Developing: Apple Threatening to Yank iRadio Holdouts from the iTunes Store…

Looks like Apple’s onerous licensing demands on iTunes Radio could be going to that crazy place.  According to multiple sources to Digital Music News, Apple is considering penalizing any iTunes Radio holdouts by removing them from the iTunes Store.

Apple is reportedly pondering the strongarm tactic, according to multiple executives at digital distribution companies speaking in confidence to Digital Music News.

iradioitunes

At this stage, we’re chasing down the chatter: earlier, one whisper pointed us to a letter from The Orchard stating that Apple would be removing the content of iTunes Radio holdouts.  The Orchard executive Jaclyn Ranere subsequently told Digital Music News that those reports were erroneous. “I oversee all client communications and this is not something we ever wrote about,” Ranere said.  The Orchard is among the largest digital distributors in the space.

Separately, UK-based distributor AWAL Digital may also be alerting clients.  “According to my label’s distributor (KOBALT/AWAL), from what they have managed to learn from Apple so far, it seems like you won’t be able to have releases in the iTunes Store if you don’t accept iRadio as well,” commenter “Tony” posted in our earlier story about Merlin’s complete absence at the iTunes Radio negotiation table.

Other distributors are apparently aware of the possibility, though Apple has not confirmed any decisions.  Another source actively reviewing the iTunes Radio contracts (and sharing ample details with DMN) admitted to the tying possibility, but could not confirm anything at this stage.  “Seems as if AWAL made a similar comment as The Orchard,” the source noted.  “I’m not willing to confirm that as yet.”

“But it feels entirely plausible that iTunes will decide to make it an ‘all-or-nothing’ deal.  That would be consistent with their gestalt.”

The rumor follows a string of indie-unfriendly licensing moves from Apple, and continues to distance Apple from its benevolent ‘savior of the music industry’ image.  Indeed, a number of readers are questioning whether Apple’s industry-friendly glow will continue after the launch of iTunes Radio.

More as the story develops.

41 Responses

  1. Yves Villeneuve
    Yves Villeneuve

    If radio is cannabilizing download sales then the said music should be removed from radio until a more advantageous time presents itself.

    Reply
    • tune Hunter
      tune Hunter

      Radio should be paid for playing someone’s music.
      Just convert all music ID guys to mandatory purchase and artists will be begging to be on the radio. They will want to be part of Discovery Moment Monetization. Today radio as the biggest discovery contributor is subject to financial extortion by labels.
      In the meantime Shazam and friends prostitute the goodwill of the industry for FREE (They are all broke milking own angel investors)
      Dope infused marketing goes on!

      Reply
      • Casey
        Casey

        Shazam drives sales. They should be (and probably are) paid for the sales they help produce.

        Reply
        • Tune Hunter
          Tune Hunter

          Shazam is a prostitute. 9 out of 10 of their ID become catalizers of theft. One in 10 become sale at iTunes or Amazon!
          This ratio of prostitution to sale is 19 ot of 20 for lyrics ID – Google is #1
          Shazam with over 300 million users and billions of IDs with minimal promotion would be a billion dollar music retailer in 12 months.
          There is no other conclusion on this subject.
          Sooner they convert sooner the cancer eating music industry will retreat!

          Reply
          • Casey
            Casey

            That makes absolutely no sense. Just because only 1 of 10 results in a sale (which is pretty impressive, really) that doesn’t mean the other 9 or 10 go out and steal the song. The vast majority probably are simply ignored when they realize the song isn’t what they thought it. Having someone pay for something they don’t like is a good way to never get that user back. And the 1 of 10 sales is 1 of 10 more than would have occurred otherwise.
            Shazam is basically just a high tech phone book for music. You know a piece of what you are looking for and it tells you what you want to know or the closest thing it can find.

          • Me
            Me

            He just sounds bitter that Shazam caught on and Tune Hunter didn’t.

      • Visitor
        Visitor

        “Radio should be paid for playing someone’s music”
        1) Streaming is not radio.
        2) If streaming were so great, why would Apple need to force artists to use it?

        Reply
  2. Visitor
    Visitor

    “Apple is considering penalizing any iTunes Radio holdouts by removing them from the iTunes Store.”
    I’m a huge iTunes fan but this is an instant deal breaker to me, if true.

    Reply
  3. jw
    jw

    Let’s make something clear. Apple did NOT save ANYTHING.
    Piracy = mostly kids who probably would’ve spent $20/yr on music downloading hundreds of dollars of music they never would’ve purchased, probably couldn’t afford anyhow. Yes, there was an effect, & maybe a drastic effect, but iTunes slowly turned so many $15 purchases to $.99 purchases or $1.29 purchases. That’s a 91%+ drop from regular music purchasers, people with their own disposable income. The negative effect that iTunes had, & was bound to have from the start, cannot be understated. A la carte downloading was ill conceived from day 1, & was purely a function of bandwidth limitations, & has no place in the life of the modern consumer or the modern music industry.
    How they got this reputation for being artist friendly, or worse yet consumer friendly, is beyond me. Apple is Apple-friendly & that’s about it.

    Reply
    • Visitor
      Visitor

      “Let’s make something clear. Apple did NOT save ANYTHING.”
      Except the entire music industry, you mean.
      Recording artists would not have been able to make money in years without iTunes.
      And iTunes is just one element in Apple’s extremely elaborate artist-ecosystem.
      Too bad, if they’re screwing it all up post-Jobs.

      Reply
      • jw
        jw

        All iTunes did was elongate the transition period between the cd & streaming. The whole time they’ve been sucking both consumers & the industry dry with worthless low quality files that will be obsolete in just a few short years, if even that.
        Because of iTunes nothing looks good right now, especially the services that SHOULD look good. It gave labels the gumption to screw every new service that’s tried to actually save the industry. Products that could’ve been self-sustaining were driven into the ground by uncooperative labels in favor of iTunes ever diminishing returns.
        iTunes is the primary example of music industry cannibalization.

        Reply
        • Visitor
          Visitor

          “iTunes is the primary example of music industry cannibalization.”
          No, it democratized the music industry. And thank heavens for that. You’ve no idea how tired I was of forking over 80-90% to all kinds of gatekeepers.
          And you may focus on the 30% iTunes keep, but I can assure you I focus on the 70% they pay me.
          That’s not even close to cannibalization. 70% is real money, and they go straight back into music production.
          Now, guess what happens to said music production if you replace these 70% with non-existent streaming revenues…
          I’m with you on one thing, though: The current sound quality is a disgrace and a total disaster.

          Reply
      • Visitor
        Visitor

        iPod helped expand piracy, it is impossible for a middle class family to get remotely close to filling an iPod without piracy

        Reply
    • Visitor
      Visitor

      “downloading was ill conceived from day 1, & was purely a function of bandwidth limitations, & has no place in the life of the modern consumer or the modern music industry.”
      I agree with this part.
      Also, the radio thing from Apple is boring “news” and obviously it isn’t going to change the fact that the download model is in decline. There is a good article about it available here: http://www.theregister.co.uk/2013/06/11/iradio_feedback_leaves_music_industry_un

      Reply
    • Tune Hunter
      Tune Hunter

      You are doing proper analitics but the price should actually go down to 49 cents a tune or 29 cents if someone prepurchases 100 tunes on a gift card. I went through CD hunting in the 90ties – it was very difficult to get to the point were you had to spend $15.
      With cell phones, internet and Shazam you can multiply the number of monatizations by 30 if not 100! With one condition, Shazam and the likes will have to stop to be the pigs working for free to make all the free loaders happy.

      Reply
  4. David
    David

    I commented already, but my comment seems not to have been received.
    If this report is true, it would amount to a classic and blatant abuse of a dominant position in one market (paid music downloads) to extort compliance with its wishes in another market (streaming). I can foresee Apple being deluged with antitrust suits and investigations, not just in the US but in the UK and especially the EU, where the European Commission can come down very hard on abuse of market power. And the Competition Directorate of the Commission is virtually immune to political arm-twisting or bribery of the kind that might get Apple off the hook in the US.
    Apple admittedly has a track record of similar anti-competitive antics, but I doubt if even they would be so brazen as to try this one.

    Reply
    • Marc
      Marc

      This is spot on. It may be an illegal tie–to get one of our products, you have to license the other. Its like McDonalds requiring that its franchisee buy burgers from this supplier and buns from that supplier or they don’t get either.
      What also burns me about this whole issue with Apple being perceived as the savior of the music industry is that when the iPod was launched, Apple decided to make it compatible with their own codec, AAC, as well as MP3. If they did not make it compatible with the MP3 its ubiquity today might be in question.
      Surely Jobs knew what he was doing when he posted on the Apple site confirming that 97% of the content on iPods was MP3’s, which at that time were not offered by the labels. the MP3 became the standard both for pirates and interoperability among players.

      Reply
      • Farley
        Farley

        Right. Repeating my earlier comment:

        The rumored Apple practices, if true, have Apple playing with the same antitrust fire that was started by merchants in response to similar Visa and MasterCard practices in the past. So, maybe Apple will consult with counsel and steer clear. (Or, maybe not.)
        The honor-all-cards rule, as implemented by Visa
        and MasterCard, in the past required that a merchant who accepted the card network’s credit cards also accept the card network’s debit cards. In 2003, Visa and MasterCard, as part of
        the settlement of an antitrust action brought by a class of merchants, agreed to revise their honor-all-cards rules to not apply across debit and credit classes of cards.

        Reply
  5. Rudy Quinones
    Rudy Quinones

    This comes to the age old proverb of who controls me and what I can do. Shouldn’t it be the creator/copyright owner that chooses this. I bet they may have good intentions but they are not comming out as the people person computer system corp that they once where. I mean they are involved with the NSA. Apple died when Steve Jobs did. All they care now is market share, revenue, etc. To me that is a slap in the face that only helps the monetarily privledged and keeps the rest out. Why are they catering to the major labels that as we all know don’t care about artists developement. They only gain success with around with the minority of their artists roster and instead of developing the rest they fire them or shelve them without any future certainity. Kudos to those independent labels that didn’t suck it up to Apple just cause it’s Apple.

    Reply
  6. Jordan Owens
    Jordan Owens

    Hopefully this all ends up blowing over and being nothing shortly, otherwise this could really get out of hand. There is no reason for Apple to go to the length of taking someone off of iTunes just because they don’t want a bad deal on streaming royalties.

    The fact of the matter is, no one has legitimately came up with a viable and profitable model for artists in the streaming era yet and until someone does that everyone is going to be gun shy to just sign on to any deals, even if it is Apple.
    iTunes has a direct link to being profitable for artists, while anything involving digital streaming isn’t (yet). It’s just going to have to be a wait and see game until someone comes up with the perfect formula. Who knows, Apple may nail it, but we won’t know until it comes out for awhile and can be analyzed.
    Given that logic, Apple should know better than to try and force the hand of artists like that. That’s acting in some poor faith in my opinion.

    Jordan Owens
    President / Head Manager
    Sour Mash Recording Industries LLC
    http://www.sourmashindustries.com
    @jordanowens45

    Reply
  7. Eddie
    Eddie

    to my knowledge…..Merlin do not have any sort of deal with iTunes, they were set up after iTunes launched and never bothered setting up deals with them, the same with Amazon!……

    Reply
    • David
      David

      I don’t know about iTunes, but there are plenty of Merlin artists on Amazon MP3s, so someone must have done a deal sometime. I think both Amazon and iTunes worked out a standard deal with the major labels, and they give the same deal to anyone else who came along later.

      Reply
    • JTV Digital
      JTV Digital

      Without a deal, you can’t put your content live on the iTunes store….

      There are 3 options to go there:
      1/Be signed with a major or big indie label who has a direct deal with Apple
      2/Go through a digital music distribution company who have direct deals with Apple as well
      3/Go through Merlin who have a direct deal and make its affiliate benefit from it indirectly (which is pretty much the same as option 2 above)

      JTV Digital | affordable digital music distribution
      and ready to put our artists on iRadio as soon as it launches

      Reply
  8. JTV Digital
    JTV Digital

    A few facts:
    *Apple largely dominates the digital music market, worldwide
    *Without Apple, a significant number of labels would be dead by now
    *Physical music market is slowly but surely dying (at least agonizing), and despite of some resistance / resurgence of the vinyl, physical records would have certainly disappeared in a few years from now
    If you were Apple, would you:
    1. Offer fair deals to record labels and share your huge revenues with everyone OR
    2. Use your monopoly position to impose your views and dictate your rules?
    Come on, let’s be honest…
    JTV Digital | affordable digital music distribution
    and ready to put our artists on iRadio as soon as it launches

    Reply
  9. Paul Callanan
    Paul Callanan

    Back in 2007 the U.K. Government had a three tier system of Royalties proposed:
    Physical Royalty of 8%;
    Download at 6.5%;
    with Streaming at 5.7%.
    We shall be putting away 10% “Held in Escrow”, for the IPADHARMONY*(TM) “Scientific interactive Music Palette Apps” being developed:[ http://ipadharmony.yolasite.com ]

    Reply
    • JTV Digital
      JTV Digital

      I think they do.
      Without iTunes, they’d miss more than 50% of their digital income.

      JTV Digital | affordable digital music distribution
      and ready to put our artists on iRadio as soon as it launches

      Reply
      • R.P.
        R.P.

        Well then that’s your opinion and I fully respect it, but, I’m talking about the future. Did you notice that Kanye skipped out on iTunes pre stream and pre orders with Yeezus? Furthermore, he offered it for purchase on his own website before it dropped on itunes. Now picture Justin Bieber and Taylor Swift following suit… They keep more of the money and don’t have to split a penny with itunes. I would say they are heading that way.
        If not, oh well, their loss, but mega stars can do it and make more money. It’s a simple numbers game.

        Reply
        • JTV Digital
          JTV Digital

          Ok got it.

          However to my knowledge, and even if there can be some exceptions, big stars have their digital releases controlled (the more politically correct word for that is ‘managed’) by their record label, whose taking a HUGE cut on their sales.

          If artists were managing their content by themselves and directly receiving their royalties, oh yes for sure they’d drastically increase their revenue, using services like ours (JTV Digital) or our competitors TuneCore, CDBaby…etc.
          But the reality is that they are (usually) tied to their record company with deals containing outdated terms that treat physical and digital sales with in the same manner (with a quite low royalty share).
          However if there are some initiatives, even by some big sellers, to take control of their music sales again, well that’s a good sign and I’ll be more than happy to welcome them!

          Reply
  10. hmmmm
    hmmmm

    “A la carte downloading was ill conceived from day 1, & was purely a function of bandwidth limitations, & has no place in the life of the modern consumer or the modern music industry.”
    Ah, I am sure the labels would love to package 1-3 great songs in a mandatory 12-song bundle again. The industry was a singles-dominated market until the corporatization of rock circa 1968. Nonetheless, singles have still been the engine of record sales consistently since then.

    People can now continuously listen to as many different digital music files for as long as they want on the dominant playback machines (iPods/iPhones and computers). Try doing that on any CD player. Mandatorily bundling tracks as an album package as a rule just doesn’t make any sense, to say nothing about how overated the album as an art form is.

    Singles were squelched for a while by a combination of greed and playback technology but are now back on top where they should be.

    Reply
    • jw
      jw

      For something to “make sense,” it has to make sense for the user & also the industry. A la carte downloading makes sense for the user & for Apple, but the artist gets screwed & the industry is in shambles.
      Subscription services make sense for everyone.

      Reply
      • Visitor
        Visitor

        “A la carte downloading makes sense for the user & for Apple, but the artist gets screwed”
        I’m an artist and I don’t have any problems with a la carte.
        “Subscription services make sense for everyone.”
        Not at all.

        Reply
  11. we're on the same page
    we're on the same page

    I agree that digital downloads generally will in the long-term will be remembered as a bridge between CDs and on-demand streaming. A transitional product that reigned briefly because of 1) bandwidth limitations, and 2) a need to transition consumer behavior between a physical ownership consumption model to an access-based model. This shift is much bigger than than just the music industry. To fight it will just further decrease music’s piece of the wallet share.

    Reply
    • Visitor
      Visitor

      “I agree that digital downloads generally will in the long-term will be remembered as a bridge between CDs and on-demand streaming”
      Streaming will be remembered as the bridge between the Piracy Era and the Post Piracy Era.

      Reply
  12. Visitor
    Visitor

    I’ve been doing some serious thinking.
    Here’s my personal solution, if the rumors are correct — which wouldn’t surprise me as Apple does seem to be moving elsewhere after Jobs; no Logic updates, etc.:
    I’m going to:
    1) Make my own little store. Like most artists, I’ve got a small, fairly well visited platform, and I’ve been thinking about this for a while anyway. Maybe it’s not the end of the world…
    2) Move everything from iTunes to Amazon for customers who prefer a store they know. I’m not particularly happy about this, given Amazon’s price politics, but it’ll do for now.
    Could be interesting to hear how other artists are going to deal with this…

    Reply
    • Sam @ Projekt.com
      Sam @ Projekt.com

      My customers really love Bandcamp. Rather than start your own download store, post your music on their site and use their embeds (and infrastructure) on your site. BC take 15%; but they provide all the technical support. If you sell over $5000 a year, they reduce their cut to 10%. I love BC.

      Reply
  13. MusiciBox

    Apple should be free to engage in this tactic if it so chooses. Their model has helped to reign in a diseased and dying industry to one with a glimmer of hope and order.

    Holding out on iRadio is holding out on Radio.

    Reply
    • Farley
      Farley

      Another view is that the rumored Apple practices, if true, have Apple playing with the same antitrust fire that was started by merchants in response to similar Visa and MasterCard practices in the past. So, maybe Apple will consult with counsel and steer clear. (Or, maybe not.)
      The honor-all-cards rule, as implemented by Visa
      and MasterCard, in the past required that a merchant who accepted the card network’s credit cards also accept the card network’s debit cards. In 2003, Visa and MasterCard, as part of
      the settlement of an antitrust action brought by a class of merchants, agreed to revise their honor-all-cards rules to not apply across debit and credit classes of cards.

      Reply
    • Visitor

      “Holding out on iRadio is holding out on Radio”
      I love Apple, but let’s be clear on this:
      Internet streaming is not radio.

      Reply
      • Casey

        Not necessarily true. A person can go to shoutcast and listen to stations that function identically to traditional radio, the only difference being the media used to deliver it to listeners.

        Reply

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