Apple has submitted a proposal to make payouts on streaming music even easier and more transparent with a flat rate amount per play. Currently, deals are negotiated between streaming companies and labels with payouts ranging from 10 to 12% of overall revenue but there is no consistency across the board. The new proposal would offer a suggested rate of $0.00091 per stream, or 9.1 cents per 100 plays. This change would make the royalties the same for 100 plays and one download, which is appealing for artists.
From Billboard's report:
Apple's suggested royalty structure would make accounting simpler and more transparent, but it would also make it more costly to run a free service, since streaming companies would have to pay a minimum rate, rather than a percentage of revenue. The current system arguably benefits Spotify and YouTube, since their free tiers don't generate much revenue compared to paid services. At the same time, such a rate could reduce the royalties paid to songwriters and publishers from services like Rhapsody.
Right now, Apple and most other companies don't pay royalties to major publishers at the statutory rate set by the Copyright Royalty Board, since they negotiate their own deals. But they pay that rate to publishers with which they can't make direct deals. Perhaps more importantly, the judges' decisions shape private negotiations between publishers and streaming services.
These proposals, if they end up passing, wouldn't take effect until between 2018 and 2022. While it would simplify things on the payout front, it would also likely put an end to free streaming services as companies wouldn't be able to afford to keep those tiers.