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

[MacRumors]

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.

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.

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

 

[Kaibelf]

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?

 

[supersalo]

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).

 

[thekeyring]

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/art...st-12-months-fortune-goes-past-50million.html

They're clearly not on the breadline.

 

[Cassady]

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?

 

[Kaibelf]

By the way, how many copies of Adele's last album sold? I think they'll live.

 

[Corrode]

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?

 

[clukas]

So what revenue are they actually loosing? It doesn't cost them anything when their music is played. Its not like the entire universe will be using Apple's music trial all at once.

 

[OllyW]

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?

I think your three months trial starts on the day you sign up, not on the day Apple Music launches.

 

[Cassady]

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%'...

 

[MTW]

Zero sympathy. Do or die, there is no reason for a label to exist in this day and age anyway, with the exception of acting as a single licensing point for their back catalog.

 

[Corrode]

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.

 

[elmateo487]

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?

If listening to their music is free to everyone for three months there is no incentive for those same people to purchase their music from iTunes. Therefor, (according to them) they will lose 3 months of revenue.

 

[vc2020]

As someone who supports indie music and buys physical copies of music as well as using a streaming service like Beats Music, I think this can only help labels.

I'll be saving $30 which I can use to buy a record I discovered using Apple Music.

 

[Cassady]

If listening to their music is free to everyone for three months there is no incentive for those same people to purchase their music from iTunes. Therefor, (according to them) they will lose 3 months of revenue.

But it's people who were possibly listening for free in any event? They surely stand more to gain by persons signing up after the free trial, than by "losing" revenue that's not actually there in the 1st place. Would love to hear a detailed explanation from one of the execs about what is actually being lost. Until then – mere speculation, I suppose.

 

[elmateo487]

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.

I originally thought like this. But I am being optimistic now. And hoping that artists will just ditch the labels and release their stuff themselves. That actually, in how I grade music, could lead to better, more free music. Artists get a bigger cut of the pie, (though less advertising), and they get to write and perform their music exactly how they want.

 

[darkknight14]

I think the 'putting us out of business' is a little over the top - as some else mentioned Adele was the biggest selling musician recently. I think many people using Apple Music will be first time streamers. I can't do the math but it should be a roaring success by the end of the year..

 

[CouponPages]

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.

 

[JeffDM]

It does sound hyperbolic, but given now Apple is a big part of a revenue stream, any dip in that stream could mean a lot. If it cuts purchases by 25% it could hurt quite a bit. And three months free trial seems pretty long. I can't think of any other free trial for a service to be longer than a month.

 

[JeffDM]

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.

In the model you outlined at the top, by far, it's not the independents doing that. So I don't think you're even comparing the same groups.

 

[ttss6]

So according to them or at least the way they make it sound like, their entire revenue is based of Apple? No £ from touring or album / digital sales? And it seems it's the labels', not really the artists', wallets who will be more affected which is why they're crying foul

 

[brueck]

There are 2 bad assumptions here.

The first is that all people will immediately stop buying music, and join apple music.

The second is that all people who join Apple music are currently paying for music. I for one will go from spending maybe $20 per year on music to $10 per month. Apple music is going to make many people start spending money on music again.

 

[Neepman]

Using Adele as the example here is absurd. For every artist as successful as she has been, there are literally a million who are not. Is it OK if I don't pay rent for my first free months. After all , its a trial right?

 

[MikhailT]

So, don't sign the contract with them? Apple Music will not succeed if it doesn't have an equal or better library to other streaming services.

They don't like Apple's terms and the immersive royalties it can bring to their businesses, don't sign. Apple can find other labels that would be happy to sign up.

They'll have no one to blame beside themselves if someone else is making more money because it was on Apple Music.

 

[Jessica Lares]

Some independent acts are successful, this has nothing to do with that though.

It's festival season. You're getting the biggest exposure you can get in the entire year as an indie act. You have people seeing you live, and the rest of us are at home checking out singles and albums.

But in three months, we might not care anymore. It's awful that you could be getting huge, huge, huge amounts of streams, and you won't see a single penny from it. Sure, some people will end up buying your album, but that will be much less than those who are streaming.