Uh-Oh: iCloud Has All the Markings of Another Indie Shaft

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If I’m reading the smoke signals correctly on this one, the indies are essentially getting the shaft from Apple’s iCloud.

In the worst-case scenario, that means an iCloud launch without critical indie licenses – but more likely, this will be a launch with inferior indie terms.

Sound familiar?

Negotiations were still ongoing between Apple and various indie labels heading into the weekend, according to our sources, a negotiation structure  based on existing iTunes deals.  Merlin is waiting on the wings at this stage, and planning to enter if clearly discriminatory treatment emerges.  But Merlin is showing outward signs of frustration, and almost every bit of licensing news on the iCloud involves the majors.
Separately, Merlin chief Charles Caldas has been very careful not to disclose any details on Apple negotiations to Digital Music News, though in conversations the group has expressed displeasure with the way indies are getting treated in cloud negotiations in general.

Of course, this ‘cloud club’ includes Google, Amazon, and Apple, of which two-thirds have bypassed major label licensing – at least initially.  But even though Apple has sealed all four majors – and is reportedly dropping $150 million and substantial percentages for the privilege – the indie negotiations appear to be getting less priority.  And, there’s no indication of a similar, bonanza-style payout for the littler guys.

This is becoming like a broken 7-inch. According to those involved in licensing discussions, major services – cloud or otherwise – typically focus on sealing the big four major labels before moving onto other rights.  And, because major labels are at the front of the line, they can demand better terms – and leave Merlin (or separate indies) fighting for seconds.  The end result is lower percentages, less money, delayed inclusion, or all three.

That was certainly the scenario surrounding Rdio, which launched without Merlin – and, without the content of marquee artists like Vampire Weekend, Animal Collective, and Arcade Fire.  And stretching further back, MySpace Music also chose to launch without Merlin, and without significant indie content.  Of course, Amazon and Google have made similar calculations, though the indies shouldn’t take those situations so personally.