Indie labels 'screwed' by Apple Music free trial deals
With less than two weeks to go until the launch of Apple Music, a report suggests that the company is having trouble enticing smaller and independent labels into signing up to take part. The problem is not necessarily that there is a lack of interest in joining Apple Music, but that the three month free trial period would generate no income for the labels.
Apple Music will make its money through monthly subscription fees, a percentage of which is then shared with record labels. During the three month free trial, Apple will make no money from the music streaming service, and will therefore have no revenue to share. While this is a cost that larger labels might be in a position to absorb, small companies say it could put them out of business.
Speaking to The Telegraph, chairman of industry lobby group UK Music Andy Heath said that smaller labels simply could not afford to take part in the free trial. He said that he was not aware of any independent label having signed up for Apple Music, and this means that music fans will miss out on large catalogs of artists' work. He 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.
Heath says that Apple is looking to branch out into new areas and is, in effect, asking smaller businesses to pay for it. While Apple will be paying out royalties that are above average to labels once the free trial is over, the fear is that this would be too late for some.
It will literally put people out of business. Smaller labels would be completely screwed. Apple just has to move on this.
It seems unlikely that Apple will change its plans so close to launch. While the company could undoubtedly afford to dip into its coffers and bear the cost of the free trial itself while continuing to pay labels, it is more likely that Apple Music will launch without the participation of a number of important, smaller players in the music industry.