iTunes Radio, Unsigned And Indie Artists And The Debate Over Royalties

At the recent World Wide Developers Conference (WWDC), Apple announced that it is entering the music streaming space with iTunes Radio.  Though it already has a lucrative business with iTunes, it is a natural move as Apple will be targeting casual listeners who are likely to stream through its mobile devices.  It is also suspected that the service will be implemented in a way as to drive sales on iTunes.

What the announcement also happens to signal, however, is a disruption in the internet radio industry, one that has reignited the debate over artist royalties.  With another prominent tech player in the mix, the subject is even gaining the attention of world-famous music artists.

For instance, Thom Yorke of Radiohead has pulled all of his tracks from Spotify, citing the vanishingly small royalties that the service has paid to unsigned and indie artists.  He’s joined in his criticism by members of Pink Floyd, who have chastised Pandora and have noted that “nearly 90% of the artists who get a check for digital play receive less than $5,000 a year.”

It is unknown whether or not iTunes Radio will be any more sustainable for musicians, though it has recently circulated its terms to independent record labels.  Royalties will be based on a mix of total listeners and advertising revenue, and on paper appear more generous than those offered by Pandora.  However, at this point it is too early to compare all services and it should be noted that the iTunes Radio business model will be somewhat different from those of its competitors.

It should also be noted that it will almost always be impossible to rely on big names for a true independent music platform.

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