Independent record labels say Apple’s recent promise to pay 10% more for Dolby Atmos tracks in Spatial Audio will take money away from them and give it to major labels and their stars, according to a new report Friday.
“It’s literally going to take the money out of independent labels and their artists, to benefit the biggest companies in the marketplace,” said a senior executive at one of the bigger independent record companies.
Apple’s promise to pay more for Spatial Audio tracks may benefit only the big music labels
Because Apple will pay its additional 10% out of a fixed pot of money, smaller record companies say more of it will go to big labels that can afford expensive Spatial Audio production and less of it will go to everyone else, according to a new report in Financial Times.
Apple prefers music tracks produced in Spatial Audio because it constitutes an Apple Music advantage over competitors like Spotify. So the company will channel more of its funding to labels that use Dolby Atmos technology at the expense of those who don’t.
Spatial Audio can cost $1,000 more per track
Music production using Dolby Atmos for Spatial Audio, which makes it sound like the music is coming from all directions, can cost $1,000 more per track to produce. That’s about $10,000 more per album. Reproducing older songs roughly double their cost to make. Even larger indie labels balk at those costs.
That’s why some influential indie labels have expressed concern. Namely, Beggars Group (which represents Vampire Weekend and Adele), Secretly (Phoebe Bridgers, Bon Iver) and Partisan Records (Ezra Collective).
“It’s going to benefit the biggest player, Universal, because they’re the ones with the resources to invest in that,” an unnamed executive said. “Whereas the independent sector … we’ve found it hard to justify the expense of creating spatial masters … we’re not in the business of chucking money just because Apple is saying you should be spending money on this.”
Another label agreed, saying, “The new deal will badly impact our revenues.”
Small labels hope to negotiate (or maybe take legal action)
Indie label executives said they hope to negotiate with Apple, which has helped pay for Spatial Audio reproduction in the past but did not comment for the story.
“Apple is probably most people’s number-two digital partner globally in terms of revenue,” said a record executive. “If [this policy] takes between 5 and 10 percent off of your global revenues, and not even because the songs aren’t performing but because you lose that money and it goes to Universal, the biggest player in the market, we’re definitely concerned. It’s hard enough to make money off of streaming.”
Sources said if negotiations with Apple fail, legal remedies may be sought.
And some indie label executives questioned the value of Spatial Audio, which Apple introduced in 2021 and made a part of Apple Music and its lineup of audio devices, including AirPods and HomePods.
“Forcing a spatial mix is the equivalent of hanging a digital 3D version of the ‘Mona Lisa’ and expecting Louvre patrons to prefer it,” said one music executive.