Spatial Audio

Indie Labels Criticize Apple Music’s Spatial Audio Royalty Structure

Apple’s new initiative to incentivize artists to produce songs in spatial audio format has caused frustration among some independent music labels. As reported by the Financial Times, Apple recently began offering artists a 10% royalty bonus for releasing songs on Apple Music that utilize spatial audio technology. However, this bonus effectively reduces the royalty pool for artists who do not or cannot produce tracks in the advanced 3D audio format.

Spatial audio provides an immersive, multidimensional listening experience using Dolby Atmos encoding. But adopting the technology has a high barrier to entry – producing spatial audio songs costs around $1,000 per track, with entire albums ringing in at nearly $10,000, according to label executives interviewed by the Financial Times. For independent labels with large catalogs of hundreds or thousands of releases, retroactively adding spatial audio across the board would require massive investment.

Executives from prominent indie labels like Beggars Group, Secretly Group, and Partisan Records spoke to the Financial Times about their concerns. These labels represent critically acclaimed artists such as Vampire Weekend, Phoebe Bridgers, Angel Olsen, and others. By shifting more royalties to major label artists with spatial audio tracks, these indie label heads worry their artists will lose out, regardless of the success of their songs on the platforms.

“If [Apple’s policy] takes between 5 and 10 percent off of your global revenues, and not even because the songs aren’t performing but because you lose that money and it goes to Universal, the biggest player in the market, we’re definitely concerned,” one executive told the Financial Times. “It’s hard enough to make money off streaming as it is.”

With Apple Music continuing its rapid growth – reaching over 90 million subscribers in 2022 – reduced streaming royalties could significantly impact labels’ bottom lines. Though Apple likely aims to accelerate adoption of the cutting-edge but costly spatial audio technology with its bonus incentive program, smaller players feel it unfairly tilts the scales even further towards music industry giants.

Some labels plan to directly petition Apple to reassess the spatial audio royalty policy, hoping to make it more equitable for artists without resources or access to the technology. But negotiating with tech titans presents difficulties, especially with spatial firmly establishing itself as a next generation audio standard across platforms like Apple Music, Amazon Music, and Tidal.

If common ground can’t be found, the policy threatens to deepen the divide between independent labels versus major labels and tech companies. With touring revenue still recovering from the pandemic despite passionate fanbases, independents face even more financial uncertainty in the streaming age’s focus on premium quality and features. Losing part of an already slim fraction of streaming cents feels untenable to those fighting for viability. Ultimately, the indies call for understanding and collaboration from Apple Music – delivering fairness in royalties means acknowledging not all players share equal standing to adopt and benefit from platform-drive upgrades like immersive audio.