Apple is positioning Apple Music as a friend to small record labels. But many independent British labels have yet to sign up because they fear they will end up losing out on revenue, the head of an industry lobbying group told the Telegraph.
Apple Music is going to launch with a free, three-month trial period to tempt users onto its platform. And music labels and artists won’t be paid anything for the songs played during that time.
This could be disastrous for independent British labels, some of them are complaining, because they cannot afford to lose three months of revenues.
Chairman of industry lobby group UK Music Andy Heath told The Telegraph that Apple’s plan for the launch of its music streaming service has dismayed British labels like XL Recordings, which looks after Adele’s music, and Domino, the home of the Arctic Monkeys.
He said: “If you are running a small label on tight margins you literally can’t afford to do this free trial business.”
The fear is that stream revenue those labels would have earned from Spotify will dry up as people check out Apple’s three-month free trial.
Once the trial is over, Apple says it will be paying more than the industry average of 70% of music streaming revenues to music owners. In the US this will come to 71.5%, and outside the US it will average out to around 73%.
But this hasn’t been enough to reassure independent labels in the UK. To his knowledge, Heath told the paper, no independent British labels have agreed to allow their music to be used in the three month free trial.
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.”
These labels are happy to stick with Spotify, Heath said, which continues to pay them for each track played, even if Apple is promising to give them more than the industry average at a later date.
The Telegraph report added that two record label bosses had confirmed Heath’s view, but did not want to be named because talks with Apple are still ongoing.
We’ve reached out to some British labels and will update this article when we hear back.
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