On Friday the 16th of April, Apple Music sent a letter out to artists, labels and publishers which claims they pay an average of a penny per stream.

It’s speculated that Apple made this statement to undermine the streaming industry’s leader Spotify. Spotify has recently come under criticism for what some people feel are unfair or unclear royalty payouts.

To give some perspective, Apple Music has 60 million paying subscribers, and Spotify has 155 million paying subscribers amongst its 345 million active users.

A penny per stream would put Apple Music’s payouts at more than double what Spotify is known to pay.

Apple estimates a one-cent royalty payout (it can also dip lower), but what it actually pays out is determined on a stream share basis. ‘Stream share’ means a percentage of how much a song got played when compared to everything hosted by the streaming platform, and not on a per-stream basis.

So, if there were a fictional pot of $100 that was being divided out as streaming revenue, and Beyoncé got 50% of all streams in that payment period, then she would get $50. If a small independent artist got less than 0.05% of total pays (worth less than 1p in this example), then they get nothing, because their overall percentage is less than the payable sum of 1p (because 1 penny is the smallest amount of money that currency divides into). So, in short, stream share payments don’t always equal a penny for every play on every track.

With the above said, a penny per stream is still way more than what Spotify offer, as it’s reported by the Union of Musicians and Allied Workers that Spotify only averages $0.0038 per stream. So, for those people whose music streams are generating enough to get a payout, then this is definitely a step in the right direction.

To be realistic, anyone expecting to make money from streaming needs huge amounts of plays on any platform, but it appears Apple is looking to set an exemplary standard in comparison to some of their competitors.

H/T: Resident Advisor