Apple Music contract: Indies served raw deal

Apple is apparently seeking to ink direct licensing deals with independent labels, bypassing global digital rights agency Merlin,which represents the world's independent label sector.

Streaming serviceSpotify told TMN it entered itsdeals with the independent sector via Merlin,common practice for digital services.

Perhaps even more concerning is the suggestion that Apple has included a clause in its contracts which will see independent labels receive no royalty payments during the free, three-month trial of Apple Music.

According to MBW, the tech giant won’t offer indies any compensation during the three-month trial following its June 30 launch.

The move has concerned the local independent sector; AIR (Australian Independent RecordLabels Association) CEO Dan Nevin has told TMN the body is looking into the potential impact on independent label revenues.

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

Merlin has also expressed concern; in a message to its members obtained by MBW, 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 be releasing music into a free market.

“Taking all of this into account, we anticipate that any member concerned about the value of their music will carefully consider the impact of such a three month free trial on their business.”

Caldas noted that while Merlin hasn’t signed an agreement with Apple Music that includes a royalty free trial, it’s “highly unlikely that the majors would have done so.”

MBW has reported the major labels have finalised their deals with Apple Music, however it remains to be seen whether they’ll be compensated during the three-month trial.

TMN has reached out to Universal Music Australia and Sony Music Global but has not received a response in time for publication.

Caldas’ concerns for Merlin members’ revenues extends to the entire recorded industry. In the message to members Caldas said: “If Apple is requesting royalty free three month trials as a permanent feature of the service, then there will additionally be a longer term economic impact as not just Apple, but other services may ask for similar terms.”

Apple Music’s dealings with major labels made headlines this week when it was revealed the attorneys general oftwo US states are investigating Apple’s negotiations with record labels to determine whether there are any signs of industry collusion. Now, screen shots from a beta developer version Apple’s Music iOS 8.4 app have been leaked which show Apple Music is charging US$2 for the service in India and US$3 in Russia. While $2 is the average cost of a physical album in India, the leaked price doesn’t mirror the industry standard for individual subscriptions, $9.99.