Since it first introduced Dolby Atmos to its platform, Apple Music has been adding more immersive audio to its service. It recently announced spatial audio incentives to music labels, which some independent labels are criticizing according to a new Billboard story. The music and entertainment publication Billboard recently issued a story focused on the concerns of independent music labels over questions about Apple Music’s new royalty incentives for the creation of immersive audio content.
In the story, Billboard says that Apple sent a letter to record labels announcing an incentive that will pay up to 10% more for immersive audio tracks recorded in the Dolby Atmos format. The story points out that on the surface the incentive seems like a good thing to offer artists higher royalties, but some independent record labels are telling Billboard some artists may lose money due to the additional costs associated with the production of immersive audio.
Other factors the independent labels point to that could hurt artists include the reallocation of the royalty pool, and the challenges related the transition to the production of Dolby Atmos immersive audio content. Citing an anonymous source, the Billboard story on Apple Music’s preference for Dolby Atmos, an unnamed music industry person says the choice should remain up to the artist.
“Spatial audio can be an interesting format when the artist elects to use it, [but] this should remain an artistic decision. For some music forcing a spatial mix is the equivalent of hanging a digital 3D version of the Mona Lisa and expecting Louvre patrons to prefer,” the source tells Billboard. “We prefer recording artists and producers maintain the freedom to choose whether to deliver a spatial mix without being financially penalized.”
Apple Music Dolby Atmos Incentives Designed to Improve Music Listening Experience
The story notes that Apple Music first announced Dolby Atmos content back in May 2021 before launching the content’s availability a month later for no additional fee to service subscribers.
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Circling back to the costs associated with the production of Dolby Atmos content, Billboard relies information from an industry source that claims an immersive audio mix per track costs about $500 or approximately $2,500 to $3,000 for an entire album, with one album costing as much as $15,000. The story states that cheaper Dolby Atmos mixes are available for as low as $50 per song, but reportedly Apple discourages cheaper options because they do not meet its standards.
According to the story, Apple recognizes the costs associated with the production of immersive audio, but the sources Billboard spoke to emphasize there are “strings” attached. The claim of these “strings” the source claims are a label or distributor must be receiving more than 50% of its revenue from tracks that are at least available in immersive audio.
This caveat, Billboard reports pressures the independent labels to convert back catalogs to immersive audio. Billboard indicates that back catalog music consumption accounted for about 73% of album consumption units in the U.S. during 2023. Apple, however refutes those claims the story stresses.
Getting deeper into the ongoing differences between labels and Apple Music, the sources that spoke to Billboard say the incentives may not be enough for small labels, labels with younger, less well-known artists, or labels that carry artists of genres that aren’t as popular with streaming music subscribers. The sources even claim that Apple Music is less likely to promote artists that don’t release immersive audio content.
“On one side, we understand Apple needs to develop their own strategy, but on the other side the new deal will badly impact our revenues,” a source told Billboard in the story. “In order to be able to maintain a same level of revenue [this year] vs. 2023 we would need to invest a minimum of $200,000 in spatial, [across] new releases and catalog.”
The story underscores that Dolby Atmos is a differentiator for Apple Music, but the story adds the challenges for independent labels extend beyond the costs associated with the format. Billboard adds that Apple Music’s royalty incentives are the latest development to occur in the world of streaming audio that were started not long ago when Deezer, SoundCloud, and Spotify introduced changes to their royalty policies.
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