Apple Music contract: Aus indies take a stand

Following reportsthat Apple Music included a clause in its contracts which will see independent labels receive no royalty payments during the free, three-month trial, AIR has taken a stand.

The Australian Independent Record Labels Association (AIR) has today told its members it does not endorse the agreement handed down to indies from Apple Music.

“The speed at which Apple has introduced their plans and its lack of consultation with the independent musicsector over deal terms has left us with the uneasy feeling that independents arebeing railroaded into an agreement that could have serious short-term consequences for our members’ interests,” its message reads.

While AIR hasn’t advised its members whether or not they should sign the current agreement with Apple Music – which will see them operate at a loss during the three month trial period – it did say “many of its members have already expressed very real concerns about the consequences of doing so.”

“This is a major problem for any label that relies on new releases rather than deep catalogue, as the potential for this freetrial to cannabalize not only download sales, which remain a very important revenue stream, but also streaming incomefrom other services, is enormous.

“As a whole the independent sector is a powerful voice in the music industry but its individual parts, the smaller labelsparticularly, cannot withstand such a potentially catastrophic drop in revenue.

“[…] It isAIR'sview therefore that, in its present form, this agreement sadly does not meet a standard ofcommercial fairness that we can endorse.”

Global digital rights agency Merlin,which represents the world's independent label sector, has also expressed its concern. In a message to its members obtained byMBW, its CEO Charles Caldas said: “[…] given it appears these trials will be royalty free, lost iTunes download sales during this period will not be replaced by streaming revenues from the new service.

“If that were the case, then in our view it would seem to make little sense in such circumstances for any of our members’ artists to release an album this summer, because any labels that signed up to the terms of the agreement we have seen would to a highly significant extent bereleasing music into a free market."

It’s unclear whether the free trial will begin on June 30 and end on October 30, or whether each new subscriber entering the trial will be given an individual start date.

Regardless, Apple Music’s decision to not pay independent labels royalties during the trial has been met with a widespread backlash. US independent body A2IM told its members: “Since a sizable percentage of Apple’s most voracious music consumers are likely to initiate their free trails at launch, we are struggling to understand why rights holders would authorize their content on the service before October 1.”

The President of Canadian independent music representative CIMA, Stuart Johnston, issued a public statement which read: “This exploitation of our artists and the music industry in general must stop. And Apple should set the example here and do what is right – stop its shameful business practices and pay the artists and labels now!”