UK Indie Labels Say Apple Music Free Trial Could 'Literally Put People Out of Business'

Apple's newly announced music streaming service, Apple Music, is upsetting a handful of independent United Kingdom-based music labels who house artists such as Adele and Arctic Monkeys (via The Telegraph). Under the terms being proposed by Apple, labels will receive no compensation during the three-month free trial given to Apple Music users. The labels argue that this trial period will "literally put people out of business," and refuse to support the service, which launches in under two weeks on June 30.

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According to Andy Heath, the chairman of industry lobby group UK Music, no British independent labels have agreed to Apple's terms or plan to in the future. Most of the labels claim Apple hasn't thoroughly prepared the labels for the launch, and that the time between its announcement and launch has left little time for contract negotiations.
“If you are running a small label on tight margins you literally can’t afford to do this free trial business," Heath stated. "Their plan is clearly to move people over from downloads, which is fine, but it will mean us losing those revenues for three months.

Apple hasn’t thought this through at all and it’s not like them. They can’t spring a contract like this on us three weeks from release."
Apple has attempted to reassure skeptical labels that once the three-month free trial ends, Apple Music will support a 71.5 percent revenue sharing contribution to labels backing the streaming service. The number will even be slightly higher -- about 73 percent -- outside of the United States to counterbalance the no royalty payment policy during the trial period. It's still not enough for some labels, according to Heath.
“I think the dynamic here is nothing to do with the royalty rates but there are elements of these deals that are just too difficult for smaller labels to do. It will literally put people out of business.

Smaller labels would be completely screwed. Apple just has to move on this.”
Apple Music was officially unveiled last week during WWDC as a three-tiered service with basic music streaming, a live global radio station, and a social media platform that allows fans to follow favorite artists. The long-awaited service will officially launch on June 30 with a three-month trial period that will allow everyone to try it out for the summer. Afterwards, Apple Music will cost $9.99 per month for users who want to stick around.



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41 months ago
I don't understand how the labels are "losing revenue" during the 3 months? Are they claiming that downloads will cease entirely during those 3 months? If so, that's a bit of a stretch. It's akin to the movie industry claiming that each pirated movie equates to one lost sale (when they know full well that someone pirating a movie doesn't mean they had any intention of buying it).
Rating: 17 Votes
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41 months ago
I must be slow. How is "not receiving royalties" for three months, for something that didn't exist before, going to cripple Indie record labels? It's not like royalties that they are currently receiving, are going to be taken away somehow? Apple Music is surely an add-on to already existing streams? Can someone explain?
Rating: 11 Votes
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41 months ago
Pointless. Simply pointless. For decades artists not only didn't get paid when their songs played on traditional airwaves, but they often bribed the station managers into playing their music.

So we've gone from a point where independent artist are willing to pay to have their music heard, to a point where they feel robbed when somebody plays their song.

I have a massive music library. I've never stolen a song. A lot of the songs I've bought since streaming came along are a direct result of hearing new music for the first time on the free versions of Pandora, iTunes Radio or iHeartRadio.

When an independent artist needs to be paid to be heard for the first time, they simply won't be heard.
Rating: 7 Votes
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41 months ago
Say you are an Indie label with a moderately successful underground band (or, a band running its own label, the line is blurred these days, but same difference) with a hotly anticipated new album scheduled for release this summer. You've worked your arse off on recording, post-production and promotion, and the band have made personal sacrifices whilst they spend time writing, rehearsing and recording too. Fortunately recording is cheaper than it used to be, thanks to the awesome Logic Studio X and everything else, but you still can't actually afford to pay the band anything, because you only broke even on the last album due to promotion costs, which are actually paid by all labels, even for artists that look like they've "come from nowhere entirely under their own steam".

You've promised the band that they'll get something back this time, apart from just screaming fans. The launch gigs are booked (which by the time you've paid venue, transport and accommodation fees you're already making an irreversible loss on), the bribes for favourable reviews have been paid (yes, that is really how it works... how else do you explain half the crap out there?) and the t-shirts are printed. You're running on impossibly tight margins, and you're relying on iTunes revenue to bring in a couple of grand so you can break even or maybe even better, because Spotify and YouTube pay near-as-damnit nada.

Then along comes Apple Music. If you sign-up, then all your fans listen to your highly anticipated album for free. Zero income. Legitimised piracy. By the end of the summer when revenue starts to trickle in, the fans have moved onto some other band (as they should) and maybe only listen to your album occasionally. Your only revenue opportunity is missed. You've helped promote the new music service of one of the most cash-rich corporations in the world, and got basically **** all back. The band, disheartened, give up and train as accountants. No Soft Bulletin, no OK Computer, no Parklife, no <insert your favourite indie band's career-defining third album here>.

If you don't sign up to Apple music, then people might at least still buy the vinyl or get the download from Amazon or iTunes. You'll loose out on people hearing your album on Apple Music, but you live to fight another day.

So, of course I'm not signing up my indie label to Apple music.

Some of you lot don't have a clue.

SL
Rating: 7 Votes
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41 months ago
I'm surprised by the lack of sympathy for indie labels but maybe I shouldn't be. Personally, I don't think music streaming is sustainable and I don't think people will notice until years down the road when we finally notice that there's just not as much music being produced as there used to be.
Rating: 7 Votes
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41 months ago

So? Just get on board once the free trial is over then. What do they want? Apple to just give them money? Will music magically be outlawed in 90 days?


You seem to have missed the point or misread the article.

What if I told you I'll hire you for a job with a really great salary, but I can't pay you for the first three months. Would you do it? Could you afford it? Or would you literally be homeless if you took the offer?
Rating: 6 Votes
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41 months ago
The temporary solution to this seems to be that the indie music should not be included in the free trial, but should be included once users have started paying.

Presumably artists can make more money from streaming. If they get £1 from me every month, rather than a one off £9.99 that's got to be better? Even if they have to wait 3 months for payments to start? Or are they expecting a lot of people who use the service for 3 months and then don't bother to carry on?

Also, the article says one of the labels complaining houses Adele?

"Adele tops young musicians rich list (despite not releasing an album for four years)"
Link: http://www.dailymail.co.uk/news/article-3051643/Adele-tops-young-musicians-rich-list-despite-not-releasing-album-four-years-Singer-earns-5million-past-12-months-fortune-goes-past-50million.html

They're clearly not on the breadline.
Rating: 5 Votes
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41 months ago

You seem to have missed the point or misread the article.

What if I told you I'll hire you for a job with a really great salary, but I can't pay you for the first three months. Would you do it? Could you afford it? Or would you literally be homeless if you took the offer?


Your analogy doesn't make sense. You suggest it's an all or nothing – "give up your existing job to only work for Apple, and then not get paid for three months"... That's surely not what's happening here? Surely the record labels already have jobs, and are being paid for it – Apple is simply saying 'hey, sign up with us as well, and AFTER 3 months, on top of what you are earning now, we will pay you X%'...
Rating: 5 Votes
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41 months ago
So? Just get on board once the free trial is over then. What do they want? Apple to just give them money? Will music magically be outlawed in 90 days?
Rating: 5 Votes
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41 months ago

I don't understand how the labels are "losing revenue" during the 3 months? Are they claiming that downloads will cease entirely during those 3 months? If so, that's a bit of a stretch. It's akin to the movie industry claiming that each pirated movie equates to one lost sale (when they know full well that someone pirating a movie doesn't mean they had any intention of buying it).


Apple is a HUGE name, and millions of people have heard that they can get 3 months of free music on Apple Music. You don't think this will have any effect on downloads or other paid streaming services?

There's no one-to-one equivalency of course, but certainly people can realize the following scenarios are likely, both of which would lose labels and artists potential revenue:

• Let's say I'm a Spotify Pro customer. I decide to try out Apple Music for 3 months. During those 3 months, any artist who would have gotten royalties for each time I would have listened to them on Spotify, will get no royalties whatsoever for any listens on Apple Music for 3 full months.

• Let's say I'm an iTunes customer and I normally buy my music to download. Apple's offering 3 months of streaming for free. Instead of buying that new song, I'll find it on Apple Music and listen to it as many times as I want to the next three months for free. By then, more songs come out and I forget about this song or only listen to it once in a blue moon, resulting in no or nearly no revenue for the artist or their label.

Multiple these by thousands of times and it will start to add up. Not to mention that this will further play into the mindset that music should be free or dirt-cheap and the person in the second scenario will probably be less likely to purchase tracks in the future.

I'm not saying it's impossible any artists or labels will benefit in the long run, but it's very clear to me why at least in the short run this will likely lose artists some money.
Rating: 4 Votes
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