Eamonn Forde Meets… – each month, the veteran music business journalist speaks to a senior industry figure about the topics that really matter – and gets the opinions of the people that make the decisions.
February 2024: Silvia Montello, CEO of AIM. She talks frankly about the impact of Apple Music’s royalty-incentivised push for Dolby Atmos adoption and the impact on independent artists and labels.
Apple Music’s moves to increase royalties, by a rate of 10%, for tracks available in Dolby Atmos is being presented by the company as a magnanimous reward; independent labels, however, are reading it as a collective punishment and the opening up of a disquieting two-tier royalties system.
Silvia Montello, CEO of independent label trade body AIM, says her member labels are gravely concerned that the re-formatting costs for small labels will be prohibitively expensive.
Apple has informed labels that if 50% of an act’s streams are in Atmos then all streams from the act will qualify for the 10% royalty boost, even if they are not available in (or even streamed in) Atmos. This is a pro rata model, rather than an Atmos-centric one. Yet there are wider worries about the down-monetisation of non-Atmos music.
“It became clear that the existing non-spatial audio streams would begin to have a reduced royalty because the 10% uplift that was being given to spatial audio streams was going to come out of the overall royalty pools,” says Montello. “The 50% is based on consumption, not on the volume of catalogue.”
(There is currently some lack of clarity on how the 50% threshold is calculated – whether it’s at a label level or at a distributor level. When we get confirmation on this, we will update this story.)
Apple is pushing Atmos as an extra feature on Apple Music, not an upsell option to a higher monthly tier for consumers, like Tidal HiFi Plus. Increased payments are therefore not a magnanimous bonus for Atmos tracks because the “extra” 10% is being reallocated from the wider royalty pool for non-Atmos tracks.
Eddy Cue, Apple’s SVP of internet software and services, admitted in 2021, when the company began pushing Atmos, that it was going to be costly and time-consuming for a label to participate. “This is not a simple ‘take-the-file that you have in stereo, processes through this software application and out comes Dolby Atmos,’” he told Billboard at the time. “This requires somebody who’s a sound engineer, and the artist to sit back and listen, and really make the right calls and what the right things to do are. It’s a process that takes time, but it’s worth it.”
Can’t afford to remaster your catalogue in Atmos? Then your royalties will be reduced.
But the real Catch 22 is that the upfront investment to remaster in Atmos – which labels tell AIM can be anything from £500 a track to £2,000 an album – is such that labels would be materially worse off for a long time, possibly forever, and even if all their music was in Atmos.
“The labels said that, having calculated it, they didn’t think the 10% uplift would actually cover the costs of having to be mixed and be delivered in spatial audio,” says Montello. “They were concerned it would be a loss leader for them to do that. Many of them don’t necessarily have big chart hits. They have more niche audiences or they operate in niche genres. They feel like they won’t be able to participate in this initiative, and feel then that they’re being further left behind. We have this growing sense of a two-tier streaming system.”
There is also a worry that non-Atmos tracks would get less editorial support at Apple Music. But the bigger concern is that this is, currently, being treated as a unilateral decision by Apple. T&Cs have changed and labels just have to accept them.
“Our understanding is definitely that it’s not an opt-in contractually,” explains Montello. “The labels that we’ve spoken to, of which there have been a significant number over the last week or so, have all said that they’re not in a position to be able to opt out or to push back against the changes. Hence the concerns around how this plays out.”
AIM says it is seeking to open “meaningful dialogue” (a phrase that does a lot of heavy lifting) with Apple “to have a conversation and look at positive ways that we can engage with them to find better support for the independent sector” and “to make sure that there is as much of a level playing field here as possible”.
As part of this, AIM has a list of areas it wants Apple to focus on and work with the body to get solutions in place. These include:
- expanding the number of Apple-approved Atmos mixing companies as labels have to go through the (currently) small list of approved suppliers here;
- bringing on board more lower-cost options as too many labels say the existing suppliers are out of their budget range;
- looking at ways that smaller labels could get funding support for this;
- ensuring the royalty rate for non-Atmos music is unaffected;
- explaining that contractual terms with some acts means labels do not have the automatic right to order remixes or remasters of material without the full involvement and approval of the artists involved (i.e. even if they could afford to remaster in Atmos, it does not follow that their artist contracts allow them to).
This is not the first battle AIM has had with Apple Music. Even before it launched in 2015, AIM was opposing Apple’s moves to offer free three-month trials without paying royalties. A threatened AIM boycott saw that policy reversed (although Taylor Swift’s Tumblr post was erroneously presented as the hero here).
Montello admits that, even if this escalates, no indie label will go as far as pulling their catalogue from Apple Music. “War is never a good idea, if it can be avoided,” she says. “And the option of taking content down would really be one that I personally couldn’t foresee happening at any point soon.”
This, she says, is about levelling the playing field and ensuring that no music is treated as lesser, but especially not music on indie labels that do not have the resources to deliver Atmos mixes of their whole catalogues.
“One of the basic tenets is we don’t want to see the devaluation of music any further than it’s already been devalued over the last 15 years,” says Montello. “The principle of there being different royalty rates depending on something that’s outside of their control does seem like it would [most] benefit the bigger labels or some of the bigger artists.”
Apple presented itself as the force of resistance to an Orwellian dystopia in its celebrated 1984 Super Bowl commercial; but now it is at risk of treating another of Orwell’s books, Animal Farm (especially its line that “all animals are equal, but some animals are more equal than others”), less as a warning from history and more as an instruction manual.
