Apple Music has revealed that it pays artists a penny for every song streamed on the service, roughly double the rate paid by Spotify.
Apple's streaming service opened up about its payment structure in a letter on Friday to artists and labels, in a bid to show they are artist-friendly and win more subscribers, the Wall Street Journal reported.
The move is seen as a dig at Spotify, which pays roughly one-half to one-third of a cent per song -- although Spotify generates far more revenue for the industry overall, as it has more users who stream more songs.
Spotify says that it has about 155 million paying subscribers and another 190 million who use the free ad-supported version, while estimates put Apple Music's paid subscriber base at around 72 million.
Apple Music has revealed that it pays artists a penny for every song streamed on the service, roughly double the rate paid by Spotify
Apple's letter to the industry was seen as a shot at Spotify. Above, Apple CEO Tim Cook is seen left and Spotify CEO Daniel Ek is seen right
Apple Music launched in 2015, an immediately became involved in a high-profile feud with Taylor Swift, who said she would withhold her latest album from the service due to Apple's policy of not paying artists for songs streamed during new users' free trial period.
Apple quickly reversed the policy and announced it would pay artists for streams during a trial period, but the tiff left lingering resentment in the industry.
The fallout from the pandemic, which had a devastating impact on concert revenue that is crucial to modern musicians, has put even greater emphasis on how revenue from streaming services is split up among rights holders.
With the letter on Friday, Apple hopes to show that it is artist-friendly, winning good will and hopefully new subscribers.
'As the discussion about streaming royalties continues, we believe it is important to share our values,' Apple said in its letter, according to the Journal.
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'We believe in paying every creator the same rate, that a play has a value, and that creators should never have to pay for featuring' music in prime display space on its service, the letter continued.
Streaming services do not pay artists directly, but instead send money to record labels, publishers and distributors, who share the revenue with the artists based on their various contracts.
In the letter, Apple says it pays 52 percent of subscription revenue, or 52 cents of every dollar, to all record labels.
Spotify pays roughly 50 to 53 cents on the dollar to labels, and roughly 75 to 80 percent of all its revenue goes to some form of rights holder, including publishers and distributors.
'If Apple can pay a penny per stream, then Spotify can too,' said the Union of Musicians and Allied Workers, which has been battling to win artists a greater share of streaming revenue
Spotify's per-song rate is lower because the average Spotify subscriber listens to more music per month than listeners on other services do.
However, Spotify delivers much more revenue to the industry overall, because its subscriber base is larger than Apple Music's.
The Union of Musicians and Allied Workers weighed in on Apple's letter, saying that all music streamers should pay one penny per stream at a minimum.
'If Apple can pay a penny per stream, then Spotify can too,' the union said.
'We also know that paying a penny per stream is only a starting point to righting the wrong of the streaming economy. This adjustment alone will not make the music industry sufficiently equitable or fair.'