Apple Music Spatial Audio Copyright Change Raises Cost Concerns, Indie Artist

On January 22nd, Apple Music sent a letter to its partners across the music industry announcing an apparently positive new change in its royalty policy: that it would pay up to 10% more for tracks delivered in spatial audio — the hello — resolution, 360 sound format in collaboration with Dolby Atmos in which Apple has invested a lot in recent years.

On the face of it, the new policy seemed like a boon: In a streaming environment in which each stream is still worth a fraction of a penny, wouldn't raising rates be a good thing?

Not necessarily, say several independent labels, distributors and trade groups who have spoken Advertising sign about Apple's new policy change. Some worry that the new surge in spatial audio streams may even result in labels and artists losing money – due to the cost of a new spatial audio mix that can be difficult to recoup, as well as the fact that it redistributes the existing pool of rights. rather than adding to it. That's in addition to the technical, creative and practical concerns some have faced trying to adapt to Apple's push into the format.

“Spatial sound can be an interesting form when the artist chooses to use it, [but] This must remain an artistic decision. for some music, forcing a spatial mix is ​​the equivalent of hanging a digital 3D version of the Mona Lisa and expecting Louvre patrons to prefer it,” says one source. Advertising sign. “We prefer that recording artists and producers retain the freedom to choose whether to deliver a spatial mix, without being financially penalized.”

Spatial audio was first announced by Apple Music in May 2021 and rolled out the following month at no cost to subscribers, touted as a new frontier in audio technology that Apple executives said was “like magic” and “real game changer.” It's true that Spatial is a monumental technology in the audio space, its immersive platform transporting the listener to the center of a room, with the different elements of a song coming from everywhere. But it's not technology that these artists, labels and distributors are pushing back against. Many of them support the format and agree that it can be transformed and have no other problems with Apple. It's the new royalty model and Apple's particular emphasis on spatial at the expense of standard stereo mixes that raise concerns.

The biggest issue is cost. Sources say Advertising sign that a surround mix can cost around $500 per track or anywhere between $2,500 and $5,000 per album, with one costing as much as $15,000. (Cheaper options up to $50 a piece exist online, though Apple is said to discourage these options because they don't meet its standards. The reality, however, is that there is no universally accepted industry standard, and some labels use these services anyway, justifying them as the only way to convert catalog effectively enough.) This is difficult for many indie labels, whose margins can often resemble a small restaurant, where cash is at a premium and the shake room is often extremely thin.

Apple acknowledges this and said it was one reason for offering an increase in streaming rights for the venue: “This change is not only intended to reward higher quality content, but also to ensure that artists are compensated for the time and investment they put into interfere with Territorial,” Apple's letter read. However, several sources say the upgrade is not unlimited: To qualify for it, they claim, a label or distributor must derive more than 50% of its revenue from tracks that are at least available in surround sound. That would put pressure on indies to convert their often more lucrative catalogs — albums older than 18 months accounted for 72.6% of album consumption units in the United States in 2023, according to Luminate — in order to reach the 50% mark. . (Apple says that's not true, and that all spatially delivered tracks qualify for the lift. It says the 50% threshold is related to a separate deal, where if a label reaches 50% of its catalog availability spatially, there is an additional increment that tags can qualify for.)

Even then, the return from the uplift may not offset the costs of mixing for regionals, sources say, particularly for smaller indies, labels with younger or developing artists, or those with genres or artists that don't typically flow very well. Multiple record label sources also said Apple won't add songs to the playlist or reserve valuable space on the Apple Music homepage — where there's a dedicated section for new releases spatially — if the songs aren't delivered in the format. And since spatial is an Apple Music-only initiative, those dealing with financial issues can't get a higher rate on any other digital services provider (DSP) to mix tracks in the space. “On the one hand, we understand that Apple needs to develop its own strategy, but on the other hand the new deal will badly affect our revenue,” says an indie label executive. “To be able to maintain the same level of revenue [this year] against 2023 we will need to invest at least $200,000 in zoning, [across] new editions and directory.”

“Spatial audio is a key differentiator for Apple Music, consistent with its position to deliver high-quality audio and a highly curated music experience,” Founder/CEO of Believe Denis Ladegaillerie he said in a statement provided to Advertising sign. “We respect Apple's policy of incentivizing spatial audio mixing and have made the decision to invest in studio capabilities to help our artists and labels take advantage of this change. We have expressed concern that the royalty rate increase for spatial audio content may impact local independent artists and labels, and we are working closely with Apple Music to find solutions to reduce the cost of creating high-quality spatial audio for independent artists, especially smaller markets”.

But there are other concerns that go beyond money. “Some older catalog may not yet exist in a form where you have all the individual stems so you can go back to the studio and bring it back to a spatial sound, so depending on what kind of master casts they may or may not exist yet, how old the recording is, there is a practical challenge which means that any existing catalog simply cannot be converted to spatial,” he says Silvia Modelo, Chief Executive of the UK's independent trade sector body AIM. “And then artistically, if you have an artist who is concerned about their artistic production and the way it sounds and the placement of the music they've made, then they probably want to consult or participate or manage that process themselves. Again, that's something that's out of reach financially for some of the independent labels, but also for the artists.”

“In the catalog, it's not just about the price, but the nature of the master itself — we don't always have masters available, and artists sometimes don't want to change their original master,” says a company executive. Adds another: “Being able to recreate strains is expensive and being able to bring artists back into the studio for the back catalog is complicated.”

Apple says it doesn't expect all content to be delivered spatially, particularly given some of the challenges with catalog managers, but that the upgrade is intended to encourage that where possible. It also says that 90% of the indie label community, as measured by streams on Apple Music, already delivers spatially, that indies have delivered more than double the spatial content year-on-year, and that more than 60% of Top Indie Albums released in the past year are available regionally. Additionally, it reports that the number of spatially available songs has grown by nearly 5,000% from the thousands available at launch in mid-2021, and that spatial audio streams have tripled over the past two years.

However, while Indians are voicing their concerns, they will ultimately have no choice but to follow Apple's changes. “No small or big indie can afford not to be on Apple Music,” says an executive at a larger indie label. “So the answer here is: none of us Indians are in a position to overturn the acceptance of these new terms regarding the villagers.”

India sees it as part of the ongoing debate over music rights reform that opened up last year when Deezer, SoundCloud and Spotify began announcing changes to their rights models. The key conversation around this was fairness, with indie labels and artists in a world that seems to be increasingly dominated by major labels and major platforms.

“We fully agree that the streaming ecosystem has not yet reached its full potential and things are now in flux,” says European independent trade group IMPALA. Advertising sign in a statement. “However, we believe it is imperative that open and constructive discussions continue to shape a streaming landscape that strengthens diversity and local markets, to the benefit of services, labels, artists and music fans.”

“We don't want to go to war with anyone, but we're equally concerned that the playing field is getting less and less level as we go forward and we might start to see a two-tier system as opposed to a standard flow rate that you can rely on,” says Montello. “We're really committed to working with the platforms as much as possible and having an open dialogue with them so they understand what the impact of any royalty changes really means for the independent sector, for emerging and developing artists. for smaller labels, for less mainstream genres and smaller markets.”