Apple Proposes Simpler Music Streaming Royalties for Songwriters; Would Make Free Streaming Costlier for Spotify and Others

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Billboard reports that Apple has submitted a preliminary proposal to the U.S. Copyright Royalty Board to simplify the process to pay songwriters and music publishers for streaming their music online. While the proposal will make the process simpler, it would make it free streaming costlier for the likes of YouTube and Spotify.

Apple’s proposal suggests an “all-in” rate that would be “fair, simple and transparent, unlike the incredibly complicated structure that currently exists.” The company proposes paying artists $0.00091 per stream, or 9.1 cents per interactive stream. This would make songwriting royalties for 100 streams equal to the royalties of one song download.

In comparison, most streaming companies nowadays pay songwriters and publishers anywhere between 10.5 to 12 percent of their total revenue that is based on a very complicated formula. This money is then divided into mechanical royalties and public performance, which is then accordingly paid to “collecting societies” and publishers.

While Apple’s proposal is simple, it will make it more costly for the likes of YouTube and Spotify to offer free streaming services as they will have to pay songwriters and music publishers based on the number of times their songs are streamed, rather than on their total revenue. If implemented, Spotify and other music streaming services might encourage or force users to switch to their paid streaming services that would benefit the overall music streaming market.

Apple and other streaming services usually negotiate their own deals with music publishers and songwriters, and don’t follow the statutory rate set by the Copyright Royalty Board. It is only with those publishers that the company cannot make a direct deal that it pays the prescribed statutory rate. A quick decision is unlikely to be taken by the Copyright Royalty Board, which comprises of three panel of judges, as they are currently in the early stages of determining the statutory rates for publishers and songwriters for 2018 to 2022.

[Via Billboard]