Licensing row mars iTunes launch
Franz Ferdinand, Basement Jaxx and The White Stripes are refusing to license their music to iTunes, causing a significant setback to Apple's new music download service just hours before it launches to a fanfare in Europe.
Apple will announce at a press conference that it is launching in the UK today, but it has just emerged that it has failed to secure agreements with a number of key independent record labels.
It means anyone going to iTunes will be unable to download Franz Ferdinand, The White Stripes and a host of other bands including So Solid Crew, Badly Drawn Boy, Cold Cut, Dizzee Rascal and Craig David.
They have refused to sign an agreement, labelling the terms Apple is trying to negotiate for the online service as "commercial suicide".
The boycott by independents in the UK and France means iTunes will be devoid of a significant proportion of UK and local European tracks.
Independent artists account for around a quarter of music sales in the UK and around 22% in Europe and enjoy a much higher profile than they do in the US.
The European launch of iTunes has already been delayed because of the complexities of agreeing royalties for each individual country.
While Apple is set to announce that it has secured online deals with the big five labels - Warner, Universal, BMG, Sony and EMI - it may only have limited independent offerings.
The labels have accused Apple of misusing its position as the dominant online music provider to squeeze unacceptable terms from smaller record labels.
A spokesman for record label trade body the Association of Independent Music confirmed that negotiations had collapsed.
"A lot of labels haven't been approached but where Apple has spoken to labels the terms on offer have been commercial suicide. ITunes in Europe will be a slightly empty service as a result."
Apple controls around 70% of the online music market through its successful US version of iTunes and runaway sales of its iPod player.
Independents accused Apple of trying to railroad smaller labels into signing licensing deals.
"This is just another example of a monopolistic American company trying to dictate terms," said a source at one leading independent who said Apple only sent out the paperwork for the contracts last Tuesday.
"Most independents have similar concerns. None of the key UK labels have signed and the situation is similar in France. Everyone's feeling fairly walked over."
Leading independent Beggars Banquet, which represents artists including Swell and The Tindersticks, said it was refusing to sign up to iTunes Europe, despite having agreed a deal with Apple in the US.
"We're big fans of iTunes but we need to make sure we get acceptable terms," said Simon Wheeler, the label's head of new media and chair of lobby group the Association of Independent Music.
"When Apple launched iTunes in America it said there was one deal for everyone but we soon found out that the majors were getting paid more, sometimes a lot more than us. We need to make sure that we get the correct terms in Europe."
At the launch of its new digital jukebox service, European market leader OD2 said its own research revealed that download activity was severely reduced when there was little or no local music.
"The international catalogue doesn't sell at all unless you have local content," said the OD2 chief executive, Charles Grimsdale.
Apple is hoping that the European launch will attract a significant number of new users. In the US, where iTunes launched a little over a year ago, it has already racked up sales of over 70 million tracks at an average price of 99 cents.
While the US legal download market has rocketed during the past 18 months, the appetite for such services in Europe has been less marked.
Peter Gabriel's OD2, which provides the technology behind online services for Coca-Cola and Virgin, has been the European download leader since it started in 1999.
However, last year it sold just 3 million songs, While this figure is expected to rise dramatically this year European download figures are expected to still lag their American rivals.
But Apple's failure to secure a deal with French independents could even see the country taken off the list of territories that are due to get the service first.
According to promotional material being sent to shops in time for today's launch, the first European territories to get the company's hotly awaited service will be the UK and Ireland and three Scandinavian countries Denmark, Finland and Norway.