Apple has built a new proposal to set fixed songwriting royalty rates for music streaming services. The government filing was created in collaboration with the Copyright Royalty Board (CRB) and would set songwriting royalty rates at 9.1 cents per 100 streams.
Although the change would simplify a complex royalty system, it would also increase the costs for competing streaming services, like Spotify. This is an important detail to note because Apple struck its own deals with record labels for Apple Music, hence the company may be able to avoid following the rules of its own proposal.
The new rates would drastically alter how songwriting rates are decided, how much artists receive, and how costly a music streaming business would be to operate.
Currently, companies like Spotify and Google pay out royalties according to very complicated federal laws. If the proposal is adopted, the new rules would take effect in 2018 and remain active until 2022, since the CRB proceeding takes place every five years.
The proposal does not cover rates for recordings since these are calculated using a different set of standards.
Apple’s proposal could be perceived as a harsh blow against Spotify, a company that is arguably Apple’s main competition in the streaming space. Spotify allows users to either pay $10 a month to stream music with no ads or listen to its ad-supported tier for free. Apple Music does not offer a free tier and only lets users pay to stream music, a feature that has attracted the favor of high-profile artists like Drake and Taylor Swift.