Indie labels are accepting Apple’s terms, and liking it.
Yesterday, we learned that Apple will pay a paltry $.002 per stream during the free trial of its upcoming streaming services. Just this morning, we’re learning that independent labels are happily accepting this extremely crappy offer.
“I am pleased to say that Apple has made a decision to pay for all usage of Apple Music under the free trials on a per-play basis, as well as to modify a number of other terms that members had been communicating directly with Apple about. With these changes, we are happy to support the deal.”
Merlin CEO Charles Caldas, in a letter to more than 20,000 member labels.
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“Over the last few days we have had increasingly fruitful discussions with Apple. We are now delighted to say that we are happy to endorse the deal with Apple Music as it now stands, and look forward to being a big part of a very exciting future.”
Beggars Group.
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“This is a great precedent in any sector on the benefits of working together and taking a stance to achieve a fair result. With 80% of all new releases produced by independent labels, this is also a great result for Apple. Their launch will now incorporate the very music that makes an online service attractive to music fans. The involvement of Merlin is vital considering its fundamental role in strengthening the independent sector. IMPALA has repeatedly called on online platforms to “play fair” and this is an impressive outcome for independent labels and artists.”
Helen Smith, Executive Chair, IMPALA.
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“I am pleased to say that Apple has made a decision to pay for all usage of Apple Music under the free trials on a per-play basis, as well as to modify a number of other terms that members had been communicating directly with Apple about. With these changes, we are happy to support and endorse the deal.”
Alison Wenham, CEO of European independent label collective WIN.
Image by Arralyn!, licensed under Creative Commons Attribution 2.0 Generic (CC by 2.0).
So Apple’s moves might have been a very smart strategy after all.
It’s basically Stockholm Syndrome. When your sadistic captor suddenly behaves slightly less sadistically for a moment, you fall in love with them for their kindness and generosity.
(Isn’t this also Negotiating 101? Make an insanely bad offer that you know the other will never accept, then back down slightly (to the offer you actually secretly had in mind), and the other party thinks they are getting the deal of a lifetime).
Spot on, Versus.
This is so depressing.
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🙁 The real Anonymous 🙁
Hey, Anonymous, we’re doing some surveys on piracy, content, & pricing, and are starting to get back results.
One question asked people (sample: 750) why they pirate content (music, movies, TV, etc).
Overwhelmingly, ads and price were the two main reasons identified as driving piracy. The “content should be free” crowd was relatively small, and a significant number of them also selected other reasons, suggesting that “content should be free” was not the only factor in their decision to pirate instead of consume legally.
A number of people elected to actually write an answer stating that they do not pirate content.
We’ll share the results after we finish analyzing them. We’re running multiple surveys so if you have any suggestions for questions you think would be helpful/informative, we’d be happy to try to incorporate them into our surveys and get you some answers.
“we’re doing some surveys on piracy, content, & pricing […] ads and price were the two main reasons identified as driving piracy”
Hi Sarah, love to see the efforts you put into this!
But the ad-part puzzles me. Would you rather…
1) Spend your free time comparing and validating VPN’s, navigating through a dark world of poisoned wells and fake torrents at the risk of getting caught and catching a virus — or
2) Install an ad-blocker?
I think you’re being pitched. I think people use the survey to tell you what they would like: No ads and cheap music — plus, preferably, free bar and longer vacations.
I don’t think you can ask people why they steal. You’d get similar self-serving results if you asked why they hit their wives or drive when they’re drunk.
They pirate for one reason only: Because they can.
It makes more sense to me to study the real world and see what actually works: Google is a mindblowing success because it’s ad-based. So is YouTube. Tidal is not. Because it is not…
Then again, I know you’re looking for something else. A third way. And I really, really hope you’ll find it.
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🙂 The real Anonymous 🙂
Most people were pretty honest, I thought – it was a relatively small percentage that said that they don’t pirate at all. But of course we aren’t expecting people to just tell us (in fact, I expect that most people don’t even know all the motivations behind their decisions, because they don’t really think about them). Rather, we’re simply looking for whatever insights we can find and use; it’s better to have information than to not have it.
I don’t know if I’ve actually gotten into the details yet, but our “third way” is built around the introduction of an option that simply opens the door to more money.
Our default assumption is that ads are indeed the preferable method of payment for a majority of consumption (at least at this point in time). So we offer ad-supported. But, within the same system, are other options. You, as the consumer, get to decide whether you want to watch ads or pay per stream (or subscribe or download or whatever options the creator has chosen to make available) – and whatever you choose, it’s as easy as clicking “play.”
The economics of it are rather simple. Start with a YouTube-style ad-supported model – that’s your baseline for streaming revenue. Any consumer who chooses to pay instead of get ads is a “win”: for zero additional work or output on your end, you make (for example) 3 cents for a stream instead of 0.2 cents (ads). On an individual basis, it’s negligible, but as everyone here knows, those pennies can add up.
But it’s not only money problems facing the industry. RepX offers improvements in transparency and, most importantly, control: you always have total control over your content and pricing. You also get ownership of your audience and data: build a network on RepX and that network is actually yours and not tied to RepX.
Maybe there’s really no money in streaming, no matter how you approach it. I don’t believe that, but even if it turns out to be true, RepX is designed to be a step in the right direction moving forward.
It’s not perfect, and we’ll adjust as go, but the numbers show that it can work (we will share our predictions and estimates, and you can judge for yourself). So we’ll see how it goes 🙂
“Maybe there’s really no money in streaming, no matter how you approach it. I don’t believe that”
Nor do I — I still believe in that all-in-full-throttle smorgasbord @19.99/month.
And that’ll be an option for the people who want it. 🙂
The idea is to introduce flexibility to maximize total revenues. If a consumer is broke and can’t pay even if he wants to, then ads are the best you can get out of him – so you go with ads. If a consumer can afford to pay and is willing to pay, then you can do better than ads for him – so you present him with subscription, purchase, or PAYG streaming options. But if you insist on one model (either ads or paid) for both of these consumers, then you’re always making less than you potentially could.
It’s a very different business model, and one that holds vast financial potential for monetizing online content.
People pirate because big music is too damn greedy. Before the internet listeners were forced to buy CDs for $20 a pop with maybe 2 or 3 good songs on them that we actually liked, that’s about $8 per song! And the CDs would last maybe a few months if you were lucky, before they would skip and become useless.
Along came the internet and sites that offered listeners a chance to actually continue to listen to the music they once BOUGHT and PAID FOR, just by downloading a file, or streaming. I subscribed to Grooveshark, and actually paid the $50 annual fee btw, and most of the music in my playlists were songs that I used to have on CDs (or cassette tapes, or records, or even 8-tracks) that I PAID for already.
Only an ignoramus would paint the listeners you are so eager to describe with nefarious terms like “pirates” with such a broad brush. We would be happy to pay for a service that offered a high level and variety of quality content, like Grooveshark before they were destroyed by big music, just because they could.
Free online file-sharing sites are not going to go away, and not all listeners are going to flock to Apple Music, or Apple anything. I say bring back Grooveshark and let us pay the $50 per year for ad-free, quality content that we can offline and take with us anywhere, with or without internet access.
That is the model for the future of digital music. Embrace it, create it, or deal with listeners who feel they have no other choice but to get their music elsewhere.
$50 per year for everything, from all consumers?
While you’re at it, perhaps you can tell us the single proper price and business model of cars, fruit, or handmade jewelry?
Yes, there are some consumers for whom that is the optimal plan. But there are others who can and should pay more for a different package based on their individual characteristics and consumption habits – and there are others who can and should pay less, because they consume less and get less value out of it.
The “future” that we should embrace is one that recognizes that there isn’t a one-size-fits-all model for so large (and diverse) a product and market. Your position that a single $50/year plan for everything is the way to go is as flawed as the record label’s old position that songs should be available only in $15 albums – you’re trying to dictate one approach for everyone (hundreds of millions of participants) and no matter what single approach you pick, it’s going to be wrong for a huge chunk of the market (whether on the consumers or suppliers’ side).
Why should I, as a consumer, be stuck with the option that you happen to prefer? Why should you, as a consumer, be stuck with the option that I personally prefer? The answer is that you shouldn’t – I should get what’s right for me and you should get what’s right for you.
Focus less on imposing your own preferences, and more on asking “what do YOU want, and how can we make that happen in a way everyone accepts?” 🙂
I didn’t mean to imply that $50 was the perfect amount, I’m more interested in the services provided to the user, and what I consider to be a package that people are willing to pay for. Remember, the issue at hand is how the industry competes with the availability of free music out there for anyone who wants it. They have to produce a service that gives users enough value to steer them away from free sites, assuming most people would rather be honest and pay for a quality service that entirely meets their needs, rather than obtaining free music dishonestly.
A few hundred million users paying $50 per year adds up to a large chunk of change to be distributed to artists and the labels. You can slice it and dice it into different types of plans, maybe pay less and don’t offer the ability to offline, or even less and they put up with some ads as well… maybe pay more and include exclusive, immediate new releases of albums from top artists a little sooner than others.
I don’t know, I’m not a marketing expert, I was just explaining what I personally would pay for the package I described.
Though not a suggested question, here is a helpful suggestion as to a group to survey.
I’d be interested in seeing what the results would be if a similar survey were conducted of a readily identifiable demographic such as, let’s say, Facebook users.
http://www.businessinsider.com/facebook-in-talks-with-record-labels-to-license-music-for-use-in-videos-copyright-2015-6
Sure thing. We haven’t been treating FB users as a readily identifiable demo – most people in the US use facebook now – but we can add that to the mix (right now broken down by age/gender/income).
That’s an interesting article, particularly contrasted with recent studies suggesting that people (especially younger demos) are becoming increasingly concerned with privacy and ad avoidance, areas where FB is pretty weak.
If FB does successfully take over video, do you think it’d likely be a net improvement for artists/labels over YouTube?
$.002 is more than Spotify pays for ad-supported streams.
$.002 is more than Youtube pays per stream.
$.002 is more than Pandora pays per stream.
Establishes positive precedence for paying for usage during free trials, and not at the lowest possible rate.
I struggle to see the crappiness.
Spotify and Youtube have pretty crappy rates for on-demand. But Pandora isn’t on-demand. The rate they pay is actually pretty damn good for radio.
“But Pandora isn’t on-demand. The rate they pay is actually pretty damn good for radio.”
Pretty good for a piracy service, yes.
I have no affiliation with a streaming music service but am on the label side of the music industy. Anyway, this has been studied extensively by several labels, the RIAA, the IFPI, and independently. And across the board, the findings clearly establish that non-interactive music services do not cannibalize unit sales. To state otherwise, is just factually incorrect. On-demand streaming (whether free or sub), however, has been proven to substantially reduce unit sales.
I didn’t say Pandora cannibalizes sales, I said it’s a piracy service.
And yep, that goes for terrestrial too.
It used to be 9 cents. Before the crisis in 2008, they all paid more than they do now. They saw that they could get away with paying less. Just like the banks. they started messing with people then blamed the people they screwed over. Then they demanded that tax payers bail them out for their own mistakes. Google and Apple are incredibly weatlhy and evil just like the banks. Alot of their success has been from music, but they refuse to pay the people who make the music.
They are greedy and corrupt and you are ignorant.
Sigh… Paul, you do realize it’s face-saving all around?
Most of these people (meaning: the labels) are happily boosting Spotify, who offer equally crappy payments, with even less hope for long term improvement than Apple might provide. Snubbing Apple now would pretty much mean they’re stuck with Ek who will happily give their product away in return for an increased valuation of his stock portfolio. The present resolution gives everyone an out they can live with.
By streaming standards, 0.2 cents is not a particularly low price. I don’t consider the deal good, but then I don’t see Merlin, Beggars and the rest of ’em saying they’re pulling out of streaming altogether. Business as usual.
it’s just DMN playing out the thread. Streaming rate hate is their stock and trade. the right or wrong of it is immaterial, it’s just fertile click bait.
Apple tries to screw all artists in free-trial period.
Facing PR mess, Apple relents and offers insultingly-low per-stream rate.
Indies take extremely crappy rate, en masse.
Industry starts attacking DMN.
Make sense?
You should probably offer some proof of the royalty rate, Paul.
Easy enough. I’ll probably get the contract, or details of the note from Sony. Then I’ll post it.
insultingly low to whom? you? wiling seller + willing buyer. what you call insultingly low are actually market rates.
lol…nobody in the industry cares about this website
which is why we’re the only place where y’all come to comment. yes….. makes sense…..
Remind me, where has DMN recently described Spotify’s even lower rates as ‘extremely crappy’?
David, I want you to please read DMN a little more frequently. Because anyone who’s reading us knows I don’t even have to answer that.
I’m sure you can remember everything you write better than I can remember everything I read, so why don’t you just answer the question? DMN used to be properly critical of Spotify, but in dealing with potential competitors to Spotify in the last few months (Tidal, Apple), you might almost have been reading from a Spotify PR script.
Keep in mind that while this site often feels like a blog, a lot of the articles are done because of current events. Spotify has made some press releases but as a whole the service hasn’t really done much in the last several months. Tidal and Apple have been considerably more active hence all the attention directed toward them.
I personally like to read about things that are current. Spotify’s sucky rates and policies are important but they are nothing new.
lol +1
“I am pleased to say that Apple has made a decision to pay for all usage of Apple Music under the free trials on a per-play basis, as well as to modify a number of other terms that members had been communicating directly with Apple about. With these changes, we are happy to support and endorse the deal.”
As this particular statement of Alison Wenham, CEO of European independent collective WIN, makes clear, “as well as to modify a number of other terms that members had been communicating directly with Apple about,” it is unclear as to what those parties negotiated as the final terms of their respective contracts and in view of the fact that there is extensive usage of the “non-disclosure clause” we may never know, unless of course, DMN happens to source a copy from one of the parties – but again, each contract may be different regarding their respective terms so hopefully those parties are satisfied with the end result, if not, I am sure that we will soon see those contracts posted on DMN with statements of complaint.
The one potential good thing that could come out of this is does this mean streaming rates for Apple will be fixed? Or is this just whatever accounting they did for the 3 months?
Regular rates will still be based on total streams. Only trial rates will be fixed. And Comped accounts will still pay no royalties (surprised DMN hasn’t sensationalized that yet).
https://youtu.be/mvfrYHCKh98
Of course they are. Weak.
Pathetic.
Indies need to pull together, but are restricted by anti-collusion laws.
Therefore, the industry trade organizations – Merlin, AIM, A2IM, etc – all need to demand far better deals.
remember, this is the same Merlin that signed a deal with Grooveshark right up until the end
OK, makes sense.
Soooo, basically, this is only ever so slightly better than 0? You know it’s really sad when a tiny fraction of a penny=a good deal. I really wonder if this will still affect indie labels a great deal, because remember, iTunes generates a lot of their revenue. To give up 70 cents on the dollar for less than a penny per stream is a lot to give up. I seriously doubt how Apple’s deal is good for labels, and I think this only further proves how worthless streaming is from a business perspective.
In the UK, and presumably elsewhere, Spotify is offering a 2-months (60 days) free trial of the Premium service. ( I’m not sure how this interacts with the ‘3-months for 99p’ introductory offer.) There are reports that this was available earlier in the year, but I have just got an email repeating it.
There is no mention of whether, or how much, artists, songwriters and labels will be paid. I’m sure DMN will be investigating this with the same enthusiasm they are devoting to Apple Music.
How is it Apple’s fault that indie artists and labels don’t know how to find their pirated albums on Google Search and send a simple DMCA notice to the hosts?
Here’s a simple example – I broke the link so as not to give the pirate any SEO:
unknownsecret .info/mp3/
Great article!
I used to think wrong, just like this article implies, then I learned about the 6 D’s of exponent framework. First, it becomes digitized, which is deceptive (CD boom) Then disrupted (napster) Then dematerialized (iTunes) Then demonetized (Spotify) Then democratized. Like it or not, there is no stopping technical progress. Everything that can me turned into information technology will suffer this fate. The good news is 5 billion more people will be coming on line in the next 5 years. There will be a new stream boom.
6 D’s of exponential framework, from BOLD by Kotler and Diamandis
(Exponent Framework is a PHP CMS)
They’re all fine and I used to think like this a decade ago.
There may be more D’s coming:
Duty (accountability to society and rule of law)
Discretion/Direction (as determined by said society)
Doctrine (as in laws and rules to ensure these behaviors)
Just because it’s exponential, that doesn’t guarantee it’s a good thing.
Just because it’s on everyone’s smart phone, doesn’t necessarily make it democratic.
This may seem like an insufferable question, but what exactly is a “good rate”?
I ask because I never seem to see comments that put how much gets paid to artists/labels/publishers/writers (which, by the way, is a lot of damn people so its like going to that birthday party with 50 kids and one cake – most get a tiny piece and some kids are just SOL) vs how much Apple/Google/Spotify/Pandora actually nets.
More specifically I guess I am asking do these companies net $50 per stream and pay $0.002 to artist or is it more like they net $0.04 and pay $0.002?
I dont have an answer but if someone can help, please break out services by on-demand from non-interactive. Just cause I gladly put music on radio-style services (e.g. Pandora). In fact, in my case, Pandora has been pretty good at driving downloads. However, I am not putting my music on Apple because I’ve found that that on-demand services (e.g. Spotify) do not drive unit sales (despite what Mr Ek says) at all.
Anyway, for me, a cannibalizing stream (e.g. Spotify, Apple, etc.) needs to be > $0.02 (assuming a real fan will stream it 50+ times) while non-interactive streams are gravy so $0.005 is good. BTW- I wouldnt mind if terrestrial radio paid the non-interactive rate for sound recordings.
I posed this question a few months back and even the most anti-streaming folks seemed to be in agreement with a penny a play. And Spotify DOES reach that sometimes. In my bands’ statements I have “per play” rates going up to 1.4 cents. Granted that’s helped with the exchange rate, but they still hover around 1 cent. Now, we also get super shitty rates of like a tenth of a penny, but the point is we need to find what gives the penny rate and then figure out how to make that closer to the norm. I think people would be fine in a penny was the average, as opposed to 6/10ths.
The problem is the “sometimes”. A rate that varies so widely is a raw deal for artists. Basically, streaming services are taking no risk for their success or failure; they put all the risk on the musicians and artists.
“We’ll pay you a fraction of whatever we make…if we make nothing, we pay you nothing”
In what industry is such a model acceptable? Can a contractor say this to his materials suppliers or workers? Can I say this to my landlord or electric utility company?
Yea, I agree, that’s why I said if the average was a penny. Meaning the swing would be between like .008 and 1.2 or so. Or a bigger swing, but that’d mean much higher than a cent on the upside.
“even the most anti-streaming folks seemed to be in agreement with a penny a play”
That’s me, did I really agree on that? 🙂
Well, if windowing is allowed…
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🙂 The real Anonymous 🙂
Could have been, I don’t remember haha. Obviously more than a penny is best, but I feel like a solid cent would appease a lot of people and add up a lot quicker.