With regards to Apple Music

http://beggars.com/group/pressrelease/90/with-regards-to-apple-music

by ascorbic • 11 years ago

58 44 11 years ago

beggars.com

rossng2• 11 years ago

Ouch - those are some pretty important artists for Apple to be missing out on.

Infernal• 11 years ago

Not sure if sarcasm - if not, then I agree. If so, see their list of current artists here on Wikipedia:

https://en.wikipedia.org/wiki/Beggars_Group#Current_group_ar...

rossng2• 11 years ago

Definitely not sarcasm - anyone who has an interest in music probably listens to someone on one of their labels.

gress2• 11 years ago

The free trial is limited to three months, so it's simply false to equate it with 'free' or 'freemium'.

Apple is asking labels to offer users access to their music for free during the trial period. I.e. Apple isn't going to subsidize the music during the trials.

The real question is - why is beggar's banquet afraid of giving their listeners a 3 month free trial? Are they afraid that people won't want to continue listening to their artists after that?

osi• 11 years ago

I would surmise that they have data based on plays from other streaming services that suggests that plays for new releases spike around when that release happens. Unless a hit is generated, plays might level off.

Sephiroth87• 11 years ago

I'm in no way a music industry expert, but I can see a couple of scenarios where this is bad:

- an emerging band/small label might need those 3 months of revenue to actually survive, especially if it's their first/only release

- people will probably listen after the 3 months, but I can imagine most albums are listened to during the launch window and not much after, so they're be losing most of their money...

w42• 11 years ago

The real question is - why is beggar's banquet afraid of giving their listeners a 3 month free trial?

Why do you consider it reasonable for Apple to use artists' IP, free, in order to acquire users for Apple's paid services?

EDIT: I also suspect that the free trial will create an enormous cash flow crunch for smaller labels when Apple Music releases. Consider the following: Apple Music will become available, for free, to all existing iTunes users for 3 months. You can expect that iTunes music purchases will nosedive after Apple Music's release, at least for those first months.

If you're a small indie label, it's likely that losing the lion's share of a full quarter of revenue from one of the largest music stores on earth (never mind the ripple effects on other stores) is going to represent a significant financial hardship. Hence their consternation over mandatory 3 month free streaming.

gress2• 11 years ago

Why do you consider it reasonable for Apple to use artists' IP, free, in order to acquire users for Apple's paid services?

I don't and that's a false statement about what's happening. When the free trial ends, payments from the users are split with the artists. Both the artists and Apple benefit from the success of the service.

You could equally well say - "why should artists expect to user Apple's IP to market their music for free?"

mrgoldenbrown• 11 years ago

Rhetorical questions cut both ways: Why is Apple afraid of subsidizing the free trial designed to acquire customers for their streaming service? Are they afraid that people won't want to continue paying for their service after that?

fpgeek• 11 years ago

Apple did not become one of the most profitable companies in the world by paying expenses partners can be convinced to eat instead.

CPLX• 11 years ago

I want to know why Apple is afraid of giving me free cell phone service with an unlimited data plan for my iPhone for three months when I buy one at the Apple store. Are they afraid I won't continue to want such a plan after the three months are up?

callumjones• 11 years ago

Does this exclude them from Beats 1 as well? I haven't listened to Ebro or Julie but I know there will definitely be music coming out via Beggars (XL & Young Turks) that Zane Lowe will want to feature - I could see it really pissing a DJ off if they can't play music like this just because their employer can't get the licensing right.

k-mcgrady3• 11 years ago

Wouldn't Beats 1 just operate under the standard radio licensing agreements?

thirdsun• 11 years ago

Likely, but the question is whether Apple/their DJs have an agenda to give tracks not in their catalog less or no time on air.

unfamiliar• 11 years ago

we struggle to see why rights owners and artists should bear this aspect of Apple’s customer acquisition costs

This. If Apple wants to draw people to their music service with a free 3 month trial, they should be ponying up the cash for those 3 months, or at least part of it since this is ultimately a mutually beneficial arrangement. Expecting labels to pay for the richest corporation on earth to attract people to its new music service seems wrong.

The artists releasing things in this quarter are going to be the worst affected. I know that I won't be purchasing any new music in the next 3 months.

escherize• 11 years ago

I don't see how the amount of money Apple has in the bank matters here.

tragic• 11 years ago

Apple is going up against well-entrenched incumbents. It would be a good idea for it to use those cash reserves in order to carve out a space in streaming-land, if that's something it wants to get into. See also: Microsoft and the XBox - how many years was it before that broke even?

Throwing money at labels alienated from Spotify and co may or may not be a good use of that money, but given the amount of griping going around, it could be worth a shot. That's between the respective beancounters of Apple and the labels.

fezz• 11 years ago

3 months seems long enough to be suspect. What other apple services have had that long of a free intro period?

huxley• 11 years ago

MobileMe was supposed to have a 2 month free trial that became a 3 month free trial due to the glitches during launch (and some people even got 4 months due to a payment screwup where they were billed for the full year in advance rather than a token authorization)

chasing• 11 years ago

...or at least part of it since this is ultimately a mutually beneficial arrangement.

I agree with most of your comment but wanted to flag this...

I don't think it's that mutually beneficial. Apple gets the reward of stealing valuable market share from Spotify, Rdio, etc. The labels just receive a different flavor of what they already have: Access to a streaming service that people subscribe to.

culturestate• 11 years ago

Apple is supposedly paying ~1.5 points more than Spotify, so labels would presumably get _some_ benefit from consumers moving to Apple Music. If the consumers they convert come from any other service's free tier — which is admittedly unlikely to be a huge amount — the effect would be even more pronounced.

j42• 11 years ago

Can anyone explain the intent here? It seems like a ridiculous decision by Apple any way I look at it... and I'm an active opponent of the major labels & right-holder organizations.

If Apple is trying to shift to a user-subscription model and pay the labels (ultimately, artists) net-90, that's great, however it's obvious to anyone who's run a bootstrapped business that an unforeseen, 90 day break in cash flow can be an unrecoverable setback.

Not for big labels. They can weather the storm (though precedent dictates they'll pass as much of this cost on to their artists as legally possible).

The financial situation of end content creators and smaller studios is far more variable. Some will be fine. Others (especially those with content scheduled for release within this 3-month window) could be completely overwhelmed. This simply consolidates more market power into the hands of currently-large labels, and generates ill will toward Apple elsewhere.

Why would a company that seems to want to attract self-publishers into its walled garden not find a structured solution to bridge the gap?

I'm all for forcing artists to stream their music (I'm looking at you, Taylor Swift), because I see how that can ultimately make everyone more money.

Arbitrarily disrupting cash flow, though, in order to run an experiment and offload your acquisition costs is a pretty offensive, and surprising move by a company with hundreds of billions in fungible assets.

notsony• 11 years ago

Hmm, why doesn't Apple charge musicians 30% like they charge developers?

muchcomment• 11 years ago

There's a 30/70 split for most online music services (both streaming and purchase). The major labels negotiate to get a better deal, but for most artists there's a distribution fee of 30%. I don't have the details for the Apple Music agreement, but I know both Spotify and Tidal takes a 30 % cut of the revenue. I expect Apple Music to follow the same revenue split as iTunes.

Also: Spotify's freemium model pays out about 1/20 compared to Tidal premium-only model. If Apple Music is a consumer success, it (and other premium-only services) will be a much more attractive option for artists than Spotify.

serve_yay• 11 years ago

And given the natural response of competing digital services to offer comparable terms, we fear that the free trial aspect, far from moving the industry away from freemium services – a model we support – is only resulting in taking the “mium” out of freemium.

Wait, how does that work exactly?

(Though I agree with the point that they shouldn't have to bear Apple's customer acquisition costs.)

chaz72• 11 years ago

Well, they don't have to sign then... Sign up after most people's three months run out. Or negotiate for better terms. Or walk away from the table.

It's not like their fate is entirely in Apple's hands.

jnks• 11 years ago

What's happening here is not a shift to net 90, and it's also not an attempt by Apple to rip any rightsholders off.

Instead, it appears Apple and the major labels believe that three free months of Apple Music threatens to hurt Spotify's userbase growth at a crucial time for Spotify (fundraising pre-IPO). The industry has lost its faith in freemium (Apple Music, trial aside, has no free tier) and either this will kill Spotify or get them in line.

The indies, who overall can't afford losing three months of revenue, are just caught in the cross fire.

maxerickson3• 11 years ago

The indies, who overall can't afford losing three months of revenue, are just caught in the cross fire.

People keep saying this. Is there much evidence to support it? It's very understandable that they don't want to forgo revenue, but that is not the same as being unable to continue operating with the lower revenue.

jbigelow76• 11 years ago

How about you forgo getting paid for your work for three months to help your employer out? Will you die as a result, probably not, so we're all good right?

guelo• 11 years ago

We know that Apple could most definitely continue operating with the very slightly lower profits of paying for the three months.

caractacus• 11 years ago

I think you're mistaken if you think that the majors would voluntarily relinquish three months of royalties from trials of Apple Music just to hurt Spotify, when they could simply pull their content from Spotify a la Taylor Swift to hurt it much more. This is Apple trying to push costs wherever they can and ignoring the indies during negotiation. It wouldn't be the first time that indies get the raw deal from a large corporate making decisions with the majors in mind.

joshuapants• 11 years ago

Looks like Beggars can be choosers after all

IBM• 11 years ago

This letter and other bleating from labels is just about trying to get a better negotiating position. What this letter doesn't mention is that Apple is offering a higher cut on an ongoing basis in exchange for the 3 month free trial.

Apple won’t pay music owners anything for the songs that are streamed during Apple Music’s three-month trial period, a bone of contention with music labels during negotiations for the new service. But Kondrk says Apple’s payouts are a few percentage points higher than the industry standard, in part to account for the lengthy trial period; most paid subscription services offer a free one-month trial.

http://recode.net/2015/06/15/heres-what-happens-to-your-10-a...

FireBeyond2• 11 years ago

The number I read was 1.5% more. Let's see some math:

Artist earns $100 in royalties per month from service. In three months, has earned $300.

Artist earns $100 * 1.015 in royalties from Apple Music. In three months has earned $304.50.

Artist loses $300 in royalties from 3 month trial. At new rate, it will take (300/1.5 = 200) months to recoup the difference from the new royalty scheme to get back the loss. Sounds like a fantastic deal for artists...

eclipxe• 11 years ago

Hmm. Apple prominently features FKA Twigs in Apple Music promotional material (and in the keynote), but she is under Young Turks which is part of Beggars. Wonder how that will play out..

dangoor• 11 years ago

If there are enough artists that opt out because of the 3 month free trial, then the 3 month trial will actually work against Apple here. You'd get a lot of people trying the service out during the free trial and being frustrated at the amount of music that's missing from the service.

With regards to Apple Music

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