The global music industry has been bracing itself for months in anticipation of Apple’s head-first dive into the streaming business. The general consensus was that the tech giant would once again revolutionise the industry as it had previously done with the iPod and iTunes.

However, while the release of Apple Music saw the service widely described as a Spotify killer, its launch has not been without controversy. First, there was the PR blunder of using a non-existent musician to promote the service’s indie-friendly features.

Then, it was revealed no royalties would be paid out during the first three months of the service’s existence, a designated trial period during which listeners could use the service for free. Naturally, this was of particular concern to independent labels.

Now, the Australian Independent Record Labels Association (AIR), who represent independent labels in Australia, has given Apple Music the middle finger, citing dissatisfaction with the royalty-free trial period.

“Having now had over a week to reflect on the launch of Apple Music, AIR is not satisfied that the deal being offered under this new initiative is fair or equitable to independent music companies,” a statement from AIR reads.

“Clearly there is great potential for this new service and the global reach that Apple can offer should, in time, help further develop existing streaming markets and open up new markets around the world. It could be a game-changing moment for the industry.”

“However, the speed at which Apple has introduced their plans and its lack of consultation with the independent music sector over deal terms has left us with the uneasy feeling that independents are being railroaded into an agreement that could have serious short-term consequences for our members’ interests.”

“The main sticking point is Apple’s decision to allow a royalty free, 3-month trial period to all new subscribers. This means that no royalties will be paid through to rights holders during that 3-month period.”

As AIR notes, the lack of royalties being paid out during Apple Music’s trial period is of particular concern to independent labels, who rely on “new releases rather than deep catalogue” for revenue and who can’t afford to have Apple Music cannibalising download sales and income from other streaming services.

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“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,” the statement continues.

“Essentially Apple is asking the independent music sector to hedge its risk, to fund their customer acquisition programme and to shoulder the financial burden for their global launch.” However, AIR is leaving the final decision up to individual labels.

“Each individual member of AIR must, of course, make their own decision whether or not to sign this agreement, but many of our members have already expressed very real concerns about the consequences of doing so.”

Readers can view the full statement below. It’s interesting to note, as Music Business Worldwide recently did, that industry analysts predict Apple’s trial to be worth a whopping US$4.4 billion in customer acquisition costs.

However, it seems Apple are intent on keeping that money out of the pockets of indie labels.

Australian Independent Record Labels Association Position On Apple Music

The Australian Independent Record Labels Association (AIR) has today advised its members on its current position on Apple Music.

Having now had over a week to reflect on the launch of Apple Music, AIR is not satisfied that the deal being offered under this new initiative is fair or equitable to independent music companies.

Clearly there is great potential for this new service and the global reach that Apple can offer should, in time, help further develop existing streaming markets and open up new markets around the world. It could be a game-changing moment for the industry.

However, the speed at which Apple has introduced their plans and its lack of consultation with the independent music sector over deal terms has left us with the uneasy feeling that independents are being railroaded into an agreement that could have serious short-term consequences for our members’ interests.

The main sticking point is Apple’s decision to allow a royalty free, 3-month trial period to all new subscribers. This means that no royalties will be paid through to rights holders during that 3-month period.

This is a major problem for any label that relies on new releases rather than deep catalogue, as the potential for this free trial to cannabalize 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.

Essentially Apple is asking the independent music sector to hedge its risk, to fund their customer acquisition programme and to shoulder the financial burden for their global launch.

Apple has always been a valued partner to the music industry but this decision to withhold income from the independent music sector is against the spirit of collaboration that we have come to expect from them.

Each individual member of AIR must, of course, make their own decision whether or not to sign this agreement, but many of our members have already expressed very real concerns about the consequences of doing so.

It is AIR’s view therefore that, in its present form, this agreement sadly does not meet a standard of commercial fairness that we can endorse.

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