Revised music royalty rules could hurt Apple’s Beats Music, iTunes Radio

“The U.S. Justice Department is in the process of deciding whether to revise the laws regarding music royalty rates — changes that could have an effect on Apple’s streaming music offerings Beats Music and iTunes Radio,” Neil Hughes reports for AppleInsider.

“The music industry is currently trying to overturn the current licensing rules, which are heavily regulated by the government. At the moment, the industry is required to license songs to anyone who wishes to rebroadcast at a reasonable rate,” Hughes reports. “The two performance-rights organizations that represent the music industry are the American Society of Composers, Authors and Publishers, and Broadcast Music, Inc., both of which have been around for decades.”

“If ASCAP and BMI are successful, analyst Rod Hall of J.P. Morgan expects the outcome to hurt Apple, which is attempting to gain a stronghold on the streaming music market with its iTunes Radio streaming service, and Beats Music on-demand subscription offering,” Hughes reports. “‘Upward pressure on streaming costs could be a negative for Apple’s newly acquired Beats Music unit,’ Hall said in a note to investors on Friday, a copy of which was provided to AppleInsider. ‘Typically, attempting to pass this sort of cost increase through to customers after the low price Genie is out of the bottle is tough in a competitive environment.'”

Read more in the full article here.

MacDailyNews Take: If streaming royalties increase, who’d be best equipped to pay the higher rates, the current cadre of pissant music streamers or Apple Inc. which has more money than most countries and isn’t dependent on streaming music for their income?

Have a nice day, Spotify. Enjoy your weekend, Pandora.

Related article:
Apple has more cash on hand than all these different countries – April 8, 2014

23 Comments

    1. Leave it to the music industry to shit on music services and paying customers the instant it becomes popular. If they’re successful and this results in either higher costs to the public or limited music selections in streaming services, people will just return to Bittorrent.

  1. I don;t bother streaming music- gave it a try and it is largely a waste of time and bandwidth. Apple Radio sucks- even with iTunes Match and I would rather carry around a decent sized library of Apple Lossless tracks than listen to streaming shit.

    Besides, anything that hurts or kills off Beaten by Dr Dre more quickly I am all for. Still think buying that shit was a seriously lame and dumb move. Dre and Iovine are thieves and dealing with thieves is bad karma.

    I really think Beaten By Dr Dre will end up a write down that will fade away like a scar. What a waste of $3 Billion dollars.

    1. I have never been a fan of streaming music services given their drawbacks, which include any or all of the following:

      – limited music selection
      – poor curation and new music discovery
      – unattractive pricing
      – crappy user interfaces
      – annoying advertising

      Apple’s own iTunes Radio is probably the worst of the bunch, featuring a combination of crappy music selection, inability to listen to what you want to listen to, a horrible user interface that emphasizes song purchases over music listening, and the most atrocious music recommendations I’ve ever seen.

      With Apple’s acquisition of Beats I decided to give Beats Music a test drive and I’m hooked. Their music catalog is enormous and it’s hard to think of a track they don’t have available. It’s quick and easy to find a particular song or browse an artist’s collection of albums, EPs, and singles. There are no ads, and the service is a reasonable $10 a month. For offline listening, you can easily mark any tracks or playlists for download, limited only by your device’s available storage space. Most importantly, Beats Music contains a nicely curated library of playlists in many genres that is infinitely better than the garbage one hears on the radio.

      This acquisition will not likely be a failure for Apple, especially considering that Beats’ profitable headphone business alone will pay back the acquisition cost in a few short years.

  2. I personally am NOT going to cheer if the choice of streaming music sources on the net is cut down due to the RIAA companies. I want Apple and Spotify and Pandora and Slacker Radio and the zillions of other audio streaming sources on the Internet. Diversity rulz. The more the corporations rule what’s played, the more streamed music SUCKS! They’ve DEVASTATED EM radio with corporate music crap to the point where creativity in current music is all but dead. Compare the cack being slogged on radio these days, compared to the golden age of the 1960 – 1990 and I personally want to vomit.

    What’s really going on: CORPORATE CONTROL. CORPORATE ROYALTY GOUGING.

    Why: To destroy freeform music on the Internet. It’s that profound and simple.

    Frack that! Go to hell RIAA. Get with the 21st Century already! Music is an ART. It is not a ‘product’ subject to corporate whims and outright management insanity.

    1. Sideline points:

      1) Streamed music is FREE MARKETING. Beats me why the RIAA executives are so stupid as to want to kill a free source of promotion.

      2) The RIAA and it’s assorted associated corporate groups prove every day that the HATE THEIR CUSTOMERS. There is no bigger incentive to pirate music than the abuse music customers suffer from the RIAA. Of course the abused customer is going to respond by stealing music. It’s basic instinctual RETRIBUTION. Again, I cannot comprehend why RIAA executives are so stupid as to actually PROMOTE music piracy by their own behavior. Idiots.

    2. Derek, if you really long for a return to the quality of the “golden age” you refer to, then you should be against streaming in general. It was a golden age because artists were being paid for the content they created.

  3. If royalty rates rise and paid services have to increase prices (and unpaid services have to start charging), it plays to Apple’s advantage in that some demand may move back to buying tracks and albums.

    In any case, the artists definitely deserve more than they are getting from the current streaming royalty structure. They are getting completely screwed, which hurts music lovers as well. The quantity of new quality music has definitely decreased over the past few years, particularly in the genres outside the mainstream/top 40/hiphop crap.

    1. I agree 100% that FAIR royalty rates are due every artist.

      But that is NOT what the RIAA and it’s pals demand. Instead, they demand killing any ability of a streaming site to make ANY profit. That is specifically the goal. Thus the royalty rates the RIAA ad nauseam have been demanding are OUTRAGEOUS and way beyond any sense of fairness.

      Let’s get the current RIAA royalty demands out on the table!

      I can tell you that in the past, this is what they wanted:

      1) An increase in Internet radio royalty fees by 300 – 1,200% to take effect on 2007-07-15, backdated to 2006-01-01. Thankfully, this was defeated.

      2) Royalty rates that are 10X higher than fees required for satellite radio. Explain that lunacy.

      More background is available here:

      http://en.wikipedia.org/wiki/Internet_Radio_Equality_Act

      And:

      1. Just for clarity, ASCAP and BMI are not particular pals to the RIAA. It is in RIAA’s interest to keep royalties low, so the recording companies make more money. It is in ASCAP/BMI’s interest to get royalties higher so that the Composers, Artists, and Publishers (the CAP part of the American Society’s name) get a bigger share of the pie at the expense of the record companies and public performance venues/services.

          1. If you think the recording industry gives a damn how much money the creatives–whether lyric authors, tune composers, or performers–make, you are the one who’s naive.

            1. Yes I can read. Can you? My point is and was that the RIAA and ASCAP are separate organizations with different goals. Blaming the composers and authors for the behavior of the recording industry is simply irrational. I understand your point, but I disagree that the proper remedy for industry excesses is to punish some of their other victims.

        1. That is: Licensing fees for public performances of recorded music are obviously related to the royalties payable to the people who wrote the music, and to any payments the performers might receive, but aren’t the same thing.

  4. The article tries to paint the increased streaming costs as a problem for Apple, but that’s not true at all. As MDN says, Apple is fine either way.
    The fact that streamers were getting a royalty rate equal to radio was bad for the status quo industry. Radio is promotion for the sale of music, and people buy tunes so they can hear the music they want, when they want, instead of randomly on the radio. Streaming services that allow you to target your music enough, reduce the need to purchase music at all! Bad for artists and cd and iTunes sales.
    Apple had to get into streaming if iTunes sales were to decline, but higher costs for streaming will make purchasing music a valid choice and help iTunes. Beats and iTunes radio for one way, iTunes sales for the other. WIn, win!

    1. “higher costs for streaming will make purchasing music a valid choice and help iTunes. ”

      No, it will just piss off customers who had bought into paid music streaming services and will trigger their return to pirating.

  5. if streaming music dies or gets more expensive for consumers Apple will make MORE money as SELLING music is a heck a lot more profitable than streaming it and Apple iTunes is the largest music retailer (seller) in the world.

    Spotify , Pandora (which is already losing money) will fade away.

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