The Independent Music Companies Association (IMPALA), representing over 6,000 European independent labels and artists, has urged Apple Music to reconsider its recently implemented “spatial audio bonus” and engage in a collaborative dialogue to find a fairer solution for all stakeholders in the streaming landscape.
The new policy, introduced last month, offers a 10% royalty increase for music available in spatial audio formats.
Starting with the January 2024 month-end royalty payments, “pro-rata shares for Spatial Available plays will be calculated using a factor of 1.1 while Non-Spatial Available plays will continue to use a factor of 1,” according to Apple Music’s update to its label partners, seen by MBW.
While IMPALA acknowledges the potential benefits of enhanced listening experiences, they express concerns about the system’s impact on independent players in the music industry.
One key concern is the limited accessibility of the bonus for independent artists and labels. “The boost in royalties… is less accessible to independents. This can be due to the upfront costs involved when recording new tracks and having to remix already released repertoire,” the organization explained in a statement on Tuesday (February 27).
IMPALA argues that the current system creates an unfair advantage for major labels, who have more resources to convert their vast catalogs to spatial audio formats. Conversely, independent labels, often with smaller budgets and resources, may struggle to keep up with this additional pressure, potentially impacting their ability to compete and invest in their artists.
“Some may also choose not to use this format, simply as a creative choice. With Apple’s revenue pool being finite, a multiplier for spatially-enabled plays inevitably translates to diminished earnings for those unable to access it, which compounds the impact on independents,” IMPALA added.
“We support moves by services to recognize sound quality in a way that is objectively fair and sustainable. Our invitation to Apple on this proposal is to look at alternative ways to achieve this rather than linking it to streaming reform.”
Helen Smith, IMPALA
Furthermore, IMPALA stressed that tying revenue allocation to specific formats like spatial audio goes against the organization’s principles of fair and sustainable streaming reform.
IMPALA’s Executive Chair, Helen Smith, said, “We support moves by services to recognize sound quality in a way that is objectively fair and sustainable. Our invitation to Apple on this proposal is to look at alternative ways to achieve this rather than linking it to streaming reform.”
Instead of the current bonus system, IMPALA calls for a collaborative approach with Apple.
“IMPALA invites Apple to discuss alternative ways, rather than unilaterally introducing significant changes, resulting in the redirection of revenues from independents to be redistributed among the major players. This is a delicate issue given the market power generally of Apple, as well as the majors and the fact that it disproportionately affects emerging and less-streamed artists, niche genres, smaller markets, and less mainstream languages,” the organization said.
IMPALA also points out that their stance aligns with their 10-point plan for streaming reform, which focuses on maximizing revenue growth, fostering diversity, and promoting broader accessibility for emerging artists and smaller markets.
“Our plan also recognizes the untapped commercial potential in smaller markets, particularly within Europe, and has proposed initiatives to unlock this potential and promote cultural and linguistic diversity within the streaming landscape,” Smith said.
“We would like to explore other ways of achieving this. For us this is simply not a streaming reform issue. If Apple remains committed to adjusting revenue allocations, let’s explore other options together.”
Mark Kitcatt, IMPALA
Mark Kitcatt, Chair of IMPALA’s streaming reform group and CEO of Everlasting Records and Popstock Distribuciones, added: “Changes to the streaming ecosystem are now being pushed out by the global streaming services which dominate the landscape. IMPALA started this discussion three years ago, and we appreciate Apple’s efforts to improve sound quality.
“We would like to explore other ways of achieving this. For us this is simply not a streaming reform issue. If Apple remains committed to adjusting revenue allocations, let’s explore other options together.”
Apple Music started rolling out spatial and lossless audio in 2021. The company described the formats at the time as “the next generation of sound.”
In January 2023, the company revealed that over 80% of Apple Music subscribers listened to spatial audio in 2022, the first full year that the feature was offered.
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