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Will Spotify and Apple Music soon be forced to jack up their prices?

Will Spotify and Apple Music soon be forced to jack up their prices?

February 2, 2018 / No Comments

It’s widely known that musicians get paid fractions of a penny for their streamed songs on Spotify, Apple Music, Pandora, and other streaming services.

In fact, UC Irvine media studies professor Peter Krapp told Mashable it would take about 4 million Spotify streams for a songwriter to make minimum wage in California over the course of a month.

But this past weekend, the U.S. Copyright Royalty Board ruled that songwriters must be paid more for their songs.

Now, streaming companies must pay 15 percent to music publishers, the largest portion in history (and a 43 percent increase).

Previously, streaming companies like Spotify had to give a minimum of about 10 percent of their revenue to music publishers — the big companies that artists hire to collect cash for their copyrighted songs.

“The decision represents two years of advocacy regarding how unfairly songwriters are treated under current law and how crucial their contributions are to streaming services,” National Music Publishers’ Association CEO David Israelite said in a statement.

For the big players in the streaming industry — the likes of Spotify and Apple Music — this could look like bad news: Streaming companies already don’t make money.

Spotify, for instance, lost over half a billion dollars in 2016. And Apple Music executive Jimmy Iovine noted last year that “The streaming business is not a great business.”

But these higher payment requirements don’t necessarily mean that the golden number of $9.99 — the well-known subscription price for Spotify, Apple Music, Google, and Amazon Music Unlimited — is suddenly going to spike as streaming sites struggle for profitability. At some point in the coming years, these subscription prices will almost certainly increase, but not because artists are going be paid a little more.

Streaming companies like Spotify already make their own agreements with music publishers, assistant professor at Drexel University’s music industry program Robert Weitzner told Mashable. “It doesn’t mean that the rate Spotify pays would increase,” he said, noting that Spotify or Apple Music may already pay above the 15 percent that is now required by law in the U.S.

Music publishers — like the publisher currently suing Spotify to the tune of $1.6 billion dollars— already negotiate with Apple, Amazon and others to get as fair price as possible (the “market rate”) for the artists they represent.

BY MARK KAUFMAN

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