- Bonus applies at a catalogue level not track level
- For many artists and labels this will mean at a distributor level
- Money for 10% bonus taken out of royalty pool meaning double whammy
- Raises yet another transparency issue
CMU can exclusively reveal that Apple Music’s 10% “bonus” for Spatial Audio content is yet another move that favours major labels and works against the interests of smaller labels and independent creators.
There has been a lot of coverage this week about Apple’s new bonus for tracks delivered in Spatial Audio - which is paid even if a user doesn’t listen to the Spatial Audio version. That uplift, first reported last year, has now kicked in and will be accounted in payments made to labels and distributors starting from the end of January.
Coverage has been pretty positive: spatial audio - or, more correctly, immersive audio - is great. It’s a genuinely innovative format and helps future-proof audio content for new modes of consumption.
However, the actual detail of the new initiative has not been reported, and many sources that CMU has talked to about Apple’s move have appeared unaware of the true impacts that its revision to royalty allocation might have for independent distributors, labels and creators.
The reason for this is that the uplift for Spatial Audio happens at a catalogue level, not a creator level. In fact, to be more explicit, it applies where “catalogue” is defined as “content delivered by a company that has signed a digital distribution agreement with Apple”.
To be eligible for the 10% bonus a content provider needs to be getting 50% or more of their streams globally across their entire catalogue from ‘spatial available’ tracks.
This means that, unless a label or artist has their own distribution agreement with Apple, they may not be eligible for the 10% bonus payment even if they provide their content as Spatial Audio.
This is because, unless the distributor or aggregator they are using hits that 50% ‘spatial available’ threshold across its entire catalogue, the label or artist's tracks provided via that distributor would not be eligible. So as a label or artist you could provide 100% of your catalogue as Spatial Audio tracks, but still not receive Apple’s bonus.
In addition to this, the 10% bonus is not being paid by Apple - it’s being taken from the total available pool of money available to rightsholders. This means that, not only might a label or creator be ineligible to receive the bonus, but in fact they are losing out further because the bonus is being taken from the reallocation of revenue.
Currently, many independent artists will master tracks themselves, or use automated mastering services to create the final tracks for delivery via their distributor to streaming platforms including Apple Music.
Sources who have spoken to CMU have said that there are currently no mass market and affordable “convert stereo to spatial” services available that pass Apple’s ‘quality assurance’ threshold for Spatial Audio. While there are a number of services out there that claim to be able to use AI to offer “spatial audio mastering”, CMU’s sources have indicated that Apple will not currently allow these files to pass their QA processes.
This means that the only option for independent creators and labels to deliver Spatial Audio content to Apple is to pay for mastering. Engineers CMU has talked to have said that the availability of spatial mastering capacity has increased and the costs of spatial mastering have stabilised. However, that cost is still beyond the reach of many creators and for labels with a significant amount of content it may represent a significant investment before catalogue can be redelivered to Apple as Spatial Audio.
With the news that tracks may not be eligible for the uplift even when they are delivered as Spatial Audio, depending on their distributor, many labels and artists will be wondering whether those costs make sense.
One source CMU spoke to this morning said: “Apple has been very clever on this. The news originally broke via Bloomberg round about the time everyone in the industry was piling on and giving Spotify a kicking over their changes. The way this news was positioned was very much as a ‘bonus’ and I think a lot of people felt Apple were doing something good while Spotify was doing something bad. You can’t help but feel that was maybe a well timed leak”.
CMU has asked Apple for comment. So far the company has not responded, despite acknowledging the request.
