Apple Music will pay labels just $0.002 per stream during its free trial -- before tax

While Apple committed to paying music labels during the free trial of Apple Music last week, the company has yet to formally announce how much they would get.

According to multiple sources, Music Business Worldwide reports, a $US0.002 per stream payout is the most likely for independent labels. But this could just be a pre-tax figure, especially in Europe, meaning that, in the UK for instance, labels would receive just $US0.0016 after VAT.

In places like Ireland, Norway, Sweden, Spain, and Italy, labels could get even less, as VAT comes in at 24%, 25%, 21%, and 22% respectively, MBW added.

Apple was not going to pay musicians any royalties for the first three months after its new streaming service launched, until a rebellion by independent labels and Taylor Swift changed their minds.

But Apple SVP Eddy Cue announced on Twitter last week that the company had reversed its decision and will pay artists even during the customers’ free trial period. At that point the company did not say how much, but did add that the amount would increase once people started paying for the service.

“Apple will make sure that artists are paid,” Cue tweeted, continuing: “Apple Music will pay artists for streaming even during customers’ free trial period. We hear you @taylorswift13 and indie artists. Love, Apple.”

Once the three month free trial is over, Apple had said that it was going to give labels, publishers, and other music owners over 70% of revenues from its new music streaming service.

Spotify says it pays labels and publishers between $US0.006 and $US0.0084 per stream. A Guardian report suggests that the average payment a signed artist gets after their label takes its share is a mere $US0.001128.

We also don’t know whether this will change the percentage of revenues artists will be paid after the three month trial is over. We have yet to see anything that would suggest that the previous revenue agreements will change, but have reached out to Apple to confirm.

In an interview with Re/Code last week, Apple exec Robert Kondrk, who negotiates music deals alongside Eddy Cue, revealed how much of the $US9.99 users will pay per month after the free trial is going to go to artists and labels.

Apple will pay music owners 71.5% of Apple Music’s revenue in the US. Outside the US this could fluctuate, but will average out at around 73%. How much the musicians who wrote the songs will actually get depends on the contracts they have with the music labels and publishers who distribute their songs, the report pointed out. The total of around 70% will go to the people who own the complete sound recordings Apple Music will play and the people who own the publishing rights to the underlying compositions of the songs.

Apple’s revenue split is only a few percentage points more than the industry average of 70%, which Spotify also says it pays.

But everything Apple has done so far — from its advertising campaigns to the decision to pay artists during the three month free trial — is meant to reassure labels and artists that getting paid for allowing their songs to be played on Apple Music is more worthwhile than letting them be played on Spotify.

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