British indie labels object to Apple Music's terms, may withhold artists like Adele and the Arctic M

Posted:
in iPhone edited June 2015
Independent music labels in the UK are reportedly loath to agree to Apple's demand that they receive no royalties for songs played during Apple Music's three-month free trial period, a sticking point that could leave the new streaming service missing some major artists at launch.




Industry lobbyist Todd Heath used some fanciful rhetoric when discussing the matter with The Telegraph, saying that small labels would not be able to absorb the potential financial hit that could come with losing three months of download sales to consumers who switch to Apple Music. Such a move would "literally put people out of business," he said.

"If you are running a small label on tight margins you literally can't afford to do this free trial business," Heath added. "Their plan is clearly to move people over from downloads, which is fine, but it will mean us losing those revenues for three months."

Among the labels who have apparently failed to reach an accord with Apple are XL Recordings and Domino, which respectively count Adele and the Arctic Monkeys among their signed artists.

The free trial was also said to be a "bone of contention" during Apple's negotiations with major U.S. labels, with Apple eventually prevailing thanks to a promise of higher-than-average royalty rates for paying customers. Apple is expected to pay 71.5 percent of revenue to rights holders in the U.S., with that sum rising as high as 73 percent abroad.

Announced during Apple's Worldwide Developers Conference last week, Apple Music will launch on June 30 for $9.99 per month, or $14.99 per month for a family of up to six people.
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Comments

  • Reply 1 of 74

    Because the people freeloading off of Spotify for the past 4 years has earned them so much money....

  • Reply 2 of 74
    jkichlinejkichline Posts: 1,369member
    Wah. Keep your bloody wanker music then.
  • Reply 3 of 74
    jason98jason98 Posts: 768member

    Because they know that 99% of trials will end up with cancellations.

  • Reply 4 of 74
    genovellegenovelle Posts: 1,481member
    Considering that the number of paid streamers is expected to remain a small percentage of users and that many people will continue to do what they have always done for now. I don't see the problem. Spotify is paying a 10th of their paid tier for those on the ad tier and 75 percent stay there forever instead of 3 months. So it would take 10 months to equal one. So month 4 with Apple will cover the first 3 plus another 7 on Spotify's free tier. The same 10 month period on Apple Music would pay them the equivalent of 5.8 years on Spotify's free plan.
  • Reply 5 of 74
    sestewartsestewart Posts: 102member

    I think it's to be assumed some labels would hold out during the trial phase. With apple music free trial, that would theoretically mean no one would be buying albums at all, and no money would be coming in to pay labels/artists. 

     

    I don't know what spotify pays or is paid for ads, but I'd think apple could monetize the free trial with iAds to help pay artists for the service until the trial is over. 

  • Reply 6 of 74
    Seems like a valid objection to me. Apple want to entice as many people as possible with a big launch and are offering three months free. They should fund this if they want to gain market share in streaming.

    They will benefit from higher subscriber numbers and more Apple devices sold - potentially. As a small business owner I couldn't sustain a significant three month drop in revenue. This is realistic, because as a consumer I wouldn't purchase a new Adele or Arctic Monkeys album if I could stream it for free on a service I was interested in.

    As for streaming in general I'm not convinced, but I like the idea of Beats Radio. I had a two month free subscription to Spotify and didn't get on with the product at all so cancelled before the paid subscription kicked in.
  • Reply 7 of 74
    lkrupplkrupp Posts: 10,557member
    Quote:

    Originally Posted by jason98 View Post

     

    Because they know that 99% of trials will end up with cancellations.




    Really? You saw that on your Magic 8 Ball?

  • Reply 8 of 74
    matrix07matrix07 Posts: 1,993member
    Because the people freeloading off of Spotify for the past 4 years has earned them so much money....

    I'm just gonna say the same thing. Thank you for saving my time.
  • Reply 9 of 74
    paxmanpaxman Posts: 4,729member
    jkichline wrote: »
    Wah. Keep your bloody wanker music then.
    Idiot comment of the year
  • Reply 10 of 74
    jungmarkjungmark Posts: 6,926member
    No problem here. I understand they want the royalties. My question is what are other free services paying them?

    Hopefully Apple won't pull an Amazon on them. Because only Amazon can do that.
  • Reply 11 of 74
    paxmanpaxman Posts: 4,729member
    A free trial is fine but it should be on Apple, not the musicians or labels. The reason for this is obvious. It is in Apple's interest to help small independents. For Apple it is 'blip' on the profit graph, for a tiny label it could mean the end. There is no benefit in that.
  • Reply 12 of 74
    kpluckkpluck Posts: 500member

    They are going to withhold Adele and the Arctic Monkeys? Is there an address available where we can send a thank you note?

     

    -kpluck

  • Reply 13 of 74
    aylkaylk Posts: 54member
    Quote:

    Originally Posted by gadgetguy03 View Post

     

    Because the people freeloading off of Spotify for the past 4 years has earned them so much money....




    Well, an extra $400 a month from the people freeloading off Spotify is not much, but is better than zero that is what I would get from the people freeloading off Apple. Technically I would be the one paying for Apple's "free trial".

  • Reply 14 of 74
    ecatsecats Posts: 272member

    Is this a big deal? They can just join 3 months later.

     

    Meanwhile it's the industry to present this in the best light for themselves - during that same time period plays can equal sales, in much the same way that Free-Play on iTunes Radio leads to new album sales. Even Lady Gaga made her whole album available on Free-Play for that reason, trial periods let people make up their own mind towards the music.

     

    Heck, this sort of stuff would come under the marketing budget of an independent anyway, they're not concerned about artists: they could easily pay them projected royalties, it's the label themselves who are worried about not turning as much profit during the same time period.

  • Reply 15 of 74
    dasanman69dasanman69 Posts: 13,002member
    jkichline wrote: »
    Wah. Keep your bloody wanker music then.

    I've done a lot of wanking in my day but never whilst bloody. :lol:
  • Reply 16 of 74
    freediverxfreediverx Posts: 1,424member
    jkichline wrote: »

    XL Recordings alone includes acts like Arctic Monkeys, Vampire Weekend, Beck, SBTRKT, and the XX.

    You may be happy with Britney and Justin but some of us have more discerning taste in music.
  • Reply 17 of 74

    What, you think Adele nibbles on twigs? It costs a fortune to feed her, and those terms are just not going to cut it!

  • Reply 18 of 74
    matrix07matrix07 Posts: 1,993member
    aylk wrote: »

    Well, an extra $400 a month from the people freeloading off Spotify is not much, but is better than zero that is what I would get from the people freeloading off Apple. Technically I would be the one paying for Apple's "free trial".

    $400 a month is definitely more than free but it makes people think music is for free. You get that but eventually you'll lose so much more.
  • Reply 19 of 74
    Meh. Never heard of them.
  • Reply 20 of 74
    sirlance99sirlance99 Posts: 1,295member
    genovelle wrote: »
    Considering that the number of paid streamers is expected to remain a small percentage of users and that many people will continue to do what they have always done for now. I don't see the problem. Spotify is paying a 10th of their paid tier for those on the ad tier and 75 percent stay there forever instead of 3 months. So it would take 10 months to equal one. So month 4 with Apple will cover the first 3 plus another 7 on Spotify's free tier. The same 10 month period on Apple Music would pay them the equivalent of 5.8 years on Spotify's free plan.

    You're assuming a 1-1 ratio, which it's not. Even with your numbers there are more than 10 people listing to free than paying. So your numbers are wrong there. Also, you're assuming again that people will stay on as a paying customer. This again is wrong. Some will, the majority will not. By your numbers it would only take 10 free Spotify customers to equal 1 paying Apple Music customer. Easy done.
    lkrupp wrote: »

    Really? You saw that on your Magic 8 Ball?

    And just how many do you think will stay a paying customer? 5%, 20%, 60%? Some will stay on, the majority will not.
    paxman wrote: »
    A free trial is fine but it should be on Apple, not the musicians or labels. The reason for this is obvious. It is in Apple's interest to help small independents. For Apple it is 'blip' on the profit graph, for a tiny label it could mean the end. There is no benefit in that.

    And here I thought, because most people on here were saying it, that Apple was all about and for the artist.
    aylk wrote: »

    Well, an extra $400 a month from the people freeloading off Spotify is not much, but is better than zero that is what I would get from the people freeloading off Apple. Technically I would be the one paying for Apple's "free trial".

    Bingo
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