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Apple proposes simpler system for paying song royalties in the US (which by pure coincidence screws over Spotify)

By Chris Cooke | Published on Monday 18 July 2016

Apple wants to simplify the way music publishers and songwriters are paid by streaming services in the US, and it’s told the country’s Copyright Royalty Board exactly how it should be done. Set a rate of 9.1 cents for each 100 streams of a song. Why 9.1 cents? Because that’s basically equal to the publishing royalty on a download. Let’s keep things simple: 100 streams equals a download in royalty terms.

The payment of publishing royalties on streams is complex, of course, because a stream exploits both the mechanical and performing rights of the copyright, and these two elements have traditionally been licensed separately in the music publishing domain. (On the sound recordings side, labels control both elements and license direct).

In many countries publishers and their collecting societies have made efforts to provide streaming services with a combined mechanical/performing rights licence, but that’s not possible in the US, where rules stop the big performing rights organisations from collecting mechanicals. So usually BMI and ASCAP collect performing royalties at rates ultimately set by the rate courts, while mechanicals are often paid (or not, as the case may be) direct to the publishers under the compulsory licence that’s available in the US.

There is added complexity in that streaming services are usually on revenue share arrangements with music rights owners, although in most cases there are minimum guarantees for labels and publishers on top of that. Either way, it’s complicated, varies around the world, and in the US gets further mangled by the rate courts or the aforementioned Copyright Royalty Board often deciding what’s paid.

So, let’s cut all that nonsense, and just say that streaming services pay songwriters and publishers 9.1 cents per hundred streams? Anything else, Apple? Oh yes, that set rate would be the same for free and premium streaming platforms, thus utterly fucking up Spotify’s freemium level. Ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha, ha.

That’s not me laughing. That’s Apple boss Tim Cook. And it’s an evil laugh too. I mean, I know he looks all cuddly and harmless but, hey, he runs Apple, he’s clearly an evil motherfucker. “An interactive stream has an inherent value regardless of the business model a service provider chooses”, writes Apple into its submission to the CRB’s current review of streaming royalties, which was seen by the New York Times.

Of course, any new system that may or may not be put in place by the CRB to simplify the licensing of song rights in the streaming domain would only apply in the US, and only to those services utilising the collective and/or compulsory licensing system.

Although songwriters and publishers are currently obliged to license streaming services that way, it’s a one way obligation, and services can circumvent that system and do direct deals with the publishers if they want. You know, like Apple did.