Apple Music pays a cent per stream

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Apple Music’s payment percentage for artists and labels is essentially a penny per stream, according to a letter from the company on the artist dashboard and first reported by the Wall Street JournalThat payment percentage is higher than Spotify, which has a confusingly variable rate schedule that basically works out at half a cent per stream.

Announcing a penny-per-stream rate is a nice PR win for Apple Music, given that it’s 1. very simple and 2. Spotify hates talking about its per-stream payments, which the company says is a misleading figure. Seriously, it just launched an entire website with the name Loud and clear Designed last month to help artists and fans understand how payments work, and much of it is devoted to explaining why per-stream rates aren’t the right thing to focus on. It’s a lot of copies like this:

In the streaming era, fans don’t pay by song and services don’t pay by stream, so we don’t believe a “per stream rate” is a meaningful number to analyze. Still, we understand that artists find it useful to calculate an effective ‘per stream’ rate or, in other words, a ratio of earnings to streams, sharing the total size of the royalty pool on Spotify (the counter) by the total number of music streams on Spotify (the denominatorBoth numbers are growing incredibly fast every year.

There are a number of factors that contribute to that ratio looking small, which we understand can be appear problematic.

Turn right. It is important to note that Spotify has a huge ad-supported music service with a very different economy from the Spotify Premium paid tier, while Apple Music only offers a paid service. And Spotify is much bigger, with a total of 345 million users, of which 155 million are paying Spotify Premium customers. (It’s hard to give good numbers on how big Apple Music is right now; the company’s latest public track is “Over 60 Million Subscribers” as of June 2019, and more recent estimates have it at 72 million.)

In any case, Spotify’s argument is that it pays lower variable rates for many more streams, while Apple is happy to say it pays a higher, simpler rate for fewer streams. Neither argument really solves the essential economic problem of streaming, which is that most artists can’t live off streaming royalties alone, and that’s why everyone is selling NFTs and hoping the concert business will get back on track soon.