Tag Archives: Bloomberg

Apple is seeking to cut license royalties paid to record labels

While the share of revenue from streaming paid to record labels and recording artists is rising, Apple Inc., among the fairest licensees in on-line music, is now seeking to reduce record labels’ share of revenue from streaming.

Bloomberg reports that the record labels’ deal with Apple were expected to expire at the end of June, though they are likely to be extended if the parties can’t agree on new terms, according to the people who asked not to be identified.

“Part of negotiations is to revise the iPhone maker’s overall relationship with the music industry.”

The negotiations would bring number two Apple closer to the rate industry streaming leader Spotify Ltd. pays labels, and allow both sides to adjust to the new realities of the music industry. Streaming services have been a source of renewed hope following a decade of decline in the digital age.

Patent holders may believe there is an element of deja vu taking place in music content. Once rock solid copyrights are now subject to renegotiation and diminished revenue because of lost leverage due to lower valuations and easier access. A key will be finding what will make copyrights more relevant again, and creating more competition among streaming services for content.

More Optimistic

Record labels are now more optimistic about the future health of their industry, which grew 5.9 percent last year worldwide thanks to paid streaming services Spotify and Apple Music. They recently negotiated a new deal with Spotify further lowering their take from the service, provided Spotify’s growth continues.

“Apple initially overpaid to placate the labels,” says Bloomberg, “who were concerned Apple Music would cripple or cannibalize iTunes, a major source of revenue.”

For the full Bloomberg article, go here.

Sales vs. Streams 

Though online sales of music have plummeted over the past few years, they still account for 24 percent of sales in the U.S., according to the Recording Industry Association of America. Vinyl record sales also are up but they are still limited to a specialty audience, while CD sale are way down.

According to Billboard, streaming led the U.S. music industry to its first back-to-back yearly growth this millennium and in the first half of 2016 was the single ­highest source of revenue in the U.S. recorded-music industry, ­bringing in $1.61 billion. All three major labels — Universal, Sony and Warner — posted streaming-driven double-digit percent boosts in earnings throughout the year.

The Trichordist, a publication devoted to “Artists for an Ethical and Sustainable Internet,” reports that Spotify was paying .00521 back in 2014, two years later the aggregate net average per play has dropped to .00437 a reduction of 16%.

                     Apple Music generates 7% of all streams and 13% of revenue

YouTube now has their licensed, subscription service (formerly YouTube Red) represented in these numbers as opposed to the Artist Channel and Content ID numbers we used last time. Just looking at the new YouTube subscription service numbers isolated here, they generate over 21% of all licensed audio streams, but less than 4% of revenue! By comparison Apple Music generates 7% of all streams and 13% of revenue.

Apple sits in the sweet spot, generating the second largest amount of streaming revenue with a per stream rate .00735, nearly double what Spotify is paying. But, Spotify has a near monopoly on streaming market share dominating 63% of all streams and 69% of all streaming revenue.

The top 10 streamers account for 99% of all streaming revenue.

New Technology, New Values

IP rights holders, including those with patents and trademarks, need to think through where they fit in the current digital scheme of things, and how much should be expected in a world that finds not paying for others’ intellectual property increasingly acceptable.

For patent holders, the streaming/copyright battle could be the proverbial canary in the mine.

Image source: fortune.com

Apple was paid $1B for rights to feature Google search engine

It’s no accident that Google is top dog for search on iPhones and other Apple products. It cost the company $1 billion in 2014 according to possibly leaked documents.  

It’s being reported that as part of a five-year case against Google’s apparent use of Oracle’s Java technology, a court heard that “at one point in time the revenue share [between Apple and Google] was 34 percent,” according to a Bloomberg report.

Apple received $1 billion from its rival in 2014, according to a transcript of court proceedings from Oracle Corp.’s copyright lawsuit against Google. The search engine giant has an agreement with Apple that gives the iPhone maker a percentage of the revenue Google generates through the Apple device, an attorney for Oracle said at a Jan. 14 hearing in federal court.

Apple-Google1Oracle has been fighting Google since 2010 over claims that the search engine company used its Java software without paying for it to develop Android. The showdown has returned to U.S. District Judge William Alsup in San Francisco after a pit stop at the U.S. Supreme Court, where Google lost a bid to derail the case. The damages Oracle now seeks may exceed $1 billion since it expanded its claims to cover newer Android versions.

Apple has something to be embarrassed about, claiming that it is dedicated to protecting customer information and not profiting from it.

TechCrunch reported that “Another factoid thrown up by the case included a claim that Android has generated $31 billion in annual revenue to date, of which $22 billion is profit.”

*****

Reports of the death of IP licensing appear to be exaggerated.

 

Image source: valuewalk.com

Video: Smartphone Patent Fight is Also a War of Words

“What’s Going On?” says Google Chief Legal Officer About Collaborative Bidding –

The battle between Google (GOOG) and is smartphone rivals including Apple (AAPL) and Microsoft (MSFT) got more heated last week.

In a public statement flagged by Bloomberg TV Google Legal Officer David Drummond as saying: “Apple and Microsoft had been at each others’ throats, so when they get into bed together you have to wonder what’s going on.”

Google, with just 693 patents, recently added to its portfolio with a purchase of an additional 1,000 from IBM. It is not clear what those patents read on. Google and its competitors are actively interested in InterDigital’s (IDCC) heavily 4G portfolio.

Drummond said last week “Android’s success has yielded something else: a hostile, organized campaign against Android by Microsoft, Oracle, Apple, and other companies, waged through bogus patents.”

Steven Levy who wrote a book on Google, a latecomer to patent strategy, believes the public war of words may not be enough to fend off businesses holding patents the company needs.

Video source: Bloomberg


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