Independent label groups have slammed Apple Music’s contract.

Independent labels have been advised against signing up with Apple Music in the short-term, following the leak of a contract that suggested rights holders would be paid no royalties from those using the streaming service’s three month trial period.

As Music Business Worldwide reported last week, independent rights network Merlin – the body that represents the interests of labels like Warp, Ninja Tune and XL Recordings – has yet to sign a deal with Apple, amid fears it would “punch a black hole” into music industry income this year.

“We’re used to helping with free trials when streaming services are not established,” an independent label executive told MBW.

“But 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.”

According to MBW, Apple is reportedly aiming to bypass Merlin and come to direct agreements with independent labels individually, though one source said: “No indie worth their salt will sign this.”

The American Association of Independent Music (A2IM) also questioned the contract in a post on its website last week, noting: “It is surprising that Apple feels the need to give a free trial as Apple is a well-known entity, not a new entrant into the marketplace.”

“Since a sizable percentage of Apple’s most voracious music consumers are likely to initiate their free trials at launch, we are struggling to understand why rights holders would authorize their content on the service before October 1. This is especially true in light of the potential revenue damage to a music label’s iTunes download revenues and impact on their cash flow.

“We will keep everyone informed as new details emerge in the press. In the meantime, please do not feel rushed to sign Apple’s current offer.”

Stuart Johnson, the president of the Canadian Independent Music Association also criticised Apple’s offer, saying: “It is an outrage that any company, let alone Apple, will refuse to pay independent artists, the labels and the publishers supporting them.

“Is Apple refusing to pay its staff during this free trial period? Is it refusing to pay its many suppliers? Does Apple expect to get its marketing and promotion services for free – all for the reason that it will supposedly receive no revenues during this free trial period?,” he continued.

“Apple is using its considerable weight to bully independent labels and their artists to sign a deal that will only benefit Apple – and not the hard working songwriters, recording artists and independent record labels that create music every day.”

Apple Music launched last week, announcing both a regular streaming service and a 24-hour radio station, Beats 1. [via Music Business Worldwide]

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