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Here's How Much Apple Pays The Music Right Holder Each Time You Stream A Song

Apple Inc. (NASDAQ: AAPL) has disclosed it pays music-rights holders a penny per stream, the Wall Street Journal reported Friday.

What Happened: Apple Music revealed this through an open letter it sent to artists to keep them informed about royalties, according to the report.

Apple’s payment structure is almost double the amount paid by Spotify to music-rights holders per stream and its payments come from monthly subscription revenue from users, the Journal noted.

In comparison, streaming music rival Spotify Technology S.A. (NYSE: SPOT) pays an average of about one-third to one-half of a penny per stream but its larger user base generates many more streams.

Apple also reportedly highlighted in its letter that it pays 52% of subscription revenue, or 52 cents of every dollar, to all record labels.

Spotify, which generates revenue from Spotify subscribers and from advertisers on Spotify’s free tier, has said it pays almost two-thirds of every dollar of revenue to music rights holders.

See Also: Apple Will Lose Top US Podcast Listenership Spot To Spotify This Year: eMarketer

Why It Matters: The music streaming service has grown rapidly in the past few years. Apple has intensified its focus on its services business, which includes subscription offerings in music, video, gaming, and fitness, amid sluggish iPhone sales over the past few years. The segment is now the tech giant’s second-largest after the iPhone.

Apple last reported more than 60 million Music subscribers in June 2019. Spotify leads the industry with more than 345 million users, including 155 million Spotify Premium subscribers.

Spotify filed a legal complaint with the European Commission in March 2019, accusing Apple of engaging in unfair competition by simultaneously running its App Store and offering a rival streaming music service.

Apple could bundle premium podcasts, with Apple Music and Apple One at no extra charge for paying subscribers, Loup Ventures analyst Gene Munster said in March.

Price Action: Apple shares closed almost 0.3% lower on Friday at $134.16.

Read Next: Spotify’s Chart May Be Music To Bulls Ears

© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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