Apple proposes higher royalty rates for music streaming rivals

Apple has put together a proposal to set fixed songwriting royalty rates for music streaming services. The government filing, obtained by The New York Times and not made public by Apple, was crafted in collaboration with the Copyright Royalty Board and it would set songwriting royalty rate at 9.1 cents per 100 streams. Although the change would simplify what has long been a mystifying and complex royalty system, it would also significantly hike costs for competing streaming services, namely Spotify. It’s important to note that because Apple struck its own deals with record labels for its Apple Music service, the company may be able to avoid following the rules of its own proposal.

The new rates, if adopted, would drastically alter how songwriting rates are decided, how much artists receive, and how costly it is to operate in the streaming business. As it stands, companies like Spotify, Google, and Pandora pay out royalties according to complicated federal laws. These new rules would take effect in 2018 and remain active until 2022 as part of a Copyright Royalty Board proceeding that takes place every five years. The proposal, which may be amended in the future and will be reviewed by a panel of federal judges, does not cover rates for recordings. Those are calculated according to a different set of standards.

Apple wants songwriting royalties fixed at 9.1 cents per 100 streams

Apple’s proposal could be perceived as a harsh blow against Spotify, a company quickly becoming its central rival in the music industry. Spotify allows users to either pay $10 a month to stream music with no ads or listen to its ad-supported tier for free. Apple considers the Swedish company’s practices harmful to musicians and publishers. Apple Music does not offer a free tier and only lets users pay to stream music, a feature that has attracted the favor of high-profile artists like Drake and Taylor Swift. Apple declined to comment.

Update July 15th, 7:44PM ET: Added Apple declining to comment.

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