Apple Music: Let’s talk Money

11 Jun 2015

Apple Music - Money


Before the release of the new Apple Music streaming service there were tonnes of blogs and rumored reports on what was going to happen with the service, how much it was going to cost and how they were planning on beating the streaming giant, Spotify.

Which is a good point, how are they going to tackle Spotify?

Apple are Apple, they are massive, and have forced apps onto our phones already, so it’s obvious that this was going to happen. Putting this app on all of their devices gives them a massive step up on the streaming market, and allows them to make more money and become bigger, quicker.

This is great for Apple, but, they had to go and ruin it.

Spotify has offered a free tier since they began, allowing users to listen to music but with adverts playing in between. This is fine, annoying, which is why I am now a Spotify subscriber, but it works, the model itself still earns money.

What are Apple doing? Well, firstly, they’re trying to get labels to pull music and force pressure on Spotify to stop their free streaming service level. In a way, I understand that free streaming isn’t great, but it’s ad supported, so it works at the moment.

Then, I read this. Apple intend to get subscribers on board for a three month free trial, great. Then it costs £9.99/£14.99 a month from there on, fair enough. But then… Apple don’t intend to pay for the licenses for the three month trial users, which seems ridiculous.

So, what are Apple paying for the music, and what are we paying Apple?

So, to stream for a month you either pay £9.99 for a single user, or £14.99 for the family pack, which is up to 6 users.

So through these subscrition levels Apple will pay out 58% of revenue.

Apple will pay 0% to rights owners throughout a users free trial.

Spotify currently pays out 70% of its revenue of the paid and ad-supported subscription level to the rights holders. So they currently pay out more than Apple Music will.

In the long term, Apple might be right, they may be able to provide a higher income to artists and labels, but that’s purely based on the fact they can entice users by plonking an app on their phone or tablet. It’s a great marketing tool, and I think they will do well, let’s just hope they pay fairly.