Apple Music's Service Terms Upsets Independent Record Companies

Apple’s latest music streaming service, Apple Music will only arrive after June 30th yet the company has managed to upset independent record companies due to its projected licensing terms.

Apple music service includes downloads for sale and a $10-a-month subscription streaming feature similar to Spotify or Rhapsody. At least 71.5 percent of the revenue from the service will be paid out in royalties, but labels and music publishers will not be paid during a three-month trial. This deal is acceptable to major record companies but these terms are not digestible to smaller companies.

Apple’s proposed licensing terms are subjected to questions since the launch of the service last week. The independent sector have openly been questioning the terms of services. The 71.5 percent rate offered by Apple only slightly exceeds the standard rate of 70 percent provided by other such services. Label executives are apprehensive that the loss of streaming income coming from a new release during Apple’s trial could be upsetting for the indie companies.

This week, a trade group of Britain, The Association of Independent Music said that the Apple deal “does not meet a standard of commercial fairness that they can endorse,” while the group’s counterpart in the United States, the American Association of Independent Music, has urged its members to not rush to sign Apple’s current offer.

One of the world’s largest indie labels whose acts include Adele, Vampire Weekend and Thom Yorke of Radiohead, the Beggars Group posted a statement on Wednesday. They considered Apple as “a wonderful partner for the last decade,” yet it was puzzled by the lack of royalty payments during the trial. “We struggle to see why rights owners and artists should bear this aspect of Apple’s customer acquisition costs,” the statement said. After this furor worldwide, Apple has declined to comment over the issue.