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Apple Will Not Pay Royalties for Apple Music's 3-Month Trial Period

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Apple Will Not Pay Royalties for Apple Music's 3-Month Trial Period
Apple said it would pay more than 70 percent revenue from music subscriptions to music owners.

In the United States, Apple will pay music owners 71.5 percent revenue from its $9.99 per month music streaming service, Apple said. The number will average around 73 percent overseas.

Technology website Re/code first reported the news on Monday.

Apple Music, launched last week, may not differ much from other music-streaming services, but comes with Apple's deep music roots, global brand and hundreds of millions of iTunes customers.

The payments will be to people who own sound recordings that Apple Music will play and owners of publishing rights to songs' compositions, Re/code said.

Apple will not pay music owners anything for its three-month free trial period. The company's payouts were slightly higher than industry standard, the website reported, citing Apple executive Robert Kondrk.

Soon after launch, officials in the recording industry said they were pleased to see Apple throwing its deep pockets and strong brand behind paid streaming, which generally provides more revenue for labels than the free services, which are supported by ads, said Cary Sherman, chairman and chief executive officer of the Recording Industry Association of America.

The trend toward streaming is clear: Paid subscriptions in the US rose 26 percent year-over-year to 7.7 million in 2014, according to data from the RIAA.

But despite the generally positive reaction to Apple's announcement, some music companies are still concerned because of the tough economics of the streaming business, said Sherman. Premium subscriptions offer slightly better payouts to record labels and their artists than free services, but not as much as digital downloads.

Spotify's premium service, for example, generated revenue of less than $37 million (roughly Rs. 237 crores) in the United States in December 2014, according to an analysis conducted by Audiam, a New York-based firm that helps music companies collect digital royalties. But Apple's sheer volume of existing users - roughly 800 million accounts on iTunes - could significantly increase the payoff for publishers, said Jeff Price, the CEO and founder of Audiam.

Written with inputs from Reuters

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