Apple Proposes Raising Streaming Music Royalty Rates To Bleed Spotify Dry
Nothing is simple when it comes to the music industry, especially where streaming is concerned. Ever since Napster originally hit the Internet and caused musicians, songwriters, and anyone else involved in the industry to see just how easy it is to share music online, there's been constant debate on how to better do things. We've even seen mega-stars like Taylor Swift chime in on various matters - something we've learned can have real effect.
While it could be argued that Apple's size - and the amount of cash in its pocket - will keep it safe in the music industry while things continue to be debated, there are some companies that can only endure so much. Spotify is a great example of this, and Apple knows very well that if it plays its cards right, it could seriously maim the service.
The New York Times reports on a leaked proposal from Apple (which the company has since confirmed, but not commented on) which encourages the idea of paying a flat rate for songs; in this case, 9.1 cents per 100 plays.
For Apple, which doesn't offer its music-streaming service Apple Music for free, it has nothing to worry about. But Spotify? It currently has some 70 million free customers, and 30 million paid - that's a big gap. It's a gap so large, in fact, that it'd likely force Spotify to purge its free tier entirely, else most of the profits from the paid service would go to pay for the free one.
For industry powerhouses like Taylor Swift, this would be a very welcomed move, as she despised the thought of a free version of Spotify. That's precisely why she's no longer found on the service, but can be found at Apple Music.
Considering the fact that Apple currently has just half of the paid subscribers Spotify does, it's no secret why the company aims to change the revenue scheme so that it'd hurt the company. However, even if Spotify were to get rid of its free tier, it's not going to suddenly lose its 30 million customers who are happy to pay. In fact, it could just force Spotify to offer the exact same subscription fees as Apple Music - minus the affiliate fee Apple demands as Spotify needs to run through its app stores.
This is going to be very interesting to see play out. Who do you stand with; Apple or Spotify?