Apple Not Coercing Indie Artists Into Apple Music Deals With iTunes Removal Threats

[simonmet]

It doesn't surprise me for a second if Apple are very careful in their negotiations to keep everything off the record and engage with clients one-on-one so they don't have a "co-witness" to support their claims.

Apple are proven to be heavy handed negotiators. Personally if I was this band I wouldn't be concerned in the slightest if they had their stuff pulled. I'd rather buy music in lossless directly from the artist anyway without giving Apple an undeservedly high 30% cut.

 

[ArmCortexA8]

Earlier this week, singer-songwriter Anton Newcombe of The Brian Jonestown Massacre took to Twitter to rant about the Apple Music terms he had allegedly been offered by Apple, accusing the company of threatening to take his music off iTunes if he did not agree to the three-month free trial period that's been a sticking point with indie artists.

Calling Apple a "satanic corporation," (and mistakenly tweeting at an "Apple Official" Twitter account not run by Apple) Newcombe said Apple offered him a deal that required him to provide his music for free for three months, and when he asked what would happen if he refused, he was told his music would be removed from sale on iTunes.....

I say too bad. I won't / don't pay for music simply because I will not partake in the corrupt "industry" which goes against the whole idea and design of copyright. Read: http://questioncopyright.org/promise. Until Copyright is implemented as it was designed, I wont help others financially. To pay for any music under the corrupt system is just making the fat cats fatter. No thanks.

 

[asiga]

Sad times for anybody who chose Apple as an user-friendly alternative back in the years when Microsoft aimed to control the life of everybody. It's sad but if you liked the Apple from the early 2000s, that's all gone for ever. The new Apple, money, money, money, and iControl the iDevices and iLifes for all iHumans.

 

[LethalWolfe]

I think you're misunderstanding a lot of very basic concepts here. Like your comment above that states:

I've been working on the indie film/original web content side of things for about a decade so I think have a pretty good grasp of the reality of the situation.

Ummm... no one who is generating content that actually attracts a paying audience is being asked to do this. If you get 10,000 hits per video whenever you upload something to YouTube, chances are you're going to work for free. If you draw 10,000 paying ticket holders to every show you perform on stage -- you're getting paid. Do you see the difference there?

Views, downloads, streams, ticket sales, etc., are empty stats w/o revenue attached to them. For example, at least one artist has said that Tidal pays out about three times what Spotify does so 1,000 streams on Tidal is more lucrative than 2,000 streams on Spotify. Would you rather have more streams or more money in your pocket?

They can bring hundreds of millions of people to the platform where your music lives -- which is a pretty amazing opportunity that most artists can't possibly create on their own.

But other other companies can create similar opportunities and the artists are still responsible for their own marketing to try and stick out from the crowd. I guess being another needle in another haystack doesn't blow my socks off anymore. Sure, being in more places hypothetically improves your odds of being 'discovered' but, meh, I'm over 'opportunity' sales pitches.

Do you expect Apple to pay people just for hosting their music even if no one listens?

You mean kinda like brick & mortar stores that buy their inventory and then sell it to customers? Or cable/TV networks that pay for content and then use commercials to generate revenue? In the streaming world, Netflix paid $118 million for the right to stream the show Friends. That's Friends though, so of course people are going to watch Friends (and maybe even sign up for Netflix just so they can watch it), but Netflix even paid some money up front for the indie doc in my sig with no guarantee that anyone would watch it (it isn't on Netflix anymore so I should probably update my sig).

I have to say, I really don't understand your issue here...

Try making a living as an artist in the entertainment industry and what I'm talking about will probably resonate more. Still might not agree with me but it would probably make more sense. Below is the Cliff's Notes version.

1. If the claim that Apple has threatened to kick artists out of iTunes entirely if they don't agree to the three month trial then that's a really shady move by Apple.

2. The three month trial is most likely going to do insane traffic and when your paycheck is tied to traffic I completely understand not wanting to leave three months worth of insane traffic money on the table. For all the 'we love music' talk you'd think Apple would be willing to eat such an insignificant cost relative to its bottom line. If someone offered to give you 9 months of wages for 12 months of work I doubt you'd accept it w/o at least suggesting, "How about 12 months of wages for 12 months of work?"

3. I'm not enamored with the potential reach a distributor has, I'm interested in the realistic amount of direct and/or indirect revenue I'm likely to earn via said distributor.

For example, my documentary was on many online platforms when it first came out (Netflix, Hulu, Amazon, PSN, XBL, Vudu, iTunes, etc.,) and while Netflix had the biggest audience potential the distribution company I worked with said we should push people towards iTunes, not Netflix (we were responsible for our own marketing), because we had a better shot of making more money with iTunes even though the audience pool was smaller. This is because iTunes does a revenue split where as Netflix just does a lump sum up front.

For a more apples to apples comparison, if I was doing a multi-platform release today, and was responsible for my own marketing, I would push viewers towards Vimeo's paid service because it has a 90/10 split as opposed to Apple's 70/30 split. Sure, iTMS has more brand recognition and more potential reach, but if the onus is on me to tell viewers where to go I'm going to point them towards Vimeo first.

 

[unattributed]

What a ****** move by Apple! This in unacceptable for artists/musicians and a disgrace to them and all their work they have done. Apple's got the money. They should just pay them out during the first 3 months of the trial. Wouldn't hurt their budget at all and by the way really help them being "the good guy" in the music streaming industry. Media would report on that and Apple would have additional publicity.

 

[dilbert99]

Why don't you come work for me for free for 3 months and then if I like you enough I'll start paying you.

As with most things in life, you attract new customers with free trials. Everyone knows that.

 

[ApfelKuchen]

This was something I was asking... I am trying Spotify... Found a new band and I've only listened to their music this month. Maybe 150 song plays. All the same band.

Is my $10 this month all going to them or is it going into the big giant pool where I just made that band a few pennies while most of my subscription fee went to subsidize pop music that kids are playing on loop all day, every day?

I'm guessing it is the big giant pool scenario, which seems to me to put adult music at a major disadvantage... I simply don't have the time to listen to as much music as I used to.

No, it's not the "giant pool." Spotify has two payment models: one is fixed-amount per-play royalties for their ad-supported free service, the other, roughly equivalent to what Apple is offering: a pro-rata share of subscription revenues - if all you listen to is '80s pop, then all your money will go to '80s pop. If your kids listen to 6 hours of music daily and you listen to 2 hours, that's how the pie will be divided.

Either way, artist payments are based on the number of plays. However, the difference between a fixed per-play royalty and pro-rata can be huge. If, on average, subscribers under-utilize the service (listen to less music than they pay for), then the money made on subscriptions will be greater than the money made on free streaming.

The web has been conducting a grand experiment in advertising-supported media, and it hasn't been working. Every year the per-impression rates have been falling and it's harder for anyone to gather a profitable audience. And while to date subscriptions have been a hard sell (just ask the newspaper web sites), if packaged correctly, I think the tide will turn. For news and info sites, I believe it'll be necessary to aggregate - every premium-cost site behind a single pay wall at Google, Yahoo, Apple News, or from your broadband provider, not unlike the way cable TV has been packaged (I think the whole cable-cutter phenomenon can be addressed by giving customers more control over their cable/pay internet line-up - it's always the cost of what we don't want that bothers us - we're far less likely to complain about the cost of what we do use.) (And by the way, if you read the full Apple Music contract, there's a rate for carrier-sold subscriptions - wanna bet that "carrier" includes the cable companies?)

Based on my experience, I believe there's greater potential for profit in subscriptions. I already made that point earlier in this thread. People tend to think they're getting a better deal with fixed-price, all-you-can-eat services. However, for every person who piles his/her plate with food, there's another who barely eats a bite, and the price is set so that it's at least as profitable as selling a la carte. People will pay extra to have up-side costs capped, and will pay extra to not feel nickel-and-dimed.

I think the $14.95 family plans are going to be huge. As of now, controlling kids' spending on music and apps can be a challenge. You see parents and grandparents buying gift cards to be sure the kids don't over-spend. Then the kids use up the allowance before the end of the month, and they beg for more. Believe me, as long as costs are capped, families will pay extra to quiet the whining. If something similar can be setup for apps (or at least games with in-app purchases)...

 

[throttlemeister]

If Apple wants to promote its new service for 3 months for free, fine. Great even. But that doesn't mean they can't just unilaterally decide it's ok to not pay royalties for distributing copyrighted material.

That's not any different than people claiming they are not really pirating music/movies/software because they are just sampling it for x time and if they like it they will buy it and if they don't, they will delete it.

If Apple makes a deal with the big record companies for this 3 month period, fine. Those musicians still get paid by the record companies. But if Apple just decides not to pay Indie musicians, they don't get paid period.

This is not a decision Apple is in their right to make, period. If they distribute copyrighted material, they owe the owner money, no ifs or buts.

 

[ginkobiloba]

IS THE MEDIA REALLY THAT STUPID NOW ?

Anton Newcombe was having a conversation with a FAKE TWITTER APPLE ACCOUNT. AN account with NO TWEETS, and 500 Followers. https://twitter.com/appleofficial
He probably even created it himself, and was having a conversation with himself !

I can not believe the media is so dumb , they didn't even take a second to look at the twitter account, and it's already all over the world with people having 10 pages long debates about Apple pressuring artists to adopt streaming or they will remove their albums form iTunes.

Is this really all that take to make headlines now ?
Can I just create an @AppleOHFEECIAL twitter account and say they threatened to kill me if I didn't buy the new Apple Watch, and the news will be in all news outlets all around the world ?

 

[ApfelKuchen]

If Apple wants to promote its new service for 3 months for free, fine. Great even. But that doesn't mean they can't just unilaterally decide it's ok to not pay royalties for distributing copyrighted material.

That's not any different than people claiming they are not really pirating music/movies/software because they are just sampling it for x time and if they like it they will buy it and if they don't, they will delete it.

If Apple makes a deal with the big record companies for this 3 month period, fine. Those musicians still get paid by the record companies. But if Apple just decides not to pay Indie musicians, they don't get paid period.

This is not a decision Apple is in their right to make, period. If they distribute copyrighted material, they owe the owner money, no ifs or buts.

Apple is not using copyrighted materials without permission. They're asking to use copyrighted materials at no charge. The labels and artists are being asked to sign a contract. If they sign, the new contract replaces the old one. If they don't sign, the old contract remains in effect. One artist reports Apple threatened to pull the old contract if they don't sign the new. Others report Apple has not done that (to them). Apple says they are not doing that. In the absence of proof, all we can do is believe who we want to believe.

There's a single contract that covers iTunes, iTunes in the Cloud, and iTunes Radio. The new contract adds Apple Music and Beats 1 to the old contract. As I read the contract, either Apple or the label/artist can cancel the existing contract at will. So if Apple wanted to threaten the labels, they could. If the labels wanted to walk, they could.

While it's possible the labels may pay something to their artists, there's a far, far stronger likelihood that the contracts between label and artist base royalties on how much the label is paid. If the label gets zero, the artist gets zero. Artists don't get paid when the labels send out promo and review copies, and this will almost undoubtedly be swept up under the same clause.

Apple can offer the same terms to anyone they want, and anyone, large label or indie, can decide whether to sign. It's not up to us to decide that the big kids should sign but the little kids should not. They're all grown-ups. The only "unilateral" about what Apple did was to decide that this would be the deal they offer, just like anyone who goes into a negotiation.

In the end, negotiating is always a matter of "who wants what, more." If the artists and labels feel they need Apple more than Apple needs any particular artist or label, then Apple has the upper hand. It's been that way since Jacob sold Esau a bowl of cereal.

 

[Benjamin Frost]

If the labels want streaming to die, then who exactly wants streaming? Why do we even have streaming? As a consumer, I want to buy once, own forever. Renting music sounds like the sort of thing the labels would want, not consumers.

Exactly.

The labels know that most new music has gone to the dogs, so they want people to be forced to rent music in order to access the back catalogue of good music.

It's too late for those of us who have already built good libraries. We don't need to rent music just to listen to what we already have. But for those who don't own much, renting is an easy way to milk them.

If the labels knew that there was tons of great new music that was going to be made, they would be confident that people would want to pay for it, and so there would be no issue over money, as lots of purchases would be made. But if little good music is being made, then purchases will be very low. So people will be more interested in listening to all the old classics.

What the labels really want is for the iTunes Store to die, so that the only option is to rent via Apple Music. That way, you will be forced to pay for the rest of your life if you want to listen to all the good old stuff, because you won't be able to own it. Sucks for the listener, but is a goldmine for the label.

 

[zudy]

Why don't you come work for me for free for 3 months and then if I like you enough I'll start paying you.

We already have this Genus its called an intership.

 

[OllyW]

Apple can offer the same terms to anyone they want, and anyone, large label or indie, can decide whether to sign. It's not up to us to decide that the big kids should sign but the little kids should not. They're all grown-ups. The only "unilateral" about what Apple did was to decide that this would be the deal they offer, just like anyone who goes into a negotiation.

I think the big problem for many of the indie labels is Apple spent months of negotiations with the big labels until they sealed the contracts (which obviously suited Apple and the big record companies) and has now sprung a take it or leave it deal on their doorsteps with the added pressure of only a couple of weeks until the service launches.

It doesn't give them a lot of time to mull over the intricate contract details and work out how it is going to affect their bottom line over the next few months which is probably why we are seeing these knee-jerk reactions online and in the music press.

 

[spazzcat]

of course it is.

But since it is Apple who is trying to enter the market, and it is Apple who is offering the free service, it should be Apple picking up the costs. Not trying to pass it on to the suppliers

The suppers are the one that will make the most money once the service is out of beta. Apple is taking all the risks, this could completely fail. These artist can remove their music and not get any free exposure during this trial when everybody with iPhone will be using the service.

 

[johngordon]

That would really depend on an artist to artist basis and what they're currently releasing.

if you're an artist whose riding on a large catalogue of already released music? I would agree to Apple's terms. its not good terms and it's Apple absolutely taking advantage of me, but, The long term payoff should be worth it.

if I were an artistwho is expecting a major album release during the time? No, I would not sign up. Initial album release tends to be the biggest bulk of most income on releases. Releasing a brand new album during the free time would mean i get zero money during what should be the most popular time for my new album.

residual income from that album 6+ months down the line are irrelevant if you can't bring in sales in the first few. Especially if the label has to eat most of the costs. If a label sees you're new album isn't making them any money, you can generally kiss goodbye to future albums being funded by that label.

And most artists cannot afford to put up front the type of money that is required for producing a major album. Some artists get several hundred thousand upfront from their label in form of loan just to pay for these albums. So yeah, Not everyone is going to benefit from this 3 month freebie

And why is it that the initial album release tends to generate the biggest bulk of most income?

Isn't that largely down to actual sales of the album, rather than streaming?

Or is your argument that that revenue is predominantly derived from existing streaming services, far more than album sales?

If it is from album sales, then presumably people who buy new albums rather than stream them for free on Spotify or Pandora, won't suddenly stop buying new albums just because of Apple Music.

A lot of what has been written about streaming is that the artists make very little money out of it.

But now with Apple Music, we are to put that on its head, and believe that this free trial will ruin artists.

Seems like a bit of a contradiction to me.

 

[johngordon]

Huh? If I manufacture widgets, nobody expects a me to subsidize a retailer to build stores so they can sell my widgets in their stores. Or give them free widgets -- to sell -- while they try to establish their business.

Why is it up to (in this case) the indie musician to subsidize Apple's new streaming subscription business model? That's not how capitalism works; the entrepreneur takes the risk and receives any benefits (or incurrs any losses).

Normally, Apple does such a great job (i.e. "it just works") that I find it mind boggling when they get something so obviously wrong...

As I mentioned earlier, I'm completely shocked that Jimmy Iovine, of all people, would be so tone-deaf.

I didn't say that Apple expects them to subsidise anything.

In your example the widget maker is giving the store free widgets, and the store is selling them.

In this example, Apple is not selling the music - its a free trial which will benefit both Apple and artists in the long run.

Having said that, if it was a new store and the store wanted to start selling, I don't know - local produce - it could theoretically ask local farmers for a few free samples for an Grand Opening Promotion to drum up business for the new store. Which would benefit the store owner and the local farmers in the long run, because people would have gone along to check it out, tempted by the free samples, and continued to shop there because they liked the store and what it had to offer so much.

 

[johngordon]

If three months of no royalties being paid from just ONE revenue source is going to put you out of business, then guess what! You were already on your way out of business.

Exactly this. There has been a lot of talk about artists receiving no revenue for three months. But as you say its only one revenue stream. Someone above just tried to make a point about that three months being the peak time for revenue. I'm sure it is, but that will predominantly be from sales, not streaming.

 

[johngordon]

As has been stated a couple of times, the "guy" in question does indeed have a screw loose... they made a whole documentary about it!



Sounds more like you are a straight-up Apple hater...

Anyway, to everyone else, since I am both a fairly unknown indie artist as well as an indie record label with music on the iTunes Music store, I have some actual insight into all of this. The offer I received was simply, Apple has a new streaming service "Apple Music" and I have the option to add all of my current iTunes Music Store music to this new streaming service with the condition that I won't get paid for the first 3 months of streaming due to the free trial. Me opting in or out has no affect on my music releases that are currently in the iTunes Music Store. Simple as that. I opted in since it's worth it for me to get my music on Apple's streaming service in case it does take off; though I generally don't like streaming services because I don't make as much money...

Also, I've made more money selling through Apple's iTunes Music Store than any other service (e.g. Amazon MP3 Store, Google Play, Xbox Music, etc.) And don't even get me started on Spotify! As I mentioned in another thread here, for every song of mine that sold on the iTunes Music Store (of which I received 70 cents per song) that same song streamed 50 to 100 times on Spotify... and I have yet to see a single penny in over 2 years from Spotify! Yes, I'll be pulling all of my music from Spotify very shortly here.

EDIT: One other thing I want to clarify is this, I don't think people get how the 3 month trial works, especially with relation to an indie artist. It's not a 3 month free trial starting in June and nobody gets paid no matter what! It's a 3 month free trial whenever a particular user signs up for the Apple Music streaming service and it depends on what he/she actually listens to.

So, for example, lets say Joe Schmoe decides to finally sign up to Apple Music on September 1st. He now has a 3 month free trial until the end of November. During that time all his "streams" are nothing but U2, AC/DC and Neil Diamond. So those 3 artists (or rather, their Record Labels) won't get paid for Joe's streaming during the months of September through November. Do you really think I am worried about that as an indie artist? Really?

On the flip side, say one of my fans (yes, I do have some) signs up to Apple's Music stream and the first thing they do is look for my songs. If I had opted out, my fan can't stream my stuff and I don't make any money anyway (and then my fan may forget about me and move on.) But if I opted in, which, again, I have, then my fan, who has already most likely bought my music in the past, is happy to see I am also part of the streaming service and now looks forward to what I do in the future. It's definitely a win/win for any indie artist to opt in and not to worry about the 3 month trial. It's really not that big of a deal.

^ This should be a sticky at the top of the thread.

Thanks Genshi - I had wondered about the trial being for the first three months of Apple Music (as seems to be widely assumed), rather than how most free trials work, i.e. for a period of time from whenever anyone new signs up.

And as you say, it depends how much stuff is streamed - no disrespect to new, unknown artists, but the chances are you're not going to be streamed that much in those first three months.

The benefits of streaming services are probably more long tail - the more people use them, the more they go off on musical tangents and hopefully discover new stuff.

But good luck with it all!

 

[johngordon]

Ignoring the little guy for a moment (though we shouldn't) imagine the impact on a known, big, popular artist who is releasing a new album on July 1 and the impact on sales if everyone for the 1st three months of availability could listen to it for free; do you really believe that wouldn't impact sales?

Imagine if everyone could watch Jurassic World free for the first three months after release for nothing, do you really think that would be good for cinemas or the studios?

That's the point though - people already can listen for free on Spotify. OK, artists will get something, but a tiny fraction of total revenue generated from actual sales + streaming revenue.

Streaming makes artists virtually no money currently - in order for the model to really start to work better for artists streaming services need to make paying subscribers a mainstream norm.

You know what might help with that? A set up with 800,000,000 active accounts worldwide with a a free trial of a service baked right in to the hardware they already have.

Oh. Wait.

 

[MH01]

For those interested, here's the full Apple contract (covers regular iTunes, iTunes in the Cloud... the whole shootin' match) http://www.digitalmusicnews.com/per...es-the-entire-apple-music-contract-for-indies . I've been on both ends of this sort of contract - nothing outrageous that I've found. YMMV.

Just how much are the labels and artists giving up during the 90-day Apple trial period vs. the 30-day Spotify trial period, and how long would it take for them to recover their "investment" (earn the same cumulative revenues from Apple as they would from Spotify, on a per-subscriber-dollar basis)?

As much as I'd prefer Apple came up smelling like roses, my calculations show a subscriber would have to stay with Apple for 8 years before cumulative earnings matched the earnings from a comparable Spotify subscriber (based on the reported 70% rate for Spotify and 71.5% for Apple, and no change in subscription rates over that period). Since a fair percentage are likely to quit within a few months of the end of the free trial period, it would skew the recoup period well beyond 8 years.

Based on that, there's only one way this "investment" by the labels and artists can be recouped - which is if Apple's marketing prowess succeeds in changing the fortunes of the industry for the better. Worldwide, inflation-adjusted music industry revenues dropped from $3.99 per person in 2002 to $1.88 in 2014. If a widespread move to the subscription model can turn that situation around (or even stop the slide), the money labels and artists give up during trial periods could turn out to be one of the better investments they've ever made.

Thanks for the effort, interesting conclusions !

 

[johngordon]

So... If you're a small artist or label making a living on iTunes selling songs... Let's just say you sell 1000$ per week... And all of a sudden everyone can listen to your music for free... You sales drop to zero. Even if you make more money after 3 months you just lost 12 grand in cash flow... I wonder if musicians landlords, and bills will let them Defer payments for 90 days.... These guys are going to have zero revenue for 90 days... It's the same crap Walmart plays with suppliers.... I bet you guys wouldn't work for 90 days for free for a bigger revenue in the futur... People have to eat.

Yes, but what does this post from 2008 about the launch of Spotify have to do with Apple Music?

This is the elephant in the room that a lot of people are ignoring - sales haven't dropped to zero because of Spotify, so they're not about to because of Apple Music's free trial.

And yes, I know artists still get something, but its practically nothing compared to what they get from sales.

 

[captain kaos]

All these indie crybabies are sickening me. Without Apple, they would be nothing.

You're kidding me right? Apple coolaid drinker. The facts are pretty black and white here, and its a kick in the teeth to music writers. Get paid nothing for 3 months while handing out your work?! If apple wants musicians on board and wants to give customers 3 months free use of its new service, then apple, with all its billions can pay the artist for that 3 months of use of their music.

 

[johngordon]

People like YOU sicken me.

You and others on here clearly have NO FREAKING CLUE what it's like to earn your living from art forms like music where other people take all the money while you do all the work. How would you like your neighbor to get paid 93% of everything you make just because you rent your house from him? Yeah, it's like THAT. Between the music industry and companies like Apple, they get the money. You get the shaft. No wonder music has gone to crap this past decade. Who is going to bother to be an artist in a society that wants everything for FREE? It amounts to a bunch of kids living in their parents basement being sickened that someone would dare to ask to be compensated for their hard work. Amazing. Just amazing.

Apple can clearly afford to pay the free trial period to the artists. If they can't afford it then they shouldn't be offering a free trial period! Who does that trial period benefit, after all? It benefits Apple so Apple should cover it or not offer it.

Enough of the bad analogies already!

In this analogy, why wouldn't your landlord get a few hundred bucks of yours to rent his house?

And where is 93% coming from - I thought Apple were keeping in the region of 28-30%?

 

[johngordon]

Free trial = Potentially more customers = potentially more money for the artists after the guaranteed lack of payment for the first three months.

Not saying artists shouldn't do it, just that there's no inherent relationship between how many customers Apple Music has and how lucrative it is for each individual artist. A few artists will probably see a nice return, a few more will get 'eh, it's better than nothing' money, and the vast majority will say 'Hey, at least my music is out there..." Unfortunately 'potential' can't pay the rent.

But there is a correlation between number of streams, and revenue.

If the potential is not fulfilled for an artist they likely won't make much money in the long run.

But by the same token, if people are not discovering and streaming them during their trial, then they're not going to be losing much money either.

 

[johngordon]

The key word is potentially. How many of the free trial subscribers will actually switch to paying customers?

If just 5% of iTunes account holders sign up, Apple Music will have 2x as many paying subscribers as Spotify.