Spotify is an on-demand music streaming service that allows users to browse a database of licensed music through different record companies, as well as create and share playlists with other Spotify users. It has 70 million songs on its servers, all of which are saved on its own servers. In the beginning, users had three subscription options: free, unlimited, and premium. Unlimited would cost 5? to its users, while premium would cost? 10. The unlimited subscription offer is no longer available on the site, although it has removed the ads, which was the main difference between it and the free version. However, it did not allow viewing the offline content on any device. While the service is appreciated by its customers, some artists’ relationships with Spotify have sparked debate in the media.
Apple The music is based on the already popular iTunes Store, which has a large user base. Users were initially given the option to sign up for a free trial, after which they would be charged 10? per month for the service, or to quit and terminate their access to the music streaming service. Favorite artists / musicians Applebecause it is a subscription service that pays artists during the three month free trial period.
COMPARATIVE IMPACT ANALYSIS: SPOTIFY V. APPLE MUSIC
Advances in technology have caused the music industry to rethink its current policies and procedures. Each new technological advance met with resistance at first, but it is only when record companies invest in these innovations that they become commonplace for the entire company. It is obvious that the music industry retains power over the consumption of its products and the fate of its performers. Accordingly, based on many aspects of the digital music market, this section compares and contrasts how these two business models compete or differentiate to meet the demands of their consumers and artists.
Subscription model: Freemium vs. Premium controversy
When your song is streamed on digital services like Spotify and Apple Music, performance and mechanical royalties are produced because a musical stream is considered both a public performance and a mechanical reproduction of your work. The amount paid for a Spotify stream varies depending on the country and type of user (premium, free, family, student, etc.). In terms of subscription, Spotify offers its users a freemium model funded by advertising as well as the premium mockup. It also allowed an unlimited subscription model initially, but has removed it now. The elimination of unlimited can be interpreted as an attempt by Spotify to encourage more customers to subscribe to the premium service by removing the middle option. Users either have to pay to receive unlimited music on any device without distractions or they are subjected to advertisements. In fact, the freemium model also describes one of Spotify’s business strategies to attract its users to its premium plans, as one would always prefer uninterrupted service without advertising while listening to music.
Apple, on the other hand, operates on a paid service model which provides its users with uninterrupted ad-free experience, and users can browse various music catalogs with premium access. Apple Music has opposed the freemium model because they believe it does not generate revenue for the music industry through advertising. Despite the fact that streaming services like Spotify pay more than 70% of the revenue to rights holders, the fact that its service is free gives users the impression that music is cheap. While Spotify has grown its users over time, attracting consumers through its freemium model, Apple music, on the other hand, has proven to be artist-friendly due to its high-end model.
Royalty payments: artists’ rights
According to the sources, Spotify buys a license from labels, artists, publishers and other rights holders in exchange for the right to stream their music on its platform. The software uses complicated algorithms to calculate the per-stream fees for each artist or label before paying them. To calculate the royalties per stream, the platform takes into account parameters such as the country in which the song is played, the value of the country’s currency, contracts, the value of the artist, etc. According to some statistics, the average “pay per stream” for rights holders on Spotify ranges from $ 0.003 at $ 0.005. Unless the artist owns “his main recordings”, which on average amounts to about $ 0.0004 Each Spotify stream, Spotify reimburses “70% in royalties,” which in most cases goes to the record company or distributor (Swanson, 2013). In the past decade, musicians have criticized Spotify, claiming that they are not making enough money from their Spotify songs. They believe this is related to Spotify’s policy of providing free music to subscribers.
The case of Taylor Swift, Beyonce, and others
Taylor Swift, the “Shake It Off” singer, withdrew her songs from Spotify in 2014, despite being one of the service’s most successful artists, after criticizing the fact that artists only received a small fee per song played. Her catalog was pulled from Spotify just prior to the release of her 1989 album on Apple Music, which was to sell more than a million copies and thus obtain platinum certification. It topped expectations, selling over 1.287 million copies in its first week, with no streams of music sites counted. In the same way, Beyonce, after the release of his last album at the end of 2013, blocked him for almost a year. When Adele released her latest album, “21”, in 2011, she was one of a handful of famous actors to do so. It was offered for sale on CD and iTunes, but it wasn’t made available for free streaming until a month or two after initial sales peaked. After being taken off Spotify for over a year, the album has sold over 30 million copies worldwide. All of these artists believed that the freemium model, championed by Spotify, allows consumers to listen to music for free for as long as they want in the hope that they will buy subscriptions to remove ads and enjoy other benefits. .
On the other hand, Apple pays its artists twice as many royalties as Spotify does on a “streaming” basis. Apple recently officially acknowledged that it pays a 52 percent net revenue share to recorded music rights holders (“all labels”), according to its section of the newsletter. This is the same share of net revenue that Spotify now pays to the big labels. In 2017, Spotify lowered its overall rate from 55% to 52%, and Apple Music seems to have done the same in its last round of negotiations, which took place the same year. In the case of Spotify, the situation is more nuanced, with some independents claiming that they are paid less than 52% because of contractual discounts and discounts. Apple took care to specify that $ 0.01 per stream is the average payout of their individual paid plans, indicating that they have omitted their discounted plans (such as their $ 14.99– Family subscription per month for a maximum of six people; multimedia sound Apple A subscription ; or his $ 4.99– student subscription per month), which is one of its business strategies. Spotify had 155 million users at the end of 2020, which, unlike Apple Music has an ad-supported (“free”) tier that it uses as a “funnel” to sell customers in Premium. In fgeneral, Apple appears to be more artist-friendly, due to its use of a variety of business tactics to remunerate artists. Spotify, on the other hand, has delayed paying royalties to its musicians because a number of artists have accused the company of doing so, and some have even removed their catalog from the service. Musicians promote Applebecause it’s a subscription-only service that pays musicians during the three-month free trial period.
The changes brought about by new technologies, more recently the widespread use of the Internet and other digital technologies, which have revolutionized all aspects of the music industry, from composition, performance and recording to distribution, promotion and listening have had an impact on how those who own rights to a musical work are compensated. Even though the music industry has stabilized in this regard, the introduction and success of music streaming services like Spotify have posed new challenges that the industry is only just beginning to face. The two main concerns that have arisen during the analysis of this debate are the licensing system of these music streaming services and the overhaul of their business models. Since services like Spotify, as has been demonstrated in various cases above, have chosen expediency over licenses by selling music to members without negotiating direct licenses with copyright holders nor seek compulsory licenses, artists are reluctant to sign licensing agreements with such streaming services due to fear. little or no royalty payments. Apple Music, on the other hand, has proven to be great in this regard. Along with the license agreements, these music streaming services also need to work on their business models. Spotify will need to do something to increase the number of paying members if the popularity of alternative streaming services such as Apple music, which does not offer a free service, continues to grow. This is because most artists believe that it is because of its freemium model that the service does not generate enough revenue and ultimately it does not pay royalties to the artists. Although, Apple music pays its artists on a penny per stream basis, the question is whether this is a good goal to aim for and, if so, how do DSPs work on it, including those with ad-supported free levels? And most importantly, how do we ensure that those pennies then flow through the system efficiently and fairly, to ensure that musicians and music companies can thrive? It is therefore relevant for policy makers to propose a mechanism with regard to these music streaming services, under the current copyright regime, to ensure the payment of royalties to the copyright owner in a fair and efficient manner. .
Apple Music vs. Spotify: A Comparative Study in The digital music market (Second part)
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