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Leaked contract reveals Apple Music will not pay rights holders during first months of existence

on June 10, 2015, 2:21pm

A leaked contract obtained by Digital Music News reveals how much Apple’s new music service will be paying in royalties.

Perhaps most fascinating are the terms of Apple Music’s initial three-month trial, during which users can access its entire platform for free. During this time span, rights owners will receive 0% royalties. Yes, as in zero.

The actual language of the contract reads, “For Trial Users, and for Comp Accounts that iTunes provides on a gratis basis, no license or royalty fees, including Fees, will be due to Company.”

In laymen’s terms, this clause would essentially mean any artist who releases new music between June 30th (Apple Music’s launch date) and September 30th — which will no doubt be among the most popular records streamed on Apple Music — will not be compensated.

Once the trial period is over, Apple will reportedly pay 58% of subscription revenue to rights holders. The leaked contract does not specify how much publisher/songwriters will receive, but taking into account what iTunes pays for digital purchases, it’s likely that number is around 12%. Meaning, Apple’s 70% payout rate would be on par with its chief rival, Spotify’s.

Nevertheless, The New York Times reports that two states have launched investigations to see whether any anti-trust laws were broken in Apple’s dealings with major labels. Attorney generals in New York and Connecticut want to know whether Apple conspired with these labels to withdraw support for Spotify’s “freemium” service in favor of Apple’s model.