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Dolby Atmos Divide: Is Apple's Spatial Audio Bet Leaving Indie Artists Behind?

Apple Music's embrace of Dolby Atmos promises an audio revolution, but at what cost? Is the stage set for innovation, or are we tuning out the indie scene? And who is really benefiting from it?

Photo by James Yarema / Unsplash

Since Apple introduced Dolby Atmos to its streaming service in 2021, the platform's determination to promote the new format has not diminished. Sometimes leading to controversies. One of the recent highly publicized moves is Apple's promise of an up to 10% increase in royalties for tracks produced in spatial audio, announced in January 2024.

Sounds great, right? Well, not everyone is dancing to this spatial audio tune. Counterintuitively, the royalty increase isn't tied to how much spatial audio is actually listened to but rather to the proportion of a label's output in this format.

This has led to some disgruntled music fans on Reddit openly declaring that they prefer to switch off Atmos altogether, citing less-than-stellar transitions that don't quite live up to the hype.

Despite the mixed reception, Apple is pushing hard for Atmos adoption. The company boasts a whopping 5,000% increase in songs available in spatial audio since the feature's launch in 2021. However, they've been a bit coy about the exact figures behind this impressive-sounding statistic.

The implications of this spatial audio push are causing quite a stir. Labels that can remaster their entire catalog in spatial audio stand to see a considerably greater revenue increase, even without a corresponding increase in streams. Meanwhile, those who can only afford to remaster a portion of their catalog may be left behind. As Apple Music's overall spending remains unchanged, so more money for spatial audio tracks inevitably means less for everyone else, a concern.

This has led to some independent record labels, representing artists like Phoebe Bridgers and Vampire Weekend, pushing back against Apple's plans. They argue that the royalty bonus will siphon money away from those who can't afford the higher production costs associated with spatial audio.

So, is Apple's spatial audio bet a democratizing force in high-quality music production, or is it deepening the divide between big labels and independent artists? As the debate rages on, one thing is clear: the plot, much like the audio, has thickened. Let's dive in and try to untangle this spatial audio web.

The sound of money

Apple is not exactly a struggling startup. With a market cap that could fund a small country (or a few), you'd think they could spare a dime for the starving artists. But is that what they do with generous royalty increases?

In other words, the rich get richer, and the poor get... well, you know the rest.

But just how much dough are we talking about here? Apple has been notoriously tight-lipped about its streaming payouts, but back in 2021, it claimed to pay an average of $0.01 per stream, and this number has been highly publicized since then. Sounds generous, right? Well, not so fast.

Friend Within, a musician from Liverpool, has pulled back the curtain on the real numbers. In October 2023, he shared his streaming royalty data on Facebook, revealing that Apple Music paid him a measly £0.000299 per stream. It was about $0.000365 in USD during that time, a far cry from the touted $0.01.

Credit: Friend Within

Meanwhile, Spotify, often painted as the villain in the streaming wars, paid him 10.03% more, despite industry claims that Apple pays up to 90% more per stream.

But what about the big guns? Maybe such outrageous payouts are more common for smaller artists. While it’s almost impossible to find high-confidence data on how much exactly artists are earning from streaming services, I found a walkaround — the marketplace of royalty exchange.

Sometimes, they sell individual track rights and provide details of earnings from different streaming services. Let's look at Lil Uzi Vert's hit "Prices." In 2022, the track earned $818 from Apple Music and $754 on Spotify.

According to Chartmetric, the song was streamed over 20.7 million times that year on Spotify. In contrast, Apple doesn't share historical stream count data. (I wonder why? Could it be to hide their paltry payouts?)

We’ll have to improvise here. Using market share data (in Q2 2022, Spotify market share was 30.5%, and Apple Music held 13.8%), we can estimate that "Prices" had around 9.37 million streams on Apple Music. That works out to a payout of $0.0000873 per stream, compared to Spotify's $0.0000364. Sure, Apple's paying more, but it's still a far cry from that magical $0.01 figure.

Let's crunch some more numbers. Travis Scott's 2023 Franchise Single, which includes four tracks, earned $171 from 52.8 million Spotify streams, which amounts to $0.00000324 per stream. Using our market share trick again, we can come up with an approximate relative number of streams on Apple Music during the same timeframe. In Q3 2023, Spotify's market share was 31.7% and Apple Music's—12.6 %. So we can assume that Franchise tracks had an estimated 20.97 million streams on Apple Music, and the payout was $120, or $0.000001627 per stream. Again, pretty low numbers.

So, what does this 10% spatial audio royalty bump really mean? For the average artist, probably not much. You're making $10 million in Apple Music royalties from 100 songs. Let’s say you invest $1,000 in an Atmos version of each track, totaling $100,000. That investment might yield an extra $1 million in royalties. Not bad, but how many artists can boast those numbers?

For Lil Uzi Vert's "Prices," spending $1,000 on an Atmos mix would net an extra $81 if it happened in 2022, a number likely to dwindle over time. That's a tough pill to swallow.

Todd Herreman, an Audio Arts Professor from Syracuse University's College of Visual and Performing Arts, also doesn't buy the hype of increased royalty for spatial. "If Apple is not charging a separate tier for the spatial audio playback, but is paying more (up to 10%) per stream, the simple math is that the extra 10% has to come from somewhere (the non-spatial streams)," he argues. "The justification that the cost of an Atmos mix is more than a traditional stereo mix may be valid, but the counter-argument that it negatively impacts those who either chose not to pay for the additional production of the Atmos offering (on top of the stereo mix), or for lower production budget projects, simply can't afford it, rings true to me."

As Herreman puts it, "Given that most streaming services have become profitable, and over time have worked tirelessly to reduce their payouts to rightsholders as well as trying to negotiate lower payouts to record labels, it seems that an increase in the payout to one format at the expense of another, should be met with skepticism (or outrage...)."

Ultimately, Apple's spatial audio play might be more about optics than artist support. While the tech giant touts innovation, indie labels wonder if they'll be forced to pay for a format that might not pay off.

The price the artists pay for immersion

Some might argue that mixing in Dolby Atmos is a breeze. "You don't need a special room, you can do it on headphones and place your sounds directly from within Logic," claims one Reddit "expert," to be destroyed with criticism. There's even a tutorial on Dolby's official YouTube channel, promising to guide you through the process.

But let's be real. Mixing in Atmos isn't like whipping up a batch of enchiladas. As one Redditor puts it, "Logic offers Atmos mixing. And it's an incredibly affordable DAW. Indie Atmos mixes are coming. Will they be good? Probably not."

Mixing and mastering in stereo alone is a tough task, requiring years of study and a deep understanding of the craft. It's no wonder most artists, even indie ones, shell out the cash to hire a professional audio engineer. With streaming platforms using different Loudness Units Full Scale values and normalizing volume at their whim, mastering is no longer just about CDs.

But Atmos? That's a whole new level of complexity. Most indie artists use Ableton Live, which doesn't even support Dolby Atmos. They'd have to switch to pricier DAWs like Logic, ProTools, or Cubase to join the spatial audio party.

Logic may be the life raft for the budget-conscious, but the Dolby Atmos Renderer? That's another beast altogether, with the Atmos rendering suite price tag hanging like a sword of Damocles over many artists' heads, approximately a cool $1,000.

And it doesn’t end there. Dolby itself whispers sweet nothings about finalizing your mix in a multichannel studio with at least 5.1.4 speakers. Some streaming services and labels go a step further, requiring mixes to be performed in a room with 7.1.4 speakers or better. A suggestion that spirals any aspiring artist into a financial abyss. An Atmos room setup in L.A. will probably cost about $2,800/day; plus you have to think of a mix engineer’s rates, averaging $40.60 per hour. A full day is probably two mixes if they are familiar with working with Dolby software and the RMU, etc.," reads a daunting insight from the depths of Reddit, totaling to about $1,500 per track.

Even experts can get it wrong. Take Giles Martin, the mastermind behind The Beatles' Dolby Atmos mixes. He admitted that some tracks might take “ages” to work on. If a veteran like Martin can stumble, what hope do indie artists have?

But enough of Reddit analytics.

Christian R. Schultz, Co-Founder & CEO at Masterchannel, AI sound mastering software, breaks down the harsh reality: "The cheapest price we heard from companies doing spatial with engineers is between $200 and $300. But the typical price is $500 and upwards for one song. If you're Taylor Swift, then you're gonna make $20,000+ of royalty per track, so the investment is clearly worth it. But if you are an independent artist who relies on streaming services for exposure, it's not unlikely you'll only make $500 - $1,000 over the whole lifetime of that track. So if you only make $500 per track and now you have an additional cost of, let's say, $300, that cuts heavily into your margins."

Schultz continues, "You'll just say, no, that doesn't actually make sense, since you also have to remember that this is just an additional format to the stereo format you also need to deliver. I think Apple really runs into the risk of 90% of the market sticking with stereo. There's no real incentive for independent musicians and labels to adopt the new format."

And let's not forget about the listeners. To truly appreciate the spatial audio experience, you must shell out for the right gear. Thinking headphones? Be prepared to spend at least $500 for a remotely decent pair. And that's just the beginning.

Apple has a whole set of guidelines on how to listen to spatial audio properly. But let's be honest, who has the time or resources to follow all those steps? Not to mention that for listeners, the cost of admission to this aural wonderland might be beyond reach, making one wonder: in the quest for the supposedly ultimate sound experience, who really pays the price of immersion? Definitely not Apple.

Does Dolby Atmos always hit the right notes?

From the get-go, Dolby Atmos on Apple Music was marketed as a game-changer. The idea? Tracks would no longer be flat and directional but instead offer a 3D audio experience, with sounds coming from all around you. Imagine the strum of a guitar not just reaching your ears but swirling around you or the echo of a drumbeat bouncing off imagined walls in your room. That's the promise of Dolby Atmos.

However, reality hits a bit differently. Dive into the depths of Reddit, and you'll see a mixed bag of reactions. For every user blown away by the depth and immersion of spatial audio, there are a dozen left scratching their head, unable to grasp the difference or, worse, feeling let down by an overhyped experience.

Some users can't get over how good it is. But step into the comment section, and the tune quickly changes.

One Redditor, lured by the siren song of Apple Music's Dolby Atmos offerings, signed up for a subscription, only to be met with a harsh reality: "After checking out a few songs, I have to say I was unfortunately very disappointed, as the audio quality sounded very low and the mixes were very weird and off-sounding sometimes."

Another laments, "Most songs in spatial audio lose their punch, sound empty, and/or greatly diminish the feel."

Even audiophiles, those golden-eared guardians of sound quality, are skeptical. One self-proclaimed audio aficionado declares spatial audio on AirPods to be nothing more than a gimmick, citing a significant decrease in volume and questionable processing when switching to Spatial Audio mode.

So, what's going on here? Is Dolby Atmos the real deal, or just a high-tech smoke and mirrors act?

Simon Hestermann, Co-Founder & CTO of Masterchannel, knows a thing or two about spatial music, and even holds a patent to prove it. Hestermann pulls back the curtain on the current state-of-the-art approach to Dolby Atmos mixing, and it's not a pretty picture.

"Artists like Taylor Swift and Dua Lipa start with the recording process in stereo, they do the mixing in stereo, and they even do the mastering in stereo. Then they export instrument groups, e.g. a vocal group, a guitar group, and a piano group from the stereo mix session and often send that to a separate engineer who then uses those stems to place them in the virtual 3D space and create an Atmos version of that," he explains.

But here's the kicker: "It is the current state-of-the-art approach, and the process itself is partially the reason why the end result doesn't sound as good. It's because the instruments you work with were never intended to be used in a spatial context. They were all recorded and engineered to be used in a stereo context."

Hestermann acknowledges that spatial audio has its place, particularly in cinematic contexts or for immersive storytelling. But the results are less than stellar when it comes to music on common headphones, even Apple's glorified AirPods.

"My experience, and that's, I think, the common opinion among engineers, it actually sounds worse because the technology can make music sound artificial based on the rendering algorithms that are used, or if more conservative approaches are used, the difference between stereo and spatial are neglectable," Hestermann says.

"It's very hard to create really pristine-sounding spatial tracks, especially if you work from stems, which is the common way that it's worked with. So it feels like it's really all about the marketing," Hestermann concludes.

Industry impact: winners and losers

On the surface, Apple Music's push for Dolby Atmos seems like a win-win situation. Dolby Atmos content is popping up everywhere, from Apple TV  and Netflix to Disney+, TIDAL, and Amazon Music. So far, Spotify has been the only notable absence.

Behind the scenes, however, there's a different narrative unfolding. Christian R. Schultz, Co-Founder & CEO at Masterchannel, pulls back the curtain on Apple's true motivations: "When a few years ago Apple came out with spatial audio support on Apple Music, their main incentive was to distinguish Apple Music from Spotify and the other competitors by saying, OK, we have lossless audio quality and Dolby Atmos, which gives you an even more immersive listening experience."

But it's not just about the music. "They might even want to push it because they sell hardware: Airpods, Vision Pro — all of it fits nicely into their ecosystem of new technology," Schultz adds. It's a classic Apple move: lock users into their ecosystem and watch the profits roll in.

To ensure they had content to showcase, Apple came up with the royalty incentive, a carrot dangled in front of the industry to encourage more spatial audio production.

For the top tier of the industry, it was a no-brainer. "A major label with artists like Taylor Swift essentially needs to convert one album to spatial audio. Everyone listens to that album, so they immediately get the return on investment—that 10% additional royalties," Schultz explains.

But the math doesn't add up for independent labels. They'd have to convert a much larger portion of their catalog to see any real benefit from the royalty bump.

"We saw that asymmetry and we said, you know, we do AI mastering in the classical sense already. Why don't we do the same for Spatial audio and offer a more cost-effective alternative? And so we started rolling out Spatial Audio mid of last year, and the word spread pretty quickly we converted a lot of tracks for many labels. And everything was fine until the beginning of this year when Apple issued new guidelines and said we discourage the use of AI in the spatial upmixing process," Schultz reveals.

A deep dive into Apple's updated asset guide confirms Schultz's story. The guidelines now prohibit practices like extracting stems from stereo mixes and upmixing from stereo to create Dolby Atmos tracks, techniques that AI-driven solutions like Masterchannel rely on.

His co-founder, Simon Hestermann, offers more insights to the story: "With our technology, we actually take the final stereo master and use AI to extract stems from it. These stems end up much closer to the original because they have the mastering still baked into them. We then use an algorithm that also places stems in 3D space, making sure that when they're folded down and listened to with headphones, they sound much closer to the original stereo system setup than an engineer's version."

He continues, "After the Atmos version is ready the next step is to go back to the artist and make the artist sign it off. With engineers, it often sounds quite different from what they actually had envisioned since they worked in the stereo space and the engineer was working with the stems that come from the mix. So it will always sound different than the actual mastered output. And we've had quite a few instances where the artist actually prefers the AI version because it is way closer to their original vision and original stereo master."

It's a compelling case for AI's potential to democratize spatial audio production and give indie artists a fighting chance. But Apple's not having it.

"From a pragmatic perspective, many artists prefer the AI version. This is also what we brought up to Apple, as we met with them recently. We said, OK, you know, we have a few artists who actually prefer the AI version. And then, in that moment, they had to admit that in those scenarios, we overrule the artist's decision, and as Apple says, you have to use the human version no matter if you like it or not," Hestermann reveals.

Apple's not alone in this fight against AI. Mainstream artists like Billie Eilish, Nicki Minaj, and Katy Perry have signed an open letter decrying the use of their art for AI training, calling it an "assault on human creativity." Industry leaders like Universal Music are also pressuring streaming giants to stop AI access to songs

But is it really about protecting creativity, or is it a desperate attempt to maintain a market monopoly and shut out cash-strapped newcomers? I’ll let you decide.