Apple Allegedly Threatening To Remove Music From iTunes If Artists Don’t Agree to New Royalty Policy

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Everyone knows Apple is a little late to the streaming business, but if the latest rumors regarding Apple Music are true it seems the biggest tech company in the world is about to become the industry’s biggest bully.

According to several reports from independent records labels, publishing houses, and artists alike, Apple is allegedly threatening to remove music from iTunes if artists do not agree to the new royalty policy being instated for the launch of the company’s new streaming platform (set to debut on June 30). The company is planning a three-month ‘free trial period’ to celebrate the launch, and according to reports it is asking all artists with music currently on iTunes (aka essentially everyone) to agree to all the company to stream their music royalty-free during that time. In other words, Apple wants to stream your music, or the music of your favorite artist, without paying them a dime to do so. If artists refuse, then the company will allegedly remove that performer’s content from iTunes, thus preventing that artist from earning any additional revenue through Apple-owned services.

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There are hundreds of other platforms for artists to sell and stream their music through, but to think what essentially amounts to a ban from iTunes would not impact the livelihood of any artists is foolish. iTunes still accounts for the vast majority of online music sales, and we have heard from several of our own clients and friends within music who have expressed concern over how this new policy may impact their business. Labels big and small rely on digital sales to pay artists, support a staff, and generally keep the lights on. Online sales have dropped in recent years, but they’re still far above the performance of any physical product. If iTunes were to revoke access to their store, the impact could cripple an entity’s ability to maintain the quality of work their consumers expect, or even shutter the operation completely.

Fortunately for the silent, there are some who are not willing to bend to Apple’s will, as Beggars Group, the record company umbrella that owns 4AD, Matador, XL, Rough Trade, and Young Turks, among others, explained in an open letter posted to their site earlier this week:

To Beggars Group Labels Artists and Managers:

We thought it was time to update you on the situation with Apple Music, following speculation in the press, some of it ill-informed. Apple have been a wonderful partner for the last decade, and we confidently trust they will continue to be so. We have recently been in discussions with Apple Music about proposed terms for their new service. In many ways the deal structure is very progressive, but unfortunately it was created without reference to us, or as far as we know any independents, and as such unsurprisingly presents problems for us, and for our coming artist releases. We are naturally very concerned, especially for artists releasing new albums in the next three months, that all streaming on the new service will be unremunerated until the end of September. Whilst we understand the logic of their proposal and their aim to introduce a subscription-only service, we struggle to see why rights owners and artists should bear this aspect of Apple’s customer acquisition costs.

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.

We are also naturally concerned, as ever, as to whether we and you are being treated on a level playing field vis a vis the major labels and their artists. Additionally, we have reservations about both commercial and practical aspects of the Artist Connect area. It is a mistake to treat these rights as royalty free, especially in the light of recent licenses with services like Soundcloud.

At the moment we do not have an agreement with Apple Music that would allow us to participate in the new service. However, we very much hope that the obstacles to agreement can be removed, for us and for independent Merlin-member labels as a whole, and that we will be able to fully support this potentially exciting new service in the coming days.

We at Haulix are concerned as well. We may not sell music on iTunes, but we rely on the continued growth and success of our clients in order to continue thriving ourselves. If iTunes makes it more difficult for the people we serve to thrive, they make it difficult for us to do so as well. 

Furthermore, our employees don’t exist in a tech-focused vacuum. We have each worked in publicity, or run a label, or even been in bands who had to work day and night for every inch of momentum they gained. We like to think we can relate to the struggles of many of our brothers and sisters in music, and the potential ripple effect from a stiff arm like this is understandably terrifying for many. 

We will, like all of you should, be monitoring this situation closely in the coming days and weeks. Apple has set a June 30 launch for Apple Music, but that doesn’t mean the repercussions for not joining the service will take effect at that time. The company has also not yet commented on the many concerns the indie community is expressing, but Billboard has a story this week that predicts the company will send out a mass opt-in email to indies within the coming days. There are even rumors the payout will be above the industry standard 70/30, reaching as high as 71.5% to performers, in hopes of selling more people on the three-month royalty free period.

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James Shotwell is the Marketing Coordinator for Haulix. He is also a professional entertainment critic, covering both film and music, as well as the co-founder of Antique Records. Feel free to tell him you love or hate the article above by connecting with him on Twitter. Bonus points if you introduce yourself by sharing your favorite Simpsons character.

James Shotwell