Indie Consortium Advises Against Licensing Apple Music…

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Yesterday, Digital Music News published a leaked Apple Music contract confirming that no royalties will be paid to rights owners during a three-month trial period.  In response, highly-influential independent label organization A2IM offered this word if caution to its members.

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Yesterday, Digital Music News publicly disclosed key aspects of Apple Music’s deal with Independent rights holders.  While on the surface the rates appear to be competitive, per stream and per subscriber rates are only one aspect of the total compensation in a licensing deal.  As we noted in our recent item on music licensing: the art of the deal, licensing compensation often takes many forms other than the streaming rate.

The Digital Music News story revealed that Independent rights holders will receive no compensation for their content during Apple Music’s 90-day free trial period.

It is surprising that Apple feels the need to give a free trial as Apple is a well-known entity, not a new entrant into the marketplace.

Since a sizable percentage of Apple’s most voracious music consumers are likely to initiate their free trails at launch, we are struggling to understand why rights holders would authorize their content on the service before October 1.

This is especially true in light of the potential revenue damage to a music label’s iTunes download revenues and impact on their cash flow. We will keep everyone informed as new details emerge in the press.

In the meantime, please do not feel rushed to sign Apple’s current offer.

If you’d like to discuss generic deal structures, please feel free to reach out to us at A2IM. A2IM understands that each music label must determine for themselves their own promotional and commerce plans and that we respect our member labels’ independent entrepreneurial spirit. We simply suggest to our members that before agreeing to any direct licenses, that they should please consider all factors and their effects on their music label’s results, now and in the future, and make an educated decision.

In accordance with the entrepreneurial spirit of our members who run their businesses, each of our members should continue to do what is in their business’s best interests knowing, whatever decision or statements they make, that every A2IM label member will always continue to get full A2IM support and benefits.

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Image by Alexander Baxevanis, licensed under Creative Commons 2.0 Attribution Generic (CC by 2.0).  Written while listening to Clams Casino.

58 Responses

  1. DavidB

    Are they advising their members against agreeing to Spotify’s introductory terms of 3 months premium streaming for 99 cents? A massive 33 cents a month more than Apple! I’m sure that makes all the difference!

    But seriously, even if you think Apple are being too generous with other people’s money (which they are), at least they are not pretending it is something other than a free offer, whereas Spotify are charging a nominal amount just so that they can boost their stats for ‘paying users’.

    Reply
    • Anonymous

      People seem to be unable to see farther than short-term. If Apple brings in the 100 million paying customers they are promising, no one will remember or care about this summer.

      Reply
      • Paul Resnikoff
        Paul Resnikoff

        Interesting perspective. But if Apple brings in 100 million paying subscribers, Apple also gets a huge payout. So why shouldn’t they be taking the financial risk (ie, paying for the raw materials) to get there?

        Now, think of it the other way: if this totally flops, Apple didn’t have to pay three months worth of royalties (ie, risk capital) to get there. Which makes this a free subsidy paid for by artists and rights holders.

        Reply
        • Try NOT SIgning... By By Catalog...

          When Apple sends “agreements” to indie labels it is in the form of an updated document in the “Connect” interface that labels use to deliver their goods. If you don’t agree to the new terms by the deadline apple provides they simply remove your entire catalog from the store. See Ya…

          Reply
          • DavidB

            If that’s true, it’s an outrageous antitrust violation, which you should report to the appropriate authorities. But if it’s true, why haven’t we heard of it till now?

          • Paul Resnikoff
            Paul Resnikoff

            From what I’m hearing, that’s not the case. There are opt-out clauses, well, at least for certain artists. But, there are currently two active investigations from two state attorneys general (CT and NY) specifically targeted at Apple Music. Those actions could easily be expanded.

          • Anonymous

            DavidB and Paul,
            See the Distrokid-posts in this thread. You can indeed opt out.

          • Antinet

            In case you didnt notice, the US govt isn’t exactly a hotbed of antitrust action the last few decades.
            Apple, Google, Amazon, should ALL be SPLIT APART!

          • Anonymous

            “If you don’t agree to the new terms by the deadline apple provides they simply remove your entire catalog from the store”

            Gross!

        • Thanks For the Laugh!

          “highly-influential independent label organization A2IM…”

          HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahaha….

          Aaaaaaaaaaaaa….Hahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahaha…

          ….Ohhh, boy

          *wiping tear*

          Jeez, that’s funny….

          Paul Resnikoff

          “If this totally flops, Apple didn’t have to pay three months worth of royalties (ie, risk capital) to get there. Which makes this a free subsidy paid for by artists and rights holders.”

          Really? Apple doesn’t have to risk any capital on this program – just because they might not be paying artist royalties to some artists, for a brief period?

          Apparently, a Stanford Economics degree doesn’t come with much actual education about basic economics, business or writing.

          Reply
          • Keep Laughing

            Think A2IM isn’t highly influential?

            Their board is: Martin Mills (Beggars Group), Amy Dietz (INgrooves), Darius Van Arman (Jagjaguwar/Secretly Group), Dave Hansen (Epitaph), Glen Barros (Concord Music), Portia Sabin (Kill Rock Stars), Craig Balsam (Razor & Tie), Scott Robinson (Dualtone), Richard Burgess (Smithsonian Folkways), Tom Silverman (Tommy Boy) & Jim Selby (Ole).

            If that group tells Apple to go screw unless they treat indies better, believe me Apple is concerned.

          • Anonymous

            “If that group tells Apple to go screw unless they treat indies better, believe me Apple is concerned.”

            And that’s just A2IM…

            Most of the industry is deeply disgusted by this.

          • Yep, Still Laughing

            Good luck to you if you really think A2IM is “highly influential.”

            I’m well aware of the A2IM board of has-been’s and also-rans. Not an industry-shaper in sight…

            If you think that Apple is concerned about them actually changing anything about Apple’s business by anything more than a tiny fraction of a rounding error, you should probably think a bit more.

            Think about things like: The launch of iTunes in Australia and Japan, a few years ago. Then, think about the fact that A2IM, in their best-case-scenario, claims to represent 1/3 of a total $9B per-year business, in the aggregate – while Apple makes somewhere around $15B in PURE PROFIT, per quarter – and has about $200B in cash, on hand.

            Yeah, shaking in their boots over in Cupertino about what Tommy-Boy Silverman might be thinking, I bet…

      • Anonymous

        pretty sure my artists with records coming out this summer who never got paid a dime no matter how successful they were will remember

        Reply
      • Anonymous

        “no one will remember or care about this summer”

        Oh, you think it’s just this summer?

        Remember what they did to Logic Pro? OS? Apple loves free (if it moves hardware).

        Reply
      • GGG

        If Apple got 100M subscribers we’ll all be ecstatic. But only until they start paying on October 1st. The three prior months where nobody is going to bother paying is going to suck. Not sure why looking short-term in that sense is a bad thing to you? It’s 3 whole months.

        Reply
        • Anonymous

          100M? Hm…

          Apple Music is a major mess, and it won’t beat Spotify — Mashable
          Apple Music hasn’t convinced The Beatles to let you stream their music — The Verge
          Apple Music contract: Fears grow it will ‘punch hole into music biz income’
          Apple Music Service Fails to get investors dancing — investors.com
          Apple’s Music Revolution That Isn’t — The New Yorker
          Apple Music to feature lower bitrate than some competitors — imore.com
          Apple Music should fear Spotify, not the other way around — BetaNews
          Acclaimed critic buries Apple Music: ‘It’s toast’ — Yahoo.com

          Reply
          • Anonymous

            It’s not that Spotify is good. It’s just that Apple is worse.

          • Anonymous

            It’s pretty hard to be worse than Spotify. Unless your name is Grooveshark. Nice try Spotify PR-man

          • Anonymous

            “Spotify PR-man”

            Haha, you couldn’t possibly be more wrong.

          • Anonymous

            …and just to prove I’m not exactly your average Spotify fan boy, here’s a very nice Hypebot article about Ek and the Google guys on his board and how they stalk Taylor Swift, bully Zoë Keating and sue everybody in sight:

            http://www.hypebot.com/hypebot/2015/06/hell-has-not-frozen-over-the-absurdity-of-the-spotify-antitrust-investigations-into-apple-music.html

            However, that doesn’t change the fact Apple Music is the worst attack on the music industry since Napster.

          • Just So You Know...

            That article doesn’t say one, single thing about “how Ek and the Google guys
            stalk Taylor Swift, bully Zoë Keating and sue everybody in sight.”

            It contains a single, delusional, editorial swipe by Chris Castle, where he merely describes behavior as stalking and bullying, only in his obviously, severely-distorted perception.

            But hey, let’s not let actual facts, or intellect, or a reasoned approach invade the hysterical rants against “tech.” I mean, it’s doing SOOOOO much good to just hyperbolize about it.

            Everything is so much better for artists now, as a result of all the myopic rhetoric of the last few years!!!!

            Thank you, David Lowery, Paul and Chris Castle!!!

          • Anonymous

            From the article:

            “Even the biggest music star [Taylor Swift] on Planet Earth cannot escape the wrath of Daniel Ek. The guy is like a stalker.”

            “we all know how Google [mentioned here because it is represented on Spotify’s board] treats artists based on any one of a number of unnecessary debacles for YouTube, such as the bullying of Zoë Keating

            Investigate Everyone: Since governments are supposed to do justice, then let’s [‘us’ = Spotify and its Google board member(s)] investigate everyone”

            “Remember that Google’s General Counsel was quick to sue Mississippi Attorney General Jim Hood to stop the populist attorney general from investigating–just investigating– Google’s sleazy business practices that got them a $500,000,000 fine after a four year grand jury investigation”

          • Yeah, So, I Have to Ask....

            I just have to ask, where is the PROOF (or even circumstantial evidence) of ANY of that?

            Chris Castle can say that anyone is “like a stalker,” and it doesn’t mean a thing. He can vaguely suggest that someone is a “bully” and it also, doesn’t mean anything.

            And as for Google suing Jim Hood the TN AG, they were 100% right about that. That’s why Jim Hood immediately dropped his investigation – which was being conducted not just for, but actually BY the MPAA, through his office. Nice guy, that Jim Hood….

            Chris Castle constantly fills his ill-informed rants with borderline libel, to get non-critical-thinking morons like you all ginned up about his imaginary conspiracies.

            There’s a reason why he has zero influence.

            So, let us see any of the evidence you have of this supposed “stalking” and “bullying.”

            Try to understand the difference between a dumb opinion and actual facts.

    • Anonymous

      methinks you have no clue how the spotify contract works if you think labels are getting a share of $0.99 instead of getting the share of an agreed minimum per subscriber. that shit is being funded by spotify, not the labels

      Reply
      • DavidB

        Fair point. Contracts may well set a minimum payout per user. The leaked Sony contract specifies a minimum of $6 per premium user per month, which is 60% of the usual subscription rate, as expected. (A free trial of up to 7 days is excluded.) If the same terms are still in force, and also offered to independent labels and artists, I agree that Spotify would be bearing the cost, and there is no problem.

        Reply
    • 99cents

      Yes, but are the streams in Spotify’s $.99 three month discount subject to a per play rate (typically .005 in the USA) or the revenue share (prorated by plays divided by the revenue)

      Reply
  2. Sam

    I’m by no means one of these Apple suckers – I’m still waiting for them to make iTunes worth a shit, but there is nothing Apple could ever do to lower themselves low enough to even look down and see Spotify with binoculars.

    I see what they’re saying above though. Down the road, it will be no big deal. Someone new signs up – you don’t get any pay from their streaming for 3 months. Not the best case scenario, but sure beats not getting anything from the streaming of entire 3/4 of users ALWAYS – FOREVER. BUT, in this first 3 months after launch, it is 100% of the users you get no pay for. It’s not like a year from now where you’re making money from the existing users while new users sign on. This is all users at once. So the A2IM saying to simply delay licensing for 3 months makes perfect sense. You can’t just hand everything over to these assholes because as arrogant as the people at Apple might be – things would be WAY worse if we built them up to the arrogance of those Spotify assholes.

    Go Rhapsody! …by the way…

    Reply
  3. Ash

    This is unbelievably stupid. If Apple can spend $100 million on everything relating to the last U2 album, then shouldn’t they be able to afford to cover royalties from the free trials this summer? Why the hell should the artist have to give up income for a service they don’t even have a stake in? This makes no sense. I doubt the royalties generated over the 3 month free trial period would make a dent in Apple’s overall profits, but it’s ethical and fair to screw the artists who are responsible for you even having a service and for Apple even enjoying the success they’ve enjoyed since iTunes? Screw off.

    Reply
  4. Anonymous

    Funny, they don’t seem to realize that the 3 month period is per user on a rolling basis, not just 3 months from the launch date. Signing October 1st will still mean users that sign from then on will also get a 3 month trial period. Sometimes A2IM reminds me of the cast of a Christopher Guest movie.

    Reply
    • B3

      Yes, but the lions-share of trials will be started when the App is released on June 30th. So if you want to avoid the worst period of royalty-free listening, it would be best to release after October 1st.

      Reply
      • Anonymous

        “So if you want to avoid the worst period of royalty-free listening, it would be best to release after October 1st”

        That’s awfully close to Apple’s Free Holiday Trial, though (and don’t think there won’t be one)…

        Reply
        • FREE "TRIAL"

          New, 6 month loyalty program free trial! Offered to everyone who signed up for Apple Music in the summer!

          Reply
      • Paul Resnikoff
        Paul Resnikoff

        That’s tough to gauge, actually. Remember, there’s going to be a massive advertising ramp-up in the coming months, it will keep accelerating. In fact, you could have an even larger bulk of free users jumping aboard come October.

        Reply
        • An Indie

          Fair point, Paul, but if you expand upon A2IM’s point you could conclude that the real advice is simply to proceed thoughtfully and not feel pushed to sign up for launch. If the service experiences a huge number of users at launch indies who have not signed can make a more informed decision but once you’ve signed the deal that’s it, you’re locked.

          Reply
  5. Anonymous

    Here’s a funny thing:

    According to Business Insider, Apple’s “real plan is to get every single artist in the world, no matter how small, to put their music on the platform”.

    And all we care about in the real world is to avoid it…

    Reply
  6. Anonymous

    Can’t be repeated often enough:

    “do not feel rushed to sign Apple’s current offer.”

    Reply
  7. Truancy

    “Do not feel rushed to sign Apple’s current offer.”

    They make it sound like we have a choice if the music is already up on iTunes…

    …DO WE HAVE A CHOICE???! If so, why has no one mentioned it? Is it dependent on your distributor?

    Reply
    • Anonymous

      Yes, you have a choice — if you’re using Tunecore:

      You can remove your music from iTunes within 48 hours.

      Here’s how you do it (I’ll post the link in a separate comment below; it may take a few hours to appear):

      ————————-

      How do I take down my music from stores?

      You can remove your content from any or all stores, at any time (at no charge).
      You can take down one release or multiple releases.

      Follow these steps to request a take down of your music:

      For security purposes, please submit the email address registered to your TuneCore account in the space below.
      You will then receive an email with instructions on how to remove your music from stores.
      Read the information on how take downs are processed.
      If you wish to proceed, click the link at the bottom of the email.
      Fill out the take down form.
      Once we process your request, most stores can take up to one week to remove your content. iTunes will remove the content within 48 hours of receiving the request.

      Reply
  8. An Indie

    YOU HAVE A CHOICE!

    iTunes has told me and many friends of mine who own independent labels that if you don’t sign the streaming deal that your music will remain available on their download store. It just won’t be on their streaming service.

    A2IM absolutely knows that the 3 month free/royalty free period is 3 months from sign up for each user. Their point is to educate indies that (a) you can wait and (b) it’s reasonable to expect the biggest rush of free trials will be those 1st 3 months. That doesn’t solve the longer term issue of 3 months of no royalties after the 1st 3 months but it at least gives indies more time to think it over than the few days or few weeks that indies got from Apple who could absolutely have shown some respect to their indie label direct partners by bringing them in and getting their point of view (under NDA) before dropping this bomb of a license on them.

    BTW – to those who point to how great things will be after the 3 month trial when everyone is signed up and paying premium fees: what will that matter to the indie label who goes belly up in the 3 months of not getting revenue from their biggest retailer? Think that can’t happen? You don’t know how tightly most indies run.

    Reply
    • Anonymous

      “iTunes has told me and many friends of mine who own independent labels that if you don’t sign the streaming deal that your music will remain available on their download store”

      We’ve been over this already:

      * Indie label owners (+ Zoe K who’s smarter than the rest of us) are not fucked. They can use iTunes Connect to opt out.
      * Individual indie artists going thru aggregators like Tunecore are most likely fucked — Tunecore is 100% pro-Apple to the point where you sometimes can’t tell the two companies apart.
      * Indie label artists are fucked if their labels sign.
      * Major label artists are fucked.

      Reply
      • Anonymous

        “* Indie label owners (+ Zoe K who’s smarter than the rest of us) are not fucked. They can use iTunes Connect to opt out.”

        However, here’s what another DMN user says:

        “When Apple sends “agreements” to indie labels it is in the form of an updated document in the “Connect” interface that labels use to deliver their goods. If you don’t agree to the new terms by the deadline apple provides they simply remove your entire catalog from the store. See Ya”

        So you might as well remove your catalog from iTunes right away. Then it won’t be served at the cannibal dinner on June 30.

        Reply
  9. There is something...

    For what is worth, I got an email from Distrokids about Apple Music, telling me that I can add the service to the albums I manage or create. So it seems that, a least for independent artists or self distributed labels, it is NOT mandatory to sign for the new service if you have music on the iTunes store.

    Maybe people should stop spread unverified information here…

    Reply
    • Anonymous

      “I can add the service to the albums I manage or create. So it seems that, a least for independent artists or self distributed labels, it is NOT mandatory to sign for the new service if you have music on the iTunes store”

      Well, that’s kind of vague — you can add the service (as an indie artist, I assume), but we still don’t know for sure if you can opt out.

      It does add new information though, so thank you for posting.

      Reply
      • There is something...

        No, it’s not vague. It means that music you released until now through Distrokids is not available on Apple Music unless you add it yourself. You don’t need to pull it from the service.

        So it’s logic to think other aggregators don’t have to force you to use it if you don’t want to.

        Reply
        • INDIE ARTISTS CAN OPT OUT OF APPLE MUSIC STREAMING!

          PROBLEM SOLVED — thanks to you (and Distrokid)!

          I asked Distrokid the following question:

          “If I release and sell my songs on iTunes via your service, can I then opt OUT of all kinds of streaming – including Apple Music – entirely?”

          And here’s the answer:

          “Yes”

          Nobody knows what other aggregators are going to do. But the fact that Tunecore won’t answer this simple question (and the fact that they use the opportunity to tell us how great Apple Music is) could indicate that their answer eventually will be “No”.

          Reply
          • Anonymous

            We still don’t know if we can opt out of Beats1. You couldn’t get rid of iTunes Radio (at least not if you’re Tunecore user).

            Granted, Beats1 isn’t on-demand, so it won’t do nearly as much damage as Apple Music.

          • Anonymous

            btw, you don’t have to opt out of streaming altogether if you use Distrokid.

            You can opt out of Apple Music, but use Spotify for instance and still sell your downloads on iTunes. (This is not hearsay, I asked Distrokid.)

  10. Anonymous

    Bottom line:

    Apple Music DOES NOT “let subscribers stream any song from the iTunes catalog”.

    Not even close.

    So buying iTunes downloads is still the only way to get all the music you want (unless you’re a criminal).

    Reply
  11. Anonymous

    CD Baby apparantly allows artists to opt out of Apple Music, too (according to a CD Baby user, Christopher Robley, on cdbaby’s site).

    CD Baby takes a 9% commision though, so Distrokid is probably the best solution for most artists.

    Reply
  12. Anonymous

    So, it seems some aggregators at least will allow you to opt-in opt-out to Apple’s Streaming. But what i really want is to be able to opt-out selectively by album. For windowing purposes ( for ex: iTunes download only upon release for the first 3/4 months, then it will be available for streaming afterwards ) . I don’t necessarely want it to be an all-or-nothing option.
    Is that possible ?

    Reply
    • Anonymous

      Ask Distrokid, they’re very responsive and I’m pretty sure windowing will be possible.

      CD Baby will probably allow it, too. Otherwise, a lot of people would leave.

      Reply
  13. JeffC

    It’s about the share price – it always is these days.
    “We are launching a new service that we don’t have to compensate artists for!” sound wonderful to shareholders.
    “We are launching a new service that we are paying xx% to artists for!” might sound better to artists/labels, but since when is that an upside for any company.
    Keep the stock price up is the only mission.

    Reply

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