Apple is paying indie labels $0.002 per stream for free trial… BEFORE tax

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It looks like Apple has finally reached a settlement with the independents over Apple Music’s free trial.

The likes of Merlin, AIM and IMPALA have endorsed the Cupertino giant’s new offer to the indies, after Eddy Cue did an about-turn and offered them royalty compensation for the platform’s upcoming three-month trial.

But the question on the lips of the industry is a familiar one… how much?

Reports suggest that the indies are receiving the equivalent of $0.002 per stream from Apple, and MBW’s sources corroborate this.

But there’s an important extra detail, numerous indies have told us: this is actually a pre-tax figure, certainly in Europe.

That means that in the UK, for instance, the $0.002 would see a further 20% knocked off in VAT – down to $0.0016.

And it will be even worse news in the likes of Ireland (24%), Norway/Sweden (25%), Spin (21%) and Italy (22%).

We know that Apple is paying 58% of Apple Music income to labels in the US – with 13.5% going to publishers – so some very rough maths would suggest that independent publishers would get somewhere around $0.00047 per stream for the three-month free trial.

(If they sign up, that is – and we understand they’re still locked in negotiations.)

Meanwhile, rumours are circulating about the nature of deals struck by the major labels before the great indie revolt (and Taylor Swift’s timely intervention) took place.

On the face of it, the majors accepted a royalty-free window for the Apple Music trial.

But, no surprise, there almost certainly appears to have been an iTunes-related minimum revenue guarantee included by Apple for the majors.

We’ve even been told a whisper, unverified, that one of the majors scored a guarantee of 80% of their current iTunes revenue. (ie. If Apple Music generates more cash than 80% of their existing iTunes income, great. If it doesn’t, Apple will have to pay it anyway.)

MBW understands that Beggars Group officially inked the Apple Music contract in New York earlier this week.

Boss Martin Mills later said: “We are now delighted to say that we are happy to endorse the deal with Apple Music as it now stands, and look forward to being a big part of a very exciting future.”

According to the leaked North American Sony/Spotify contract from 2011, the major was guaranteed a per stream rate of $0.00225 for the Swedish service’s free tier – although that is probably now outdated.

Spotify says that across premium and free tiers, it pays a blended per-stream rate of around $0.007 to music rightsholders.Music Business Worldwide