CUPERTINO, CA (Hypebot) — Indendent labels and artists are upset by what they say is the unfair advantage that Apple Music gave major record labels with its recent 10% increase in royalty payments for tracks available in spatial audio.
The increase began with January payouts and is calculated on all streams for the track, whether or not the listener plays the track on a Spatial Audio device.
But recording in spatial audio costs about $1000 more per track, say the indies, and only major labels have the deep pockets to invest in new music in the format much less in converting decades of back catalog.
London-based Beggar’s Group estimates that converting its catalog would cost more tham $30 million. Other large independent music groups including Secretly and Paritsan are also upset by Apple’s royalty shift.
Royalty Increase comes from a Finite Royalty Pool
What concerns the independents the most is that this 10% increase is taken from Apple’s finite royalty pool, leaving less to pay independent artists and labels unable to afford the new format.
Apple is also motivated to shift the payments to spatial audio in part because, unlike Spotify and other competitors, it also profits from the sales of the iPhones, iPads, its new $3,500 Vision Pro headsets, and other devices needed to play Apple Music’s spatial audio tracks as well as most of the headphones, including AirPods Pro, AirPods Max and Beats Pro, required to experience Spatial Audio.
“It’s going to benefit the biggest player, Universal, because they’re the ones with the resources to invest in that,” an executive at a large indie told the Financial Times. “It’s literally going to take the money out of independent labels and their artists, to benefit the biggest companies in the marketplace.”
Bruce Houghton is the Founder and Editor of Hypebot, a Senior Advisor at Bandsintown, President of the Skyline Artists Agency, and a Berklee College Of Music professor.
