iTunes Match: Is This Really a ‘Bonus’ for Artists?

Why is it that Spotify is typically villified by artists, while Apple is lauded as a savior?

In a telling interview with the Black Keys, drummer Patrick Carney was intensely critical of Spotify, its leadership and its dangerously-low payouts, but contrasted Apple as the more artist-friendly alternative.

“I imagine that if Spotify does become something that people are willing to pay for, then I’m sure iTunes will just create their own service, and do it themselves.  And they’re actually more fair to artists.”

Part of the reason is that Apple is more friendly to artists, and far more transparent than Spotify.  Since the beginning, Apple has negotiated good faith payout percentages on paid downloads for copyright owners, whether the label or artist (via services like Tunecore). And we all know what those payouts are – ie, 70 percent of retail.  There aren’t backroom deals with major labels and shady ownership stakes involved; artist payouts aren’t a frustrating mystery.

And when the clouds blew in, Apple was also negotiating with labels to secure the rights for iTunes Match – despite a murky legal terrain. Amazon and Google weren’t as friendly.

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April, 2011: “Dear Labels, Go F**k Yourself. Love, Amazon…

But is that the full story?  Apple’s good guy glow is shining once again on Match, which pays artists modest amounts for cloud-based listens.  These are a small fraction of what Spotify pays (imagine that), yet somehow, you hear the word ‘bonus‘ tossed around repeatedly on this.  The logic is that the consumer already purchased the song or ripped it from a CD, therefore any extra money is nice to have.  It’s icing on the cake.

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June, 2012: “This Is What iTunes Match Is Paying an Indie Band…

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But what about the fans that didn’t purchase or rip these songs in the first place?  It’s almost impossible to measure percentages here, but collections of 10,000+ songs are rarely acquired through legitimate methods.  And for years, the industry estimated that 19 out of every 20 downloads were obtained illegally.  Indeed, in the iPod-toting heyday, 10,000 or even 20,000 songs was nothing impressive, and easily managed by the iTunes app and accompanying iPod whatever.  Of course, iTunes+iPod (and ultimately iPhone) was designed to handle, organize, and sync these massive loads with ease.

Which means Apple’s wildly-successful iTunes ecosystem was a major motivator for illegal acquisition in the first place, and an integral reason for the massive devaluation in recordings.  And the beauty, from the vantage point of Steve Jobs, was that Apple wasn’t doing anything illegal yet making billions off of hardware.

A fairly mainstream experience, circa 2008…

The rest is recent history.  Limewire died but downloads continued, while huge swaths of fans shifted to YouTube or Spotify.  But not entirely, which means that in the current battle between Spotify streams and cloud-enabled collections, the hangover of billions of stolen MP3s remains a huge part of this picture.  Which also means that Apple is ‘matching’ lots of dirty downloads, while sprinkling penny fractions on top of it all.

So does that make them the good guy, and iTunes Match a ‘bonus’?

16 Responses

  1. Casey

    Apple is paying royalties on music they don’t have to. That doesn’t make them more artist friendly. In fact I would say Apple could not care less about the artists. They just want to keep the labels happy and reduce their chance of getting sued so their stock price stays high. Patrick Carney is clueless if he thinks Apple will be more fair to artists. If Spotify claims to pay 70% of their revenue (and their earnings show them paying more) and Apple pays only 70% of their revenue, how is that going to be more fair to artists? The only way they can pay more is if they charge more. Since companies are having a hard time getting people to pay what they charge now, something tells me charging more is not going to happen.

    Their transparency and Spotify’s lack of transparency again has nothing to do with being artist friendly or not. It has to do with what the labels want. Spotify and similar services have said they would like to have more transparency, but they can’t, because the contracts do not allow it. Keep in mind in most businesses, the idea of sharing details about your contracts is insane and illegal. Artists seem to think everything should be transparent. That is not how business works.

    • Artist

      But you don’t get it. Spotify is evil. Giving people legal on demand access to large portion of the world’s published music is EVIL and WRONG. People shouldn’t be able to listen to all the music they want. That’s not how the world works!

      • Realist

        Have you been living in a cave for the past 15 years. This is exactly how the World has been working since the dawn of the internet. At least Spotify are creating a legal, although ultimately unsustainable, service.

        • pro Songwriter

          Please keep in mind that just because its legal doesn’t mean its right.

  2. Um What

    It’s to see why Apple even needs to pay royalties for iCloud. They aren’t selling music, they are providing a storage service for music the user already has access to. So yea, I think this would qualify as a bonus..

  3. Rob

    How about 80% to the artist and 20% to the fan that shares the music and they can opt to donate to a charity –

  4. discography

    It’d be cool if iTunes Match actually worked. Apple makes solid hardware and a stable OS but they suck as a cloud company. MobileMe sucked, iCloud has its own fair share of issues and shortcomings and iTunes Match is another. Paid $25 to get censored versions of my music spit back at me if they are even accessible at all. A error riddled service to the core. Why they keep rollingout this ancillery services that damage the core brand is beyond me. If you can’t do cloud right after all these years just leave it to Amazon, Google and Microsoft.

    • @mattadownes

      Although its flawed the first edition of match was widely worth the $25 a year. If they can couple that with a Spotify type service for an additional $75 a year, I’m in forever.

      • discography

        I moved to Amazon MP3 and am still fixing my library. Apple is just not a cloud company. It never has been and has yet to be. With Amazon for $20 I can store 250,000 songs compared to 25,000, scan and upload, prices often cheaper and not tied down to just one OS. I predict ultimately the ubiquity of Amazon will destroy the value of Apple’s ecosystem (on top of the general sands of time changing trends that will impact Apple cool factor.) If I switch from iOS to Android or WP8 I’m not going to lose my media like I will with Apple.

  5. Naughty by Nurture

    Just be happy Apple isn’t completely screwing the music biz over!

    (because they could, ya know)

  6. Robert

    I guess I’m a rarity, but after nearing 30 years of collecting music on CD I have ripped my library now up to the letter N and am at 65,000 tracks. All purchased. Hate to be thought of as a criminal by the music industry when I’m actually one of their best customers over a period of decades. It’s also why I may have to end up going with Amazon’s Cloud Player instead of iTunes Match. I would prefer to be with Match, but if there’s not a serious increase in the amount of storage then Amazon’s 250,000 limit is where I have to go.

    • discography

      I used Match and switched to Amazon MP3. While the web interface could use an upgrade the iOS app is top notch and is not plagued by the download errors, random track censorship, etc. that plague iTunes Match. Ultimately for a cloud service, you should go with a cloud company. That and if you want to switch to Android or whatever down the line your music collection will come with you with a simple install of an app.

  7. time2wake up

    iTunes Match: Is This Really a ‘Bonus’ for Artists? Nope but it’s great for pirates! Yeah!
    So this is how the pirates parlay their music collection using iTunes match….

    Ok You have your desktop computer/server with your mega loads of music files you’ve downloaded from the file locker sites. Sadly they are not all all high quality. So you set up your laptop with your itunes and your itunes account. You take the low quality files and import thm into your laptop itunes then from there into the cloud. iMatch, once synced up, download again, tidy up and you have cleaned up some of your collection. Move them back to your desktop …and on….

    Lots of cheap content and Apple’s profiting all the way …selling more hardware!

  8. Robbie Fields

    iTunes Match has been a huge disappointment so far yet my catalog is earning an extra 2.5% monthly, as a percentage of iTunes $ sales for the Americas.

    Spotify, for all the hype, generates a little less at 2.25% monthly for the USA, as a percentage of iTunes $ sales for the Americas.

    The inherent problem with Spotify’s poor accounting(s) may lie with difficulties in determining legitimate copyright owners, whereas iTunes has largely won that battle already, besides endemic “click” fraud on streams.

  9. gaetano

    Apple, as much as I love them, have not historically been “good guys” in retrospect. Good businessmen? Sure.

    Let’s remember that The Itunes Store launched in 2003, years after Napster effectively blew a hole in the side of the Titanic music industry hull from 99-01.

    The ipod was introduced in 01 and gave a wonderful new way to enjoy their owned, or acquired music.

    Once they had the Itunes Store ready to go, they with Jobsian flare demanded not only their cut of 30% which seems fair enough, but also what the market value (unit price) would be for singles and albums. At that point they had enough leverage to get every major (and big indie) to sign on.

    Take it or leave it, sink or swim.

    They just did the same thing with all the Telecoms via the Iphone and even the holdouts came crawling back to take their hardline deal.

    Now that the Digitial download paradigm has more or less plateaued sales wise, and piracy and sharing are still rampant, Spotify is attempting to do a similar thing, without the help of the hardware product and brand equity that gave apple the leverage in the first place.

    That being said, there are companies that haven’t even monetized ANYTHING with 10x the VC invested that have been around for much longer…

    They’ll be here for a bit, and if they do go down apple has more than enough assets and clout with labels to acquire them and do what they see fit.

  10. Versus

    Why is there no technological solution to determine whether a music file was legitimately obtained? I thought such watermarking or something similar would be a simple enough tech for all the “geniuses” at Apple.

    – Versus