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Here’s the Contract for Amazon’s Upcoming Streaming Service…

amazonsignature1

Several months ago, sources pointed Digital Music News to Amazon’s plans to launch a streaming music service.  Now, those same sources are handing us the contact they’re being asked to sign.  These are specifically smaller publishers and rights owners, who are being handed ‘take it or leave it’ terms without the ability to negotiate.

Major labels are being offered far larger sums in a separate negotiation process, according to separate sources.  This contract confirms some earlier details and rumors, like:

(a) Amazon will primarily use its streaming music service to boost Amazon Prime subscriptions and revenues.  “It will be included as part of Amazon Prime as an additional benefit to customers at no additional cost and will be integrated into the current Amazon music experience,” Amazon is communicating to all prospective rights owners.

(b) That is part of a larger bundled media offering that includes streaming television and free books (and, of course, free two-day shipping).

(c) It is unclear how much streaming access Amazon will offer, though conditional downloads (however defined) will be part of the offering.  “The Service will offer Amazon Prime customers on-demand streaming and limited download access to a select amount of curated music,” the letter to rights owners continues.

(d) Outside of major labels and the largest content owners, independent labels will not be able to negotiate their terms.  The contact is ‘take it or leave it,’ according to sources.

(e) It is unclear when this service will be launched (even to Amazon executives, most likely), though rights owners are being asked to sign the following by May 1st, 2014.

Here are the first two pages for major publishers that we’ve been able to acquire.

Amazon_Streaming_Contract_01

Amazon_Streaming_Contract_02

 

More details (and contact pages) as we receive them.  Please send any additional information confidentially to news@digitalmusicnews.com.

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Comments (22)
  1. Dave Buerger

    According to point (a), this looks like another scheme to CHEAPEN the value of music.


    Reply
  2. Anonymous

    “take it or leave it”

    Option #2 sounds like a great deal.


    Reply
    1. Casey

      The question is, can you still sell music in the Amazon MP3 Music store if you don’t provide streaming rights?


      Reply
      1. Anonymous

        No, the question is why anybody would want to sell anything there.


        Reply
  3. Casey

    At $100 per year (~$8.33 per month) for all the services provided by Amazon Prime… that doesn’t leave much money for a music service. And it is only $50 per year for students. The royalty rate could end up being very low, even in comparison to existing services.

    From a consumer standpoint though I can see this being a very big hit. No more having to pay $10 per month for Spotify/Rhapsody/Rdio or buying individual tracks.


    Reply
  4. Anon

    All I see in this deal is a threat to publishers, “take the deal at 21% or we’ll go through the PROs and only pay 11%.” This is a copyright deal and has nothing to do with record labels. Maybe you have more info on the master recording licenses?


    Reply
    1. Paul Resnikoff

      I’m working on it.


      Reply
  5. TuneHunter

    Pathetic! … to see organizations like Amazon, Apple and Google to follow self-destructive dead end business model created by D.Ek, S.Parker and F. Keeling

    So many resources engaged in pursuit of peanuts. Little money with a lot of commotion at someones expense!


    Reply
    1. Anon

      The difference between Google and Amazon entering the game compared to Beats or Spotify is that Google and Amazon can afford to be loss leaders in this category assuming they can drive business into their other verticals. If Spotify fails to generate returns for their investors it will simply wither up and disappear one day as they will have nothing to fall back on.


      Reply
      1. TuneHunter

        I agree, Apple and Amazon entry to streaming will remove a lot of oxygen from already suffocated Spoofy.

        it is all brilliant, proper delivery etc. but why do they run naked and beg to be screwed?

        Can someone explain

        Avant garde NERD land! FEW CHANGES required to convert this chaos to 100 billion dollar industry.

        it very simple but only Google, possibly Amazon or key artists with legislative changes will and can do it.


        Reply
      2. Paul Resnikoff

        Excellent point. Streaming may be the future, but that doesn’t mean it has to be profitable, or that all of the current participants will survive to enjoy that future profitably. If Spotify IPOs, then that’s another story. Otherwise, this loss leader future could be dominated by the likes of Google, Apple, and Amazon.


        Reply
  6. Dr. X

    The music labels LOVE LOVE LOVE when Internet Radio increases market share over terrestrial radio.

    The reason is simple:

    Terrestrial radio (USA): $0 in royalties payment in 2013
    Internet radio (USA): $590 mil royalties payment in 2013 (up 28% from 2012)

    Pandora reports that it has 9% market share in overall radio in March 2014. Imagine the revenue to the music labels if Pandora has 18% market share, 27% market share, 36% market share

    9% market share in radio = $590 million royalties
    18% = $1180 million royalties
    27% = $1770 mililion royalties
    36% market share in radio = $2360 million royalties

    As more people have smartphones and as the carriers offer better data allowance, more and more people will use streaming (both internet radio and on-demand).


    Reply
    1. TuneHunter

      X, You are streaming PROPAGANDA tube on someones property.
      Clipping and pasting same posts all over is just that.
      Instead distributing of communist posters tell your bosses about discovery moment monetization.


      Reply
    2. American Musician

      Yeah you don’t really see the record labels bitching about Pandora. It’s entirely publishers. It’s worth noting that record labels and musicians get zero from terrestrial. But it one of the major income sources for publishers and songwriters.


      Reply
  7. Dr. X

    RIAA 2013 #

    76.74.24.142/2463566A-FF96-E0CA-2766-72779A364D01.pdf

    2012:

    Streaming Revenue: $1.0328 billion USD (up 59%)
    Singles Download Revenue: $1.623.6 billion USD (up 6.7%)
    Album Download Revenue: $1.205 billion USD
    CD (physical): $2.4856 billion USD

    2013:

    Streaming Revenue: $1.439 billion USD (up 39.3%)
    Singles Download Revenue: $1.569 billion USD (down 3.4%)
    Album Download Revenue: $1.234 billion USD (up 2.4%)
    CD (physical): $2.1235 (down 14.6%)

    Streaming revenue 2011: $650 mil
    Streaming Revenue 2012: $1.0328 billion USD (up 59%)
    Streaming Revenue 2013: $1.439 billion USD (up 39.3%)

    If Streaming revenue grows 28% in 2014, it will be the biggest of the 4 components in 2014.


    Reply
    1. TuneHunter

      X, your logic is Ek’s logic it means no logic. If you go 150% from 500 million you got $750M not big deal, actually disaster if the same streaming activity took 10% from iTunes and Amazon 5 billion revenues.
      250million gain becomes 500million dollar loss.

      Again, your posting is no different than communist propaganda I have seen in my childhood.


      Reply
  8. Anonymous

    Just YouTube alone sends billions of dollars to the music industry. I don’t doubt artists aren’t seeing it, but SOMEONE is getting this money.


    Reply
    1. TuneHunter

      Please name exact number.

      VeeVoo is silent for years so it can’t be impressive – just enough to keep good mood on patched up Titanic.

      Music makes 1/3 of the traffic on YT – last year $5.6B in revenues – I doubt Titanic boys got a billion out of it.

      Discovery moment monetization can convert YouTube to 50 billion dollar hub of 100B industry before 2020.


      Reply
  9. Where's Dre?

    Anon is right – this is a publishing deal (ASCAP, BMI, SESEC, & HFA) and has nothing to do with the rates for interactive (Spotify) and non-interactive streams of the sound recordings. We would love to see what’s behind that kimono…


    Reply
  10. questions

    i just got this same contract (microlabel) and was trying to figure out if it’s worth signing. unfortunately the comments above are not helpful. what made me pause wasthe below line under Mechanical Royalties:
    “ADSI will pay … (i) 21% of the amounts expensed by ADSI (in accordance with GAAP)for the rights obtaind from record companites or other master recording owner… less the the public performance royalty amounts that will be expensed…”
    and this line under Public Performance royalties:
    “Publisher’s Performance Pro-Rata Shate of (i) 11% of the amounts expensed by ADSI… multiplied by a fraction…”

    QUESTIONS:
    -What does “expensed” mean in this case? (does it mean after they written off some costs? or does it mean accumulated and delivered? or what?)
    -Are 21%, and 11% reasonable, or set by some law? why not 100%?
    -if i don’t sign it, does that mean in the future a possible law will bring a higher rate… or nothing?
    -sign or don’t sign?


    Reply
  11. hippydog

    WTF?
    ADSI is amazon. Pro-Rata means proportional.. (IE: you get a percantage based on how many times your music is played VS others). GAAP is “Generally Accepted Accounting Principles”

    sooo…

    Mechanical: Amazon will pay you a proportional amount of 21% of amounts paid to the master recording owners, minus the public performance rights..

    I read it 10 times..
    I still have no idea what they are agreeing to pay out.. :-(


    Reply
  12. tinytiny

    Chiming in. We got this contract too from MusicReports. A portion of our catalog is on Amazon mp3 through TuneCore.


    Reply

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