The Wall Street Journal obtained an advanced look at a letter Apple Music sent to artists. The disclosure was delivered today via the artists’ dashboard in Apple Music and was sent to labels and publishers. It’s a more transparent look at music streaming royalties between the two behemoths in the space.
Just last month, an artist activist group demanded that Spotify pay artists one penny per-stream, a request that was flatly dismissed. Indeed, Spotify has actively committed to fighting the penny per play push coming from the Union of Musicians and Allied Workers, who organized a protest outside Spotify’s offices in New York.
At last count, Spotify had far more paying members than Apple Music. Spotify had 155 million premium users in the fourth quarter of 2020, and 345 million users overall. The last time Apple revealed its Music subscriber numbers was in June 2019, when it had more than 60 million members.
Spotify users stream more music than those on other platforms. As such, the company drives more revenue to the music industry than its competitors. It paid rights holders €5 billion (around $6 billion) last year.
Artists typically don’t receive those payments directly. Apple, Spotify and other services pay royalty fees to rights holders, such as publishers, record labels and distributors. Artists and songwriters then receive a cut of the royalties, which depends on their deals with those rights holders.
Apple wrote in its letter that it pays out 52 percent of Music subscription revenue to record labels. About two-thirds of each dollar of revenue that Spotify pulls in (including from users on the free, ad-supported tier) goes to rights holders, with around 75-80 percent of that paid to labels. Overall, streaming accounted for 83 percent of record industry revenue last year, according to a Recording Industry Association of America report.
Spotify pays much more revenue to the music industry than Apple does since it has many more users. But Spotify’s average per-stream payout rate is lower because the ad-free tier doesn’t generate as much revenue as its subscription does.
