Apple’s Royalty Premiums for Pricey Audio Format Sparks Indie Label Fury

Apple wants to encourage wider use of a technology that many music professionals and fans consider a major improvement to sound quality. In doing so, it has provoked the ire of independent recording labels. They argue the 10 percent royalty bonus Apple now pays to songs sold in spatial audio format will only further enrich the major labels dominating the recording industry, leaving smaller players and visionary artists scrambling for scraps.

Anger over the split royalty scheme Apple announced last month was initially reported by the Financial Times. It echoed the anger of independent label executives at the 10 percent surplus paid to song files sold in spatial audio. The format adapts music to the immersive 360-degree sound tech the company has developed and integrated to its computers, tablets, smartphones, and other devices. The surrounding effect accentuates various audio sensations-including intensity, distance, and changing heights of sound sources.

Apple wants to see as many creators producing content in that format as possible, which prompted it to start paying a 10 percent premium on music offered in spatial audio to encourage record labels to use it. 

Rather than that added incentive, officials at independent labels have roundly denounced the initiative. They say it leaves them at a disadvantage to the industry’s big, deep-pocketed players who stand to rake in extra revenues because they can easily afford the higher costs of recording in spatial audio.

 For starters, they told the FT, recording new music in spatial audio adds about $1,000 in costs to each new song produced, or roughly $10,000 for an entire album. London-based label Beggar’s Group told website 9to5mac that the expense of converting older works would total more than $30 million for its back catalogue.

 Given the finances required for that, critics add, only major labels can afford to take full advantage of Apple’s spatial audio premium. Yet because increased payments they’ll receive will be coming from finite Apple royalty funds, detractors say even less will be left for independent labels already unable to produce enough songs in the premium format.

 “It’s going to benefit the biggest player, Universal, because they’re the ones with the resources to invest in that,” a senior executive at a large independent record company told the FT. “It’s literally going to take the money out of independent labels and their artists, to benefit the biggest companies in the marketplace…We’re not in the business of chucking money just because Apple is saying you should be spending money on this.”

 It isn’t just obscure, converted garage studio startups protesting. According to the FT, labels including Secretly, Partisan Records, and Beggar’s Group that produce acts like Adele, Phoebe Bridgers, Vampire Weekend, Ezra Collective and Bon Iver are all crying foul. 

 Meanwhile, regardless of the higher costs involved, some members of the music industry contest the claim that spatial audio improves the sound quality of songs in the first place. 

 Though the 360-degree, 3D effects are doubtless impressive, skeptics suspect Apple’s premium payment innovation is more a reflection of the format’s importance to the company’s tech and product strategy, rather than its improvement to the music listening experience. Apple is pushing to popularize the term “spatial computing” as well as spatial audio, following the release of its $3,500 Vision Pro headset.

 “Forcing a spatial mix is the equivalent of hanging a digital 3D version of the ‘Mona Lisa’ and expecting Louvre patrons to prefer it,” another music executive told the FT.