Apple proposal for streaming royalties may squeeze Spotify


The Copyright Royalty Board is accepting comment on statutory rates for downloads and interactive streaming services. The new term is set to run 2018-2022. Apple, Spotify, Google, Pandora, Amazon, and RIAA are expected to provide comment on the proposed new rates.

Apple's comment Friday was revealed through the New York Times. Apple proposes simplifying the rates, which would be higher than the current rates. This may put pressure on competing streaming services, particularly Spotify and Pandora that offers free tier of service.

Although the bulk of Apple's proposal with the Copyright Royalty Board is confined to three brief paragraphs, it would have wide implications if it were adopted. Songwriting rates paid by interactive streaming services like Spotify are now governed by a byzantine system that includes a division between what are known as mechanical and performance royalties for the same songs. Apple's proposal would cover all songwriting royalties with the same rate. (Royalties for recordings are accounted separately.)

What Apple does not say in its filing, however, is that the statutory rates it proposes would not apply to its own services. When the company introduced Apple Music last year, it struck direct deals with music publishers at rates that are slightly higher than usual.

It's an interesting wrinkle that Apple may not be affected by what it's proposing, but when t's time to renew it would seem likely that terms of any existing deal will be altered if the statutory royalty rate is more.