You could compare pricing trends in music subscriptions to a strange game of chicken where everyone’s a chicken: or rather, where nobody is bold enough to raise their price in case rivals don’t follow.
That’s not entirely fair – prices have been raised for family and student subscriptions – but in the most developed music markets the 9.99 ($/£/€) monthly cost of an individual subscription has largely held since Spotify’s launch in 2008. It’s been a growing spark of unrest as music rightsholders and musicians’ rights campaigners alike seek to increase streaming revenues, and thus royalties.
Is Apple Music’s decision yesterday to up the monthly cost of its individual subscriptions a breakthrough? The service will now cost $10.99 / €10.99 / £10.99 in the US, Europe and UK.
“The change to Apple Music is due to an increase in licensing costs, and in turn, artists and songwriters will earn more for the streaming of their music,” said Apple in a statement for Hollywood news site Deadline, which noted that its Apple TV+ and Apple One bundle are also increasing in price.
If Apple’s move paves the way for its rivals to follow suit, this may be a significant moment. Can we quantify the impact? This 2020 infographic from music-streaming trade body DiMA, which counts Apple Music among its members, might help.
It suggested that of every $100 collected from consumers in subscription revenues, around $7.11 ends up with songwriters and $6.63 with artists, after all the entities in the middle – labels, publishers, managers, collecting societies etc – have taken their cuts.
A million people paying $9.99 a month for Apple Music would, by this reckoning, end up putting around $710.3k in songwriters’ pockets and $662.3k in artists’ pockets in a given month. That same million people paying $10.99 a month would generate $781.4k for songwriters and $728.6k for artists.
Combine those two, and we’re talking about a $1 price increase putting just over $137k of extra royalties a month in the pockets of songwriters and artists (after rightsholders have taken their cuts) per million Apple Music individual subscribers.
Scale that up to a year ($1.6m of extra royalties per million subscribers), then scale it up to however many million people Apple Music has paying for individual subscriptions (for argument’s sake, if it were 70 million people that’s $115.4m of extra royalties a year), then scale it up to many more if other DSPs were to follow suit and…
Well, we’re well into the realm of shakily speculative maths now, and we haven’t even tried to model any negative impact of such a price rise, if some people decide to cancel rather than pay an extra dollar / euro / pound. Suffice to say the impact is meaningful, although it doesn’t suddenly solve all of the arguments and challenges around the streaming economy.
(For mischief’s sake, DIMA’s infographic would suggest that per million subscribers, a $1 price rise means $435.4k of extra revenue for labels, and $66.3k of extra royalties for artists.)
By jumping first with an across-the-board price increase for individual subscriptions – Spotify has done so in some countries, while Amazon Music Unlimited increased its discounted price for Prime members earlier this year – Apple Music is earning warm praise from the industry. Even if few people seem to be remembering the time it also two-footed rivals’ efforts to charge higher prices for HD music by adding lossless to its service for no extra cost.
(The counter-argument might be that bundling higher-quality audio into a basic subscription makes a small price increase easier to swallow – and that this increase will have a much bigger impact in terms of revenues / royalties than a standalone, pricier HD tier…)
Still, breaking the 9.99 barrier for individual subscriptions is widely acknowledged as overdue – wine comparisons included. Yes, the current economic climate makes it feel slightly risky. But if Apple’s decision emboldens rivals while also spurring some important conversations about the value of music, it’s a welcome development.