It’s been revealed that Apple will pay zero royalties to artists that are streamed during the 3-month Apple Music trial period.
The entire service – Apple’s music streaming service to rival the likes of Pandora and Spotify – was announced at WWDC 15 earlier in June, and it all seemed pretty exciting. Users would even be able to try the service for a huge three months without paying the regular $9.99.
However, it looks like the independent labels are yet to reach a deal with Apple as it stands, due to the company wishing to negotiate with labels directly. This is what they are currently doing with major labels, but independents generally negotiate deals like this through a representative network called Merlin. Currently, Apple doesn’t wish to talk to Merlin, notes this article on Engadget.
As for the royalties, Digital Music News has noted the lack of royalties during the trial period. Though that article mentions Apple only paying 58% of revenue to licensers, it’s since been reported that Apple will in fact being paying a little over the 70% that’s standard for services like Spotify. The misconception seemingly revolves around publishing rights and overall subscription revenue.
The lack of royalties, since confirmed by Apple executive Robert Kondrk in an interview with Re/Code, has become a concern for many involved.
Though deals have been struck between Apple and major labels, the service could be severely lacking in independent artists. Furthermore, these deals are struck between Apple and labels. What will it mean to artists that have a big release set for the summer? During the three months from the end of June where any potential Apple Music subscriber has access to three months of free use, the artist may well lose out on any royalties from Apple Music streaming.
Though Apple will be playing slightly more royalties that Spotify (reportedly 1.5% more in the US, 3% elsewhere), Spotify does pay royalties during its 1-month trial period, and on its free streaming tier, something which Apple doesn’t have. However, Apply says the increased revenue payment makes up for all of this. Though whether the hypothetical artist mentioned above will see the benefit from that is uncertain.
Whether Apple will be able to strike up a deal with independent artists, or even keep major label artists happy, who’s latest product could be used to advertise the service with no chance of a kick back, is yet to be seen.