Apple signed three major music labs on the iTunes Radio service recently and now they have revealed how much artists will be making. It turns out that the rates are more than what Pandora is paying, according to The Wall Street Journal. Apple is going to pay 13 cents every time a song is played plus 15% of net advertising revenues. This amount will jump to 14 cents per song and 19% of ad revenues within a year or two.
Pandora currently pays 13 cents per listen. Pandora currently has over 70 million listeners and 100,000 artists. Apple will not pay for performances of songs that are already in a user’s libraries or on an album that the user already owns part of. Those tracks will be selected for special promotions and will be royalty-free. Apple will not pay for songs that listeners skip in the first 20 seconds, applicable only to two songs per hour for any user.
At the end of late last year, Pandora filed a lawsuit against the American Society of Composers, Authors and Publishers (ASCAP) due to allegedly high royalty rates. Around 125 musicians publicly opposed Pandora’s attempts to cut rates.
“There is a window of opportunity here to create a healthy and sustainable music ecosystem, but that won’t happen if the discussion is dominated and controlled by entrenched incumbents,” said Pandora founder Tim Westergren in a blog post. Westergren also denied that Pandora tried to reduce artist royalties by 85%. He blamed the Recording Industry Association of America (RIAA) for the rumor.
“We are committed to the challenge of building an ad-supported business for consumers, and to do it bearing a substantial royalty cost,” added Westergren. “But just as we must honor and value the role artists play in providing the music for the service, so the artist community must also value the years of effort, investment, and expertise that has made Pandora such a massive driver of artist exposure in the music ecosystem.”
Pandora recently bought a terrestrial radio station in South Dakota as an attempt to lower royalty rates. BMI filed a lawsuit against Pandora for doing this.