Terrestrial radio is all but dead. It had a long great run, but it’s time is coming to an end. Even CBS is looking to sell off it’s radio stations. The technology, and people’s habits, have just moved on. One of those technologies is of course, streaming music services.
With streaming music services, users can find a much larger range of entertainment than any radio market can offer. I’m sure most of us have a favorite. Me? I like Pandora. I love how the more I listen, and rate the music, the better it knows me, often playing songs for me that I’ve never heard of before, yet end up loving once Pandora plays it for me. Yet I don’t listen that often. I listen to a lot of podcasts, I have a lot of music on my phone, and I recently started up my Sirius satellite subscription again, so it is rare that I listen to Pandora. Of course, this means that I have no need of paying for the premium service. For the amount of listening I do, I’m fine with ads. I’m guessing most listeners are like me and not paying for the service.
Apple wants to throw a wrench in the gears of these free services.
Apple has approached the U.S. Copyright Royalty Board with a proposed new plan for paying royalties for streamed music. The way that royalties work now is a very confusing calculation in which these streaming services pay between 10.5 and 12 percent of their overall revenue for the music which they stream. Apple’s proposition is that instead of this, streaming services pay a flat rate of $0.00091 per streamed song. Apple states that this plan is “fair, simple, and transparent, unlike the incredibly complicated structure that currently exists”.
I’ll admit that it seems to be a fairly simple plan, but I believe Apple is being anything but transparent on their motivation.
Let’s look at Apple Music. First of all, Apple Music’s success has been questionable. Last Year on August 18th, Cult of Mac stated that 48% of trial subscribers had already quit Apple Music. Two days later, Apple stated that only one in five users had quit. In September of last year, Apple mouthpiece BGR bragged that Apple Music had his 15 million users, meanwhile, four months later it was being reported that Apple Music had hit 10 million users. How successful is Apple Music really? Your guess is as good as mine.
There are a few things that users should realize about Apple Music though. First, Apple Music is the new kid on the block. Other streaming services like Spotify and Pandora have just been doing it longer, and are arguably better. Second, there is no ongoing free Apple Music Service. Apple music costs $9.99/month. And this is how Apple’s proposed plan can kill the competition.
The way the current royalties work, with services paying a percentage of their revenue to the music companies, they are still able to operate with an advertising model even if they don’t have many paid subscribers. With Apple’s plan, these companies will have to pay a flat rate per song no matter how much money they are making.
If this plan becomes a reality, we can expect any number of things to happen. I believe that we can depend on being bombarded with advertising on the free streaming services, as the companies try to pay for this flat rate. There could also be a very real possibility of some of these services simply shutting down when they are suddenly being forced to pay more than they are making. Lastly, I think it is safe to say that Apple will have closed the door on any future start ups coming in to provide competition.
Once again, Apple finds a method to enrich themselves, while stifling competition. Let’s just hope that the U.S. Copyright Royalty Board see’s through this ploy.