Last week, a leaked contract suggested that Apple's new streaming service, Apple Music, would pay a standard royalty rate of 58% on all streams, and would not pay a penny to music streamed during Apple Music's free trial period.
Now, Merlin – the body representing some of the world's biggest independent labels, including XL Recordings, Domino, Ninja Tune, and Warp – have expressed their concerns over the arrangement.
A source from an independent label told Music Business Worldwide that although indie labels often help streaming services get off the ground with free trials, "this is Apple, with hundreds of millions of customer credit card details. Offering no compensation at all to labels for a trial that will help Apple sell its devices is hugely disappointing."
"Not being paid by Apple Music for three months is bad enough; it’s going to really hurt cash flow for independent labels and punch a black hole into music industry income this year," they continued, "But Apple Music will also hurt other revenues that we could have otherwise relied on. For example, we expect iTunes to interrupt people downloading tracks – encouraging them to join this great new streaming service. That’s deliberately cannibalising sales. And if we’re all scared of not making money during Apple Music’s free three months, then nothing will be released and physical sales will tumble… Why would you ever release into a window where you can’t make any money on the biggest digital music retailer’s platform?"
It’s further reported that Apple Music is aiming to win the business of independent labels by approaching them directly. “No indie worth their salt will sign this,” a source told MBW.
The free trial option – available from 30th June – can be activated at any time from Apple Music’s launch. However, the three-month window remains a sticking point, with a source pointing out: “Why would you ever release into a window where you can’t make any money on the biggest digital music retailer’s platform?”
Apple’s priced subscriptions are from $9.99 per month in the US, with rates starting from £9.99 in the UK.