What happens to the $10 from a month of Apple Music?
When Apple Music launches at the end of June, you’ll get a three month free trial to the streaming service. After that, you will pay $10 monthly for the all-you-can-eat music subscription service. More than $7 of that will be passed along to music labels, music publishers, and other music owners, according to a recent report from Re/code.
It’s a fairly standard thing for music rights owners to get around 70 percent of the revenue from subscription services, but until now we didn’t know the real numbers. According to Robert Kondrk, the Apple executive who negotiates the media deals along with Eddy Cue, Apple will pay music owners 71.5 percent of the subscription revenue from the new service in the U.S. Outside the U.S., the number will shift but will be around 73 percent on average.
During the three-month trial period, Apple has managed to get music owners to agree to waiving the royalties. This is a major coup, since the music labels seldom want to give up any revenue, but Kondrk says that Apple’s higher-than-average payouts are meant to account for the royalty-free trial period.
Spotify, a major competitor for Apple Music, pays royalties on every song played, even under trial offers and the free radio service. Apple has gotten around this and scored the royalty-free period by convincing music executives that Cupertino’s streaming music service will far exceed Spotify’s 20 million paying users in numbers.
Whether or not that turns out to be true is still up in the air, since Apple Music doesn’t launch until June 30. Even then, the story won’t end, since we will have to wait for the first round of three-month trials to end before we can see how many people stick around and pay for Apple Music.
