Apple Inc. “is demanding that record labels such as XL Recordings, the home of Adele, and Domino, the label behind the Arctic Monkeys, agree to a free three-month trial of Apple Music, during which they will receive no payment,” Christopher Williams reports for The Telegraph.
“The plan, only disclosed since the service was unveiled in at a glitzy event in San Francisco last week, has caused dismay among British labels, according to Andy Heath, the chairman of UK Music, the industry lobby group,” Williams reports. “Mr Heath told The Telegraph that to his knowledge no British independent labels have agreed to Apple’s terms or intend to on grounds they will ‘literally put people out of business.'”
“Mr Heath’s view was echoed by two record label bosses, who asked not to be identified because talks are ongoing and Apple demands strict secrecy from its partners,” Williams reports. “Apple Music is expected to have a major impact on the music market when it is introduced as part of an iPhone software update on June 30.”
Read more in the full article here.
MacDailyNews Take: Surely, if there really is a major problem here, Apple will work things out with smaller independents so as to not “put them out of business.”
But, seriously, are all of the labels’ current revenue streams going to instantly dry up the moment they sign up for Apple Music? Of course not, but this does highlight just how successful these labels think Apple Music will be; they expect their other revenue streams (downloads, Spotify, Pandora, etc.) to decline – significantly, it would seem – with the launch of Apple Music. On this, their thinking is sound (pun intended).
The potential benefits of a successful Apple Music to labels of all sizes must be considered. No short-term pain, no long-term gain.
Independents choice:
1. Not participate and get ZERO revenues
2. Participate, and get their cut day 91+
As it costs the labels NOTHING out-of-pocket, how is 90 days going to put them out of business? Sure seems to me that an revenue stream (perhaps turning into the major revenue source) should not be overlooked.
For the 90 day period in question, everyone who can will give Apple Music a try. Which means they won’t be using the other streaming services, hence no revenue from those streams.
In reality, since Apple is trying to build their brand with the 90 day trial, they should go ahead and pay the artist/label revenue streams out of Apples pocket. That would enable the labels to participate without the stress of giving away music free for 90 days. It should have everyone lining up at Apples door to be part of the trial. Certainly fairer than expecting small players to do Apples heavy lifting.
If everyone is listening to the free 90 day service from Apple, they won’t get any revenue anyway.
Good point. Apple is going to suck all of the air out of the room for a while.
Apple is the largest company in the world, now. I have been a loyal Apple customer for decades, I bought a 128k MacIntosh when they were announced and waited 30 days for shipment.
During those decades Apple has gone through several dry spells where reducing their revenue to nothing, or near nothing, for 3 months would have put them out of businesses. I hope Apple can remember those times when they were a niche player supported by a few loyal fans.
My diverse taste in music does not mimic that of Jimmy and the Dr. and the likes, so I find myself supporting quite a few Indies. Apple’s music strategy may facilitate a great opportunity for the big record labels to put unfair competitive pressure on smaller or less financially stable labels and independents, and does not shine a very favorable light on Apple, in my opinion.
Slight modification to above: small labels can put their new or unknown groups up for free on day 1 then follow up with their well known groups on day 91.
Such short sighted thinking. Sometimes you have to sacrifice in the short term for bigger gains in the long term
Is it any wonder the music industry is suffering so much financially. They act like dinosaurs.
My only argument with this would be that some smaller labels are ALWAYS worried about the short term, because they don’t have the money to wait for the long term. This is analogous to someone living pay check to pay check.
The argument being made is a valid one in this instance… if they lose a possible sale now to someone who’s getting the music for free then that’s still lost revenue. Waiting 6 months for a measly revenue check (assuming they’re paid quarterly) could break the label.
Personally, I think Apple should just pay the labels for the music during the trial period and then afterwards, if the user decides to subscribe, somehow recoup those fees.
But is Apple going to curate the titles?
Why sign up in the first 3 months or even 6 months ?
Let the big boys offer their music for free during the trial period and see how many free memberships turn to paid memberships in the following 3 months. Then let Apple make the case for Apple Music based upon revenue numbers.
I don’t see any advantage in going early.
“…other revenue streams (downloads, Spotify, Pandora, etc.)”
From what I understand, revenue from Spotify and Pandora is minuscule and there is no reason any record company can’t set up their own download site and keep 100% of the profits, especially now that everyone has ditched DRM.
Then again, maybe there is little reason for small, independent record companies to exist in the internet/Facebook/CD-Baby age.
To the Indies:
Tell Apple to go pound sand.
I think Apple would get pissed if someone told them the same regarding their intellectual property.
Wrong is wrong. Smells of Jimmy Bovine and Serial Beater Dre.
1. Between 2010 and today Indies made around $93 million, or approximately $23 million a year. Piracy causes the music industry $12.5 billion every year. It seems to me any attempt to decrease piracy should be embraced with open arms. $15 for a family of 6 is pretty inexpensive, even for the thieves.
2. Indies will have much more exposure on Apple Music than they do on iTunes because, A. Their music will be on many different playlists, which means there will be more chances for listeners to discover their music and B. The entire Apple ecosystem, which includes hundreds of millions of people, will be experiencing Apple Music over the next few months. Again, this means their music will heard by more people. This translates into more fans and bigger shows.
3. If people eventually opt-out of Apple Music than listeners will purchase the actual songs through iTunes, Amazon, etc. and this means the Indies will make more money because additional listeners will have saved their music.
If Apple wants to offer their music service free for 90 days, then Apple should cover the royalties for those 30 days. They are pushing THEIR platform; they certainly have the money to invest in it.
Asking small labels (or even the big labels) to subsidize what is Apple’s own promotion is insane. It’s no better than billionaire owners of football teams demanding that cities with budget problems build them new stadiums so the billionaires can charge more for the luxury suites. Insanity!