Maccast 2018.05.27

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Apple added 2M Apple Music subscribers in 2 months back in March/April
Ben Schachter of Macquarie Capital thinks the service will average 40 percent yearly growth for the next three years
Still says the business won't be as profitable as Apple's hardware
- High costs of royalties paid to artists and labels
- Still according to the RIAA in 2016 revenues were half of what they were in 1999, with CD sales.
- iTunes stopping selling music.
- As far as we know Apple pays out better then their competitors
- Data from the RIAA and the Trichordist (artist community blog)
- Apple pays about $8.00/per 1000 streams vs. about $4.00 for Spotify (average of about $6.00 on paid and $2.00 on free). Google and Amazon are $6.00 and $7.50 respectively
- Still Tidal is $1.30 per 1,000, but only has 0.50 percent of the market for streams vs. 10.5% for Apple and 47.78 percent for Spotify.
- Even still Apple's generated 22 percent of the market revenues despite having only 11 percent of the total streams.
YouTube, popular among unsigned artists, only pays around $0.80 per 1000 streams.
So how do artists make money in the era of streaming growth?
What about songwriters?
- Copyright Royalty Board rules in January o increase songwriter rates for interactive streaming by nearly 50% over the next five years
- They don't get per stream but either 1) a percentage of revenue or 2) total content costs whichever is greater.
  - Content costs are payments to label

Music Modernization Act, aims to do three things:
- Modernize music licensing
- Compensate "legacy artists for their songs service and important contributions to society"
- Allocate to music producers.
Key provisions include the streamlining of the musical licensing system and royalty protection for music made before 1972.
The bill seeks to combine legislation already in place in other laws
- the CLASSICS Act which applied to works written or recorded before 1972
- the Fair Play Fair Pay Act
- Musical Works Modernization Act for songwriters and publishers
- MP Act for producers and engineers
For Apple and music streaming services the big deal is, if the act becomes law, as the streaming services comply with the law including establishment of a data base of authors and composers for all the music they host, they cannot be sued for damages.
Apple the big music industry associations seem to support it and there, so far, hasn't been opposition from the streaming services.

Allows free tier to listen on demand to songs on the 15 personalized discovery playlists (curated)
They pay less to artists for free streams, about $2.11 per $1,000
Does this matter? Seems like media made a bigger deal about it then it is.

Setting up shop in Nashville in an effort to attract more country artists to the platform
Apple said stream of country music increased 66 percent in 2017 and it's "Pure Country" radio station it's second most popular curated playlist followed by "A-list Country" in Third.
Smart for Apple to start with a focus on rap, hip-hop, and R&B?
I definitely get a lot more country recommended to me (I like singer songwriters).

Apple seems on track to sell about 2.5 to 4 million units based on various numbers.
Estimates from KGI and Deutsche Bank are on the lower end.
Strategy Analytics says 600,000 in the first quarter, so the predictions (if sales stay around that level) might prove out.
I'm pretty sure you don't have a HomePod, but have you had a chance to hear one?
- What do you think?
Do you own AirPods? What do you think?