It hasn’t been widely known, but Apple Music’s licensing deal with the major labels ran out in June. Since then things have been chugging along as if they still were in contract while a new one was negotiated. The first of those three deals, this one with Warner Music, has just been announced, with Sony to follow soon. Universal and the indie label association Merlin (which is beginning to feel like a fourth major) are also expected to come on board with a new deal shortly as well.
As always, the deal hinges upon upfront money (which wasn’t announced) and the percentage of revenue that’s paid to the label. Apple Music was paying 58% of revenue to the majors, which was higher than all other streaming services, who mostly received 55%. The reason why Apple paid more is because the majors were afraid that Apple Music would cannibalize their revenue from iTunes. With streaming revenue now far surpassing download revenue, that issue is no longer a concern, so Apple reportedly has negotiated a new deal at 55%.
The interesting thing here is that Spotify negotiated their new deals at 52%, but it took a year to do so, and the negotiations were very contentious in the process. Apparently that wasn’t the case with Apple, as negotiations where said to be quick and cordial. Of course, that’s the difference when a music service isn’t as concerned about revenue when it’s just a small part of larger company. Spotify needs all the revenue it can get, since it’s never turned a profit, and in fact, is losing more than ever.
How does this work out for the artist? Yes, it’s true that the streaming services are paying less of their revenue than before, but the fact of the matter is that the overall revenue stream is growing fast, meaning that more money is passing through to the label. Hopefully that means the artists are also getting more, but again, it all depends on your deal with the label. Be sure to read what you sign!