APPLE TAKES A SHOT AT SPOTIFY IN ROYALTY PROPOSAL

Apple is rolling the dice on simplifying royalty rates in a gamble that, if it works, could hit Spotify hard.

Apple submitted a proposal, obtained by The New York Times, to the Copyright Royalty Board that recommends streaming services pay 9.1 cents in songwriting royalties for every 100 times a song is played. It would replace the byzantine collection of rules governing streaming and royalty rates.

Thanks to the multiple deals Apple has struck with music publishers, the rate will not have a heavy effect on its payouts. It is seen, however, as a direct attack on Spotify as it would significantly raise the rates Daniel Ek’s company pays on both its pay tier and freemium level.

The proposed rate takes the position that 100 streams equals one digital download. Other players in the streaming world were expected to file proposals by 7/15, among them Spotify, Google, Pandora, Amazon and the RIAAA. (Only Apple’s has been made public). Will the other proposals be as strategic as Apple or will they look to keep payments as low as possible? Stay tuned.