Apple Music will not be paying royalties to major or independent music labels and unsigned artists during the three-month trial period after its launch on June 30, according to Re/code.
The tech company will offer a free three-month subscription to its users, after which they will need to pay $10 a month for their subscription. During the trial period, record studios won't be compensated for track streams.
About 70% or $7 of the fee will supposedly go to the labels, music publishers and recording artists. However, a copy of the Apple contract was leaked online where it revealed that the company will only be paying 58% of its streaming sales.
However, Apple executive Robert Kondrk debunked these speculations and confirmed that 71.5% of revenue will rightfully go to the teams behind the music, while labels based outside of the U.S. will be getting 73%.
Apple is still discussing specific terms directly with major labels, rather than going through a third party business. They decided to forgo the route of coursing their licensing agreements through an enterprise called Merlin, typically done by a number of independent studios.
The Cupertino-based company is also in hot water it is being investigated by the government under allegations that it is working with big-named labels to remove their content on free streaming services such as Spotify and Pandora. However, state officials in New York and Connecticut have not found any evidence of misconduct as of late.
Apple has been against Spotify's freemium model and other top label executives also advised them to pull back on providing free content as well. Spotify offers a $10 per month paid service, along with free versions that offer unlimited, ad-supported, on-demand music on desktop PCs and smartphones.
Spotify's Head of Communications Jonathan Prince also mentioned that Apple also offers its own free music through its iTunes Radio Service and will offer more through its Beats 1 radio service. They pay music owners a much lower fee for music streamed.
"We pay royalties on every single listen, including trial offers and our mobile free custom radio service, and that adds up to approximately 70 percent of our total revenues, as it always have," Jonathan explained.
