I’m a Label Executive. And This Is My Fair Warning on iTunes Music Downloads…

My Warning on iTunes Music Downloads

You might be missing the real story on iTunes Music Downloads, indie labels.

The following comes from an executive at an established label that wishes to remain anonymous.  

The purpose of me writing this op-ed, or whatever you want to call it, is that a lot was left out last week in the whole ‘iTunes Music Downloads are Getting Canceled’ story, or whatever the title [of the story] was [ed: here].  There was a lot of back and forth and everyone started focusing on the wrong thing, including Digital Music News and including Apple.

So let me first address the biggest problem that I found with Digital Music News’ coverage of the matter.  The entire article put the whole matter into a black-and-white discussion.  Unfortunately that’s not the best way to view this.  The whole debate seemed to focus on whether or not Apple was going to go completely dark on their iTunes music download store within two years, or three years, or whatever, and it’s not that simple.

The reason why I feel like I need to address is because there are a lot of labels that may have moved on from this topic after last week without realizing that there are very serious issues that need to be focused on.  I am saying this to you as someone who oversees a very substantial catalog on both the recording and publishing sides, and I’ll leave it at that.   Let’s just say I’m in the mix with many labels but I won’t get into the specifics of exactly from what level I am speaking.

“Whether or not Apple wakes up one day and decides to tear down its iTunes music download store is not the most important thing. Because they are already starting to get rid of it.”

My bold statement is this: Whether or not Apple wakes up one day and decides to tear down its iTunes music download store is not the most important thing.  Because they are already starting to get rid of it.  This phase-out is already happening and Apple is definitely assisting this process.  They are definitely not growing their download store and they are doing what it takes to make this die a natural death.

You can say there are some things they are doing to fuel their download store with exclusives, etc., but overall I think the net initiative is to let this go away.  I would even point to Chance the Rapper as an example of this.

As a user you can see this in motion.  You can see that I’m not making this up.  If you’ve ever purchased any substantial amount of iTunes downloads from the last year or so, and I mean from July [2015] onward, you’ve noticed that these downloads are gradually getting sucked into the Apple Music product.  What I mean by that is that there are all sorts of confusing connections back to Apple Music even if you don’t want to have anything to do with Apple Music at all.   But even worse, your downloads that you either paid for, downloaded, or ripped, have been totally mangled and often replaced by Apple’s official version of that track, whether that exists on Apple Music, or whatever.

The net net of all of this is that your iTunes download collection has been totally corrupted by Apple and this process will continue as long as Apple realizes that the future is streaming.  Apple is building on the future of streaming and they are not investing or preserving your download account just because you like it.

Just look at the numbers.  Off the top of my head, there are something like 30% year-on-year [paid download] declines.  But that’s going to turn into 45% [y/o/y], it’s then going to turn into 65% year-on-year.  This is going to accelerate, and this doesn’t have to be a big event because it’s going to die anyway.  You may not even notice it’s gone, in fact you may not even notice that it’s being killed right now.

It’s sort of like the patient that gets a little less oxygen every day.  The patient is going to have a lot less strength over time, and you won’t even notice when he’s gone.   Then you wake up one day:

“Who’s over in Ward C?  Is that guy dead yet?”

Oh yeah, he is.

Anyway, getting back to my main point: of course Apple is going to deny all this, because they can.  I hate to say it, but Digital Music News set them up for an easy denial like amateurs, because [Apple] basically said “all downloads won’t be terminated within two years.”  [DMN] framed this as a yes-or-no question, and if you know anything about politics or have spent any time inside the Beltway then you definitely know the easiest thing to deny is a very concrete black-and-white statement.  Because if you deny this, you’re just denying that black-and-white statement, not the broader aspects or broader initiatives that are being undertaken.

“It’s going to die one way or another.”

So I know that what’s basically going to be happening is the same s–t.  It’s going to die one way or another.  It’s not about pulling the plug, so please get your head out of that black-and-white tunnel.  I’m mentioning all of this because I know that many labels, especially indie labels, are not properly diversified against downloads.  They’re not making the money back on streaming or vinyl, and they won’t be able to adapt.  And that doesn’t even get into the issue of the pain that indie labels have felt since being unable to sell CDs en masse, or even being able to attract the juicy artists they want who are increasingly holding out longer and longer because they feel they can do stuff independently (and many times they are right).

This is all going to get far worse once downloads start to seriously get weaker.  And remember: iTunes is really the only player that matters here.

I hope you’ll keep in mind that the majors don’t really care at all that this process is happening.  That’s maybe taking it too far: sure they’re going to lose money like everyone else but they’re planning to make a huge amount off of streaming.  They’ve now changed their entire mentality around this, and they’re now viewing streaming as a golden goose.  The data is showing explosions around streaming right now, with the increases just massive.  They want a piece of this, whether it’s an I.P.O., sale, or whatever.  And that’s why we’re seeing labels demanding huge percentage chunks of these companies, and putting less emphasis on cash advances.  This is the way these deal structures have moved now.

They can handle it.  If downloading goes away, [the major labels] have worked very hard to diversify and leverage their catalogs.  Now if that’s their golden goose, you’re seeing Spotify work for the labels and at their beck and call, not the other way around.  UMG [Universal Music Group] is more powerful than anyone here, and they’re definitely not an indie.  In fact, they want indies to die so that they can consolidate as much as possible, to buy up your catalog when you’re desperate for scraps and consolidate even further.   This is the brutal world that your [indie] label exists in, the majors aren’t looking out for you.

Thanks for hearing me out on this issue.  And thanks to DMN for publishing it even though I’ve been critical of the story.  I’m not trying to blame you guys, but I feel an obligation to speak out and warn other label heads who may not be seeing this issue properly.  Because I’m very concerned that 2017 could be a blood bath for indie labels if they’re not prepared and diversified.

Apple isn’t on your side and neither are the major labels.  I’m not even sure streaming is on your side.  So proceed accordingly.  Anyway, I’ve done my part, I hope that helps.  Peace.

Image by Kyle Watson, licensed under Creative Commons Attribution 2.0 Generic (CC by 2.0).

 

 

37 Responses

  1. Anonymous

    I get the sense that the labels are more concerned about making as much money as they can delaying the industry’s inevitable demise, rather than actually trying to save it. Streaming is indeed the future, but for the music industry to be healthy, it should only be a part of it. Labels need to do two things. First, they need to window new releases as digital downloads only for at least 3 months before making them available for streaming. That will make iTunes relevant again. Second, they need to stop licensing all their music to free/ad supported services, like Youtube and Spotify’s free tier. Piracy will undoubtedly increase substantially as a result, but it won’t matter. There will be enough people who go to iTunes as well, and labels will still make more money from iTunes than they’re making now through streaming. More importantly, so would the artists, allowing them the chance to actually make a living. Labels need to stop being afraid of the damn pirates. Spotify has been instilling the fear of piracy into the labels for years. It’s time for the labels to stop listening to them.

    Reply
    • Nelson

      I believe that the Future of Entertainment Today (.com) is that artists/suppliers of the product become owners of the company and Altavoz Ent has gone to the efforts to not only get the distribution as a service #DaaS setup it also now allows successful suppliers to be part of the ownership of our ArtistsOwnedPublic.co

      Reply
    • Anonymous

      No “inevitable demise” is going to occur. If it was going to happen, it would have gone down 8 years ago, and obviously it didn’t. Artists continue to want to work with labels as much as they ever have, so please stop wasting energy on an outdated meme.

      Artists need to get together on a mandated streaming royalty now, or an entire generation of musicians will experience the biggest shafting in history. Ignore this fact at your own peril.

      Reply
      • Anonymous

        I hope you’re right. I just know that streaming alone won’t sustain this industry. If permanent downloads on iTunes become irrelevant, regardless of whose fault it is, the industry is screwed.

        Reply
    • Michael Oliphant

      Streaming is not even remotely the future. Streaming is completely geared towards only major artists. The fact is that the huge majority of all music released on this planet is made by independents. iTunes never did anything to support indies and never will. Like all big business, they just go where the easy money is and screw everyone else.

      Reply
      • Anonymous

        Well, I didn’t say it was a great future. It’s simply the way it is and the way it’s going to be, and there’s not a damn thing we can do to stop it. But as long as the labels, both major and indie, are smart about how we use streaming, it will be ok. Right now, very few labels are being smart about it, and are essentially giving away the farm, to the detriment to everyone except their own bottom line. If we start windowing new releases, and phase out free/ad-supported services (which the majors are capable of doing), I believe things will improve.

        Granted, the only way things will truly get better is if we implement effective, common-sense copyright enforcement laws. That will require congress to take action, and taking action isn’t exactly their strong point. But we don’t have to wait for that to happen to implement windowing.

        Reply
        • Kenny Phillips

          You say “implement effective, common-sense copyright enforcement laws.” I say that your common sense and mine may differ. Also, considering the number of individuals that have at least one pirated tune, who’s going to pay for the enforcement? Who’s going to search their devices? Are we only going to go after bootleg streamers, or only the big names, and leave individuals alone? Calling for more government is usually not the answer. It’s never been. But if you see what is occurring now, it appears that a solution is on the horizon, and it will be brought about by cooperation (however tense) between artists and distributors.

          Reply
    • ANDY WALKER

      The true is that the Great Producers are gone, like the Great Music , and now , the CEOs of the Music Labels are less than 30 y.o. , with WHICH EXPERIENCE ?
      This is the Problem … No more Talented Scouts, No Real Producers like Sir. Martin , to name just one for all …
      Don’t need no more words !!

      Reply
      • Anonymous

        I don’t use streaming services because they offer me nothing. I want physical copies of my music (CD, Vinyl or digital versions). I used iTunes Match for one year but hated that they replaced my version of a song with theirs. Totally threw my iTunes out of whack. Now, all my music fits on my phone and i have plenty of space left. So why do I even need streaming? I don’t. And I don’t know many intelligent folks that stream vs listening to their music on whatever device they want to hear it on. Streaming will die before iTunes will stop having a store. Don’t be dumb enough to think they care about anyone, indie artists can get on iTunes YOU can get your music on iTunes, it just has to be mastered properly, which anyone with any sense will do if they record something for commercial release.

        Reply
  2. Ezraz

    This is what happens when you keep selling 10% versions of the real thing.

    Reply
  3. Remi Swierczek

    Thank you brave girl! Steve Jobs is also rolling in his grave!

    The main problem of music industry is 10 years of stupefied and gutless UMG.
    Sony follows it like a puppy on leash, Warner does similar commotions on it’s own.

    UMG has allowed Ek’s DOPE to become reality, UMG created purpusless VEVO and allowed YouTube to pulverize music monetization.
    UMG has planted Jimmy Iovine at Apple to spread cashless streaming gospel.

    Today we are all working hard to convert $200B of prime fruits to $15B of tasteless, over-burned subscription and advertising music MARMALADE!

    THE ONLY HOPE: go on you knees and pray to GOOGLE!
    Chef MONK of digital medieval, Larry Page, might become fair.
    He is a MOONSHOT seeker, so tell him that music is bigger than all digital ads and he can triple his Google as he delivers $200B music industry by 2025.

    PRAISE THE GOOGLE and his best son Larry Page! HALLELUJAH & HALLELUJAH again!

    Only Monk Larry and his hunger games spaceship can lock music in monster virtual BALLON than he can make 3 million pinholes feeding music to restaurants, radio stations, sub-free streamers or elevators!
    Each pinhole operating as a music store, charging for addition to the playlist.
    Each pin hole with Google cash register paying back to all involved parties including the elevator operator!

    Reply
  4. Anonymous

    Paul/DMB simplifying a complicated/complex issue into a black and white one!?!? NEVER!

    Reply
    • Me

      I’m no fan of Dave Matthews Band, but it seems kinda harsh to place the blame on them.

      Reply
  5. FarePlay

    Paul, naughty boy. This is all feeling a bit contrived, even this latest “transcribed” missive feels oddly apologetic.

    The truly unfortunate part about all this is that the musicians and songwriters are and have been nearly absent from the imploding mass that is the discussion of their careers and how their work is treated.

    Get in the game while you still can. Get informed, take action, be responsible for your future.

    Reply
  6. Vail, CO

    My prediction: download store phase-out starts Jan. 2018, done by 2020. No more downloads, unless you want the ‘classic’ version.

    Reply
  7. Graham Needham

    Indeed, Apple are already starting to get rid of the iTunes Store – traditional iTunes Store album/single links (even those you get *from* the iTunes Store) no longer work properly, so labels and artists are losing sales and Apple Music (streaming) gets pushed more and more. See http://wwrdb.com/blog_post.php?29 including a video demo of what is happening.

    Reply
  8. Jichael Mackson

    When Gorbex returns to suckle from the cosmic goat breast, the shields of the Jibbleglibbets will be rendered useless due to methane fart pellets that have expiration dates. The ruler of Assbreathia will then take the 38th daughter of Cill Bosby and splatter her science tablets with Poochie Coot. Yes.

    Reply
  9. Educated composer

    This was very poorly written. I see multiple grammatical errors and typos. Perhaps you would be taken more seriously if you had your articles proofread by an educated editor.

    Your point might be valid, but your delivery was unprofessional.

    Reply
  10. Frank

    Gee, I thought the brilliant Steve Jobs said that people want to buy music, not rent it. And he’s *always* right, correct?

    Reply
  11. RockNRoll Buddha

    It’s getting much, MUCH worse for the indies @ the streaming services – Good Luck trying to get any Promotional love from Pandora, or getting on a Spotify Curated Playlist if you’re an indie.

    it began to change in earnest last year, and now the streaming services are completely in the tank for the majors. Once the Major labels realized that streaming was not only the future – but the NOW – they co-opted the streaming services by taking ownership stakes and cutting deals to the detriment of the business as a whole. So the big curated playlist slots that would actually give an indie a shot at real growth and making some streaming $$$ are pretty much gone.

    Same shit, different day – same as it ever was. These wonderful new technologies that were initially a boon to for the indies and had a chance of leveling the playing field have now gone away and indies once again are getting the short end of the stick.

    Its making an increasingly tough business even tougher to be financially sustainable. If you can’t get some decent streaming revenue coming in, combined with other revenue streams – touring, merch, the occasional sync – you’re fucked.

    Reply
    • Frank Derbin

      Not true. I have indie label and i have managed to get my releases to Spotify’s curated playlists. Ok i have admit that i know people who work there and i, but ain’t that the point? Their official line is that they will not take suggestions for their playlists. Also they don’t favor majors over indies. It is just much easier for majors to get heard in the first place. But if you get on the Spotify playlist curators radar you CAN get your releases featured there.

      Reply
      • RockNRollBuddha

        I know people at Spotify too, and make pitches for our acts every week. If you’re getting your acts on their curated playlists, then Congrats! I was getting my acts on their curated playlists up until about a year ago, but its now dried up.

        Its not that we haven’t built up the story for our acts, or are going in cold and asking for playlists adds when nothing else is going on for the acts – we have Press, Touring, Terrestrial and Satellite Radio play, video exposure, etc. But for the most part those playlist spots are no longer available to us. Week after week, the playlists are now filled with either Major label or major distributed acts across the board.

        Reply
  12. DJ Jazzy L

    Put a limit on the number of times someone can listen to a track to encourage digital downloads and purchase of CDs. That’s what cookies are for. As an internet broadcaster, digital downloads and CD’s are an integral part of building and designing my playlist and music collection. And it’s independents that I support – not mainstream. There are hundreds, maybe thousands of internet broadcasters doing the same and I see true support for them dieing if access to digital downloads evaporate.

    Reply
  13. Frank Derbin

    I think that that the writer got this bit wrong:
    “What I mean by that is that there are all sorts of confusing connections back to Apple Music even if you don’t want to have anything to do with Apple Music at all. But even worse, your downloads that you either paid for, downloaded, or ripped, have been totally mangled and often replaced by Apple’s official version of that track, whether that exists on Apple Music, or whatever.”

    That is just bad UX design from Apple and will be fixed in the future. Apple Music is badly designed product and they are working on it to make it better.

    I would not bet one dime the Apple Music would outlive iTunes store. Apple don’t hesitate to kill it’s products if they don’t see good future with it. (That applies to iTunes Store too)

    Reply
  14. Anonymous

    This article is poorly written and doesn’t put forth any new data or observations of substance. The writer indicates the purpose of the article (I think?!?) is because labels are moving on from the original story without addressing serious issues that need to be focused on. But what issues were presented in this article that weren’t included in the original? And where are the thoughts from the label executive on how to address them?? I worked at a label for many years rising to the undefined level of “executive” as well. I expect better and more from DMN and a label exec.

    Reply
  15. Anonymous

    Bravo for this poor writing sample to remain anonymous.

    The purpose of me writing this op-ed, or whatever you want to call it, is that a lot was left out last week in the whole ‘iTunes Music Downloads are Getting Canceled’ story, or whatever the title [of the story] was [ed: here]. There was a lot of back and forth and everyone started focusing on the wrong thing, including Digital Music News and including Apple.

    Reply
    • Todd

      So you didn’t understand the gist of it, because the grammar was incorrect. I’d hate to be in bed with you.

      From a not so smart musician, put your stuff out on vinyl expressly prohibit your stuff from the net with the threat of a lawsuit to the ISP should said work turn up on the net. Hell they’re good at tracking stuff for Universal as it is, the tech is there to stop the destruction of the music business. But it’s old money and their kids reaping as much as they can from as little as there is. Music isn’t even music anymore, it’s a billion dollar spectacle or Adele coming from out nowhere with a bullet straight to the top, when nobody is buying records..? it’s always been a corrupt dirty business from non singing Ginger Rodgers in a see through opaque dress precode singing The Rhythms Gonna Get You ” to the totally auto-tuned wails of Neyo.

      Reply
  16. Yet Another Anon

    “As a user you can see this in motion. You can see that I’m not making this up. If you’ve ever purchased any substantial amount of iTunes downloads from the last year or so, and I mean from July [2015] onward, you’ve noticed that these downloads are gradually getting sucked into the Apple Music product. What I mean by that is that there are all sorts of confusing connections back to Apple Music even if you don’t want to have anything to do with Apple Music at all. But even worse, your downloads that you either paid for, downloaded, or ripped, have been totally mangled and often replaced by Apple’s official version of that track, whether that exists on Apple Music, or whatever.”

    I’ve purchased a substantial amount of iTunes downloads from 2009 and have over 30,000 tracks in iTunes (a mix of personal CD rips and digital purchases). I also pay for iTunes Match and Apple Music. I haven’t seen anything get “sucked into” the Apple Music product. I’ve seen no mangled or replaced versions of my tracks (outside of those I intentionally deleted/downloaded to upgrade their quality via iTunes Match). I’ve seen some missing artwork on other computers connected to my account, but no changes to those on my “master” computer.

    Yes, people have had tracks get replaced. But you’re attributing software errors affecting a subset of users to intentional, malicious, and legally-actionable activity by Apple.

    Reply
  17. BoganBrouhaha

    Your average, ‘non big time’ musician, makes its money from live performance and merchandise – pretty much always have. The people squirming; are the managers, middle men, sales reps, distributors… ie. the old guard in a modern system that takes their cut. Welcome ISPs, the shadowy middlemen you didn’t know existed.

    Reply
  18. Chuck Danas

    What is this Apple Music you speak of? I dropped that shit in 2005. It totally tore up and spit out all my own music. Why would ANYONE want to buy beautiful music that was made to make you feel alive, only to be played on one company’s shitty version of a music player. If i buy music, i want to play ot on what I want to play it on. I dont want to convert another copy of it. I want to fucking play the one i bought… anywhere i want. Good riddance Apple Download store, you suck. You’ve always sucked. Its just taken the rest of you all to realize it.

    Reply
  19. Jason Didner

    I believe sharing download proceeds with a charity is a good way to get your fans involved in supporting your album, even though the age of music ownership is ending for the mainstream. PledgeMusic understands this and sets a standard that projects have a charity component to them. Tom Jackson also works with artists to give them a revenue stream based on those artists pitching a children’s charity at their shows. In that spirit, I’m donating 50% of download proceeds to St. Jude Children’s Research Hospital. I have no reproduction costs on the downloads other than paying a compulsory license for a cover tune. And it will help save lives. And I believe it will make a tough sell (downloads in 2016) a bit of an easier sell. What say you?

    Reply
  20. jay

    What people are forgetting though is that downloads will still be needed for DJ’s to go and play music. So stores like beatport will likely sell more downloads as streaming increases and downloads die on sites like apples download store.
    if beatport becomes pretty much the only place you can download dance music then that can only benefit them. At the moment people can buy dance mp3 downloads for iTunes, amazon, etc.

    Dj’s can’t go to gigs ‘streaming’ music. They need the actual files. They edit those files for their shows to make them unique, they do mash-ups, etc etc

    Reply
  21. robert steele (@stlrbrt)

    Just tragic. iTunes was the only fair aspect of the digital music landscape. Our society has allowed the tech companies to destroy a once great and vibrant professional music way of life. Yes there is still a lot of music out there but it is way harder than it should be to make a six figure career out of it – while a small set of tech oligarchs are making billions and billions from music and paying artists next to nothing. Youtube should be required by law to give half their ad revenue to the content owners they sell ads against. As it is they give a tiny almost meaningless percentage.

    Reply

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