Record labels attack Apple deals that would leave them 'completely screwed'
Record labels attack Apple deals that would leave them
'completely screwed'
Independents claim they could be forced out of business
by free trial of new streaming service and withold popular artists such as
Adele
By Christopher Williams, Technology, Media and Telecoms
Editor
6:30PM BST 16 Jun 2015
Apple is accused of attempting to launch its new Spotify
rival, Apple Music, in a way that would leave Britain’s independent record labels
“completely screwed” and struggling to survive.
The Silicon Valley giant is demanding that record labels
such as XL Recordings, the home of Adele, and Domino, the label behind the
Arctic Monkeys, agree to a free three-month trial of Apple Music, during which
they will receive no payment.
The plan, only disclosed since the service was unveiled
in at a glitzy event in San Francisco last week, has caused dismay among
British labels, according to Andy Heath, the chairman of UK Music, the industry
lobby group.
Mr Heath told The Telegraph that to his knowledge no
British independent labels have agreed to Apple’s terms or intend to on grounds
they will “literally put people out of business”.
With only two weeks until Apple Music is due to launch,
it could leave the service with large gaps in its catalogue. Adele’s last
album, 21, is the biggest selling of the decade, for instance.
Mr Heath said: “If you are running a small label on tight
margins you literally can’t afford to do this free trial business. Their plan
is clearly to move people over from downloads, which is fine, but it will mean
us losing those revenues for three months.”
“Apple hasn’t thought this through at all and it’s not
like them. They can’t spring a contract like this on us three weeks from
release.
“They are basically putting all the risk on the labels.
People will say ‘oh but you’re on Spotify’. Well yes, but we get paid for
that."
In contrast to Apple’s plans for a free three-month
trial, Spotify pays royalties for every song listened to via its mobile app,
albeit fractions of a penny per track.
Mr Heath said: “Of course my members want another player
in the market but not at the risk of their survival.
“Apple is sitting there with this massive pile of cash
and saying to us, ‘you help us start a new business’. Well I just don’t think
it is going to happen on these terms.”
Apple has said sought to reassure labels that once the
free trial is over it will pay better than standard streaming royalties of
around 70pc of the monthly subscription charge, which will be $9.99 in the US.
UK pricing has not been announced.
But Mr Heath, said: “I think the dynamic here is nothing
to do with the royalty rates but there are elements of these deals that are
just too difficult for smaller labels to do. It will literally put people out
of business.”
“Smaller labels would be completely screwed. Apple just
has to move on this.”
Mr Heath's view was echoed by two record label bosses,
who asked not to be identified because talks are ongoing and Apple demands
strict secrecy from its partners.
Apple Music is expected to have a major impact on the
music market when it is introduced as part of an iPhone software update on June
30.
Apple Music includes a streaming radio station run by
former Radio 1 DJ Zane Lowe
Analysts see the service as a major threat to Spotify,
the current streaming market leader, as it will benefit from Apple’s control of
a large slice of the smartphone market.
The launch has already attracted the attention of
competition authorities in the US. The Attorneys General of New York and
Connecticut have launched a joint investigation into whether Apple unlawfully
colluded with the three major record labels to restrict access to free music
streams from rivals.
The launch of Apple Music is part of a broader push into
the media market by the iPhone maker, amid competition Amazon, Facebook and
Google. It is also believed to be preparing its own television streaming
service in partnership with broadcasters and is recruiting journalists to
aggregate articles for Apple News, a news app.
Apple declined to comment on Mr Heath’s criticisms. It
has said that it wants to offer a choice of downloading and streaming.
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