AppleInsider Staff
Independent music labels in the UK are reportedly loath to agree to Apple's demand that they receive no royalties for songs played during Apple Music's three-month free trial period, a sticking point that could leave the new streaming service missing some major artists at launch.
Industry lobbyist Todd Heath used some fanciful rhetoric when discussing the matter with The Telegraph, saying that small labels would not be able to absorb the potential financial hit that could come with losing three months of download sales to consumers who switch to Apple Music. Such a move would "literally put people out of business," he said.
"If you are running a small label on tight margins you literally can't afford to do this free trial business," Heath added. "Their plan is clearly to move people over from downloads, which is fine, but it will mean us losing those revenues for three months."
Among the labels who have apparently failed to reach an accord with Apple are XL Recordings and Domino, which respectively count Adele and the Arctic Monkeys among their signed artists.
The free trial was also said to be a "bone of contention" during Apple's negotiations with major U.S. labels, with Apple eventually prevailing thanks to a promise of higher-than-average royalty rates for paying customers. Apple is expected to pay 71.5 percent of revenue to rights holders in the U.S., with that sum rising as high as 73 percent abroad.
Announced during Apple's Worldwide Developers Conference last week, Apple Music will launch on June 30 for $9.99 per month, or $14.99 per month for a family of up to six people.
Malcolm Owen
William Gallagher
Charles Martin
Christine McKee
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Andrew Orr
74 Comments
Because the people freeloading off of Spotify for the past 4 years has earned them so much money....
Wah. Keep your bloody wanker music then.
Because they know that 99% of trials will end up with cancellations.
Considering that the number of paid streamers is expected to remain a small percentage of users and that many people will continue to do what they have always done for now. I don't see the problem. Spotify is paying a 10th of their paid tier for those on the ad tier and 75 percent stay there forever instead of 3 months. So it would take 10 months to equal one. So month 4 with Apple will cover the first 3 plus another 7 on Spotify's free tier. The same 10 month period on Apple Music would pay them the equivalent of 5.8 years on Spotify's free plan.
I think it's to be assumed some labels would hold out during the trial phase. With apple music free trial, that would theoretically mean no one would be buying albums at all, and no money would be coming in to pay labels/artists.
I don't know what spotify pays or is paid for ads, but I'd think apple could monetize the free trial with iAds to help pay artists for the service until the trial is over.