labels are irrelevant? And artists/publishing companies go directly to companies like Apple and Spotify to distribute their content?
Artists will soon be able to, as part of the connect feature of AM.
Score: 6 Votes (Like | Disagree)
Rogifan Avatar
77 months ago
I really could give a rats ass about hearing someone babbling inanely from LA, NY or London. If I listen to the radio I want local content, news and things that are relevant around me. I even listen to local music talent that would never show up on Apple Radio. On my iPhone I don't need a person to announce a song or boil down important global issues into trite single liners. Not even sure what a global DJ is going to say?

Just play music and shut up, I don't need to pay money to hear someone tell me what song played. Personally I think Apple's "Global Radio" is a contrivance of a bygone area.
Yes, yes and yes. And if I want to listen to radio I just pull up my TuneIn app and I have access to 40K radio stations, including all the BBC Radio stations that Beats 1 is mimicking.
Score: 6 Votes (Like | Disagree)

Top Stories

april 2021 event coverage feature

Apple Event Live Coverage: New iPads, AirTags, and More Expected [Event Over]

Tuesday April 20, 2021 9:07 am PDT by
Apple's virtual "Spring Loaded" event kicks off today at 10:00 a.m. Pacific Time, with Apple expected to debut updated iPad models and perhaps some other hardware such as AirTags or iMac models based on Apple silicon. Apple is providing a live video stream on its website, on YouTube, and in the company's TV app across its platforms. We will also be updating this article with live blog...
m1 imac colors

Apple Announces Redesigned iMac With M1 Chip and Seven Color Options

Tuesday April 20, 2021 10:22 am PDT by
Apple has announced a new, redesigned 24-inch iMac, featuring an M1 chip, a 4.5K display, and a range of color options, as well as an improved cooling system, front-facing camera, speaker system, microphones, power connector, and peripherals. The new iMac features a completely new compact design, and comes in a range of seven striking colors, including green, yellow, orange, pink, purple,...
iphone 12 preorder purple

Apple Launching iPhone 12 and 12 Mini in New Purple Color on April 30

Tuesday April 20, 2021 10:08 am PDT by
Apple today announced that the iPhone 12 and iPhone 12 mini will be available in a new purple color starting April 30, with pre-orders starting this Friday. Apple is also releasing a new MagSafe Leather Case and Leather Sleeve in Deep Violet, a Silicone Case in Capri Blue, Pistachio, Cantaloupe, or Amethyst, and a Leather Wallet in Arizona, all available to order beginning today. iPhone...
14

Apple Says iOS 14.5 Will Be Released 'Next Week'

Tuesday April 20, 2021 11:08 am PDT by
Apple today in a press release about its new AirTag item tracker announced that iOS 14.5 and iPadOS 14.5 will be available starting "next week." iOS 14.5 and iPadOS 14.5 are packed with new features, including the ability for iPhone users who are wearing an Apple Watch to unlock the iPhone with Face ID while wearing a mask. iOS 14.5 and iPadOS 14.5 will also be the minimum software versions...
ipad pro with m1 chip

Apple Introduces Next-Generation iPad Pro With M1 Chip, Thunderbolt, 5G, XDR Display, and More

Tuesday April 20, 2021 10:40 am PDT by
Apple today announced the next-generation iPad Pro with the same M1 chip found in the latest Macs, Thunderbolt and USB4 support, 5G connectivity on cellular models with mmWave support in the United States, and more. With an 8-core CPU and 8-core GPU, Apple says the M1 chip in the new iPad Pro provides up to 50% faster performance and up to 40% faster graphics compared to the A12Z Bionic chip ...
f1618938547

Apple Announces AirTag Tracking Devices Starting At $29 Each

Tuesday April 20, 2021 10:10 am PDT by
Apple today announced AirTag, a Tile-like Bluetooth tracking device that's designed to be attached to items like keys and wallets for tracking purposes, letting you find them right in the Find My app. AirTags are accessories for attaching to backpacks, luggage, and other items. Any U1 device like the iPhone 12 can be used for precision finding to guide you right to the item you're looking...
Ports 2021 MacBook Pro Mockup Feature 1 copy

Stolen MacBook Pro Schematics Confirm Apple's Plans to Add More Ports and Remove Touch Bar

Wednesday April 21, 2021 10:31 am PDT by
Schematics stolen from Apple supplier Quanta Computer outline Apple's plans for the next-generation MacBook Pro models that are expected in 2021, and clearly confirm plans for additional ports and a return to MagSafe. MacRumors saw the schematics after they were leaked online, and some of them feature the logic board of the next-generation MacBook Pro. On the right side of the machine,...
iPad Pro

New 12.9-Inch iPad Pro Will Be 0.5mm Thicker to Accommodate Mini-LED Display

Monday April 19, 2021 11:30 am PDT by
The upcoming 12.9-inch iPad Pro will be thicker than the previous-generation version, likely due to the inclusion of the mini-LED display. We've heard several rumors about the change in thickness, and now leaked design images have confirmed it. A source that designs accessories for Apple devices sent MacRumors a series of photos that feature exact dimensions for the new iPad Pro models, and...
iPad Pro Feature Orange

Wedbush Analysts Say 'Spring Loaded' Event Will Debut New iPads With 'Modest Price Increase,' Along With 'a Few Surprises'

Monday April 19, 2021 6:37 am PDT by
Apple is planning to launch a new entry-level iPad, iPad mini, and iPad Pro at its "Spring Loaded" event tomorrow, along with "a few surprises," according to Wedbush analysts. In a new note to investors, seen by MacRumors, Wedbush analysts Daniel Ives and Strecker Backe explained that the iPad will be the main focus of Apple's "Spring Loaded" event, with new entry-level iPad, iPad mini, and ...
maxresdefault

Apple Event 2021: Everything Apple Announced at Its 'Spring Loaded' Event in Just 6 Minutes

Tuesday April 20, 2021 4:23 pm PDT by
Apple today held its first event of 2021, and it was one of the most exciting events that we've seen in some time. Apple announced a whole slew of new products, including an M1 iMac, an M1 iPad Pro, a refreshed 4K Apple TV, and the long-awaited AirTags. Subscribe to the MacRumors YouTube channel for more videos. It took Apple an hour to introduce all of the new devices during its virtual...