The UK’s independent label trade body has warned that Apple’s new music service could be “catastrophic” for smaller labels.

In a letter to its members this week, the Association of Independent Music (AIM) acknowledges that Apple Music offers the industry a major new revenue stream but says the lack of consultation with indie labels had left them with an “uneasy feeling”.

Chair and CEO Alison Wenham says the royalty-free trial period is “a major problem for any label that relies on new releases rather than deep catalogue, as the potential for this free trial to cannabalise not only download sales, which remain a very important revenue stream, but also streaming income from other services, is enormous. As a whole the independent sector is a powerful voice in the music industry but its individual parts, the smaller labels particularly, cannot withstand such a potentially catastrophic drop in revenue”.

As revealed in a leaked contract last week, Apple doesn’t want to pay any royalties to rights holders while users are enjoying their three-month free trial.

Wenham concludes: “Each individual member of AIM must, of course, make their own decision whether or not to sign this agreement, but many members have already expressed very real concerns about the consequences of doing so, hence our communication to the whole membership. It is AIM’s view therefore that, in its present form, this agreement sadly does not meet a standard of commercial fairness that we can endorse”.

The AIM’s comments come after the US independent label trade body A2IM said it was “struggling to understand why rights holders would authorise their content” for Apple Music.

As CMU points out, unlike the streaming services, Apple isn’t negotiating with the independent rights network Merlin to secure a single licence that covers over 20,000 independent labels and distributors, because the indies’ original iTunes deals pre-date the creation of Merlin. Instead, Apple is dealing with the labels individually, which could reduce their negotiating power.

Earlier this week Beggars Group, which distributes indie labels like XL, 4AD, Rough Trade and Matador, released its own statement on Apple Music, saying it “struggle[d] to see why rights owners and artists should bear this aspect of Apple’s customer acquisition costs”. Merlin has also warned that the service will “punch a black hole” into music industry income this year.

Anton Newcombe of the Brian Jonestown Massacre has since claimed that Apple threatened to remove his back catalogue from iTunes if he refused to comply with the royalty-free proposal.

FACT’s Andrew Friedman recently put Apple Music under the microscope, arguing that the tech giant’s foray into streaming is proof that it’s no longer a beacon of innovation.

 

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