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British labels say Apple Music terms would “put people out of business”

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Spotify’s CEO, Daniel Ek, simply tweeted “Oh ok” after Apple showed its hand at the Worldwide Developers Conference – suggesting the music service wasn’t as “revolutionary” as it had been billed as.

Apple Music will work as an app across iPhone, iPad, iPod Touch, Mac, PC, Apple TV and Android smartphones and aims to bring the best features of online music together “for an experience every music lover will appreciate”.

This doesn’t, it seem, extend to UK record labels, with Andy Heath, the chairman of industry lobby group UK Music, telling The Telegraph that Apple’s terms will “literally put people out of business”.

The tech giant is insisting that record labels – including XL Recordings, home of Adele – agree to a three-month trial of Apple Music, during which no payments will be receieved. The Arctic Monkeys’ label Domino will also be one of many affected.

Heath said that to his knowledge, no British independent labels have agreed to the terms and do not intend to either.

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With Apple Music due to launch imminently, this could potentially leave the service with large gaps in its catalogue.

“If you are running a small label on tight margins, you literally can’t afford to do this free trial business,” Heath explained. “Their plan is clearly to move people over from downloads, which is fine, but it will mean us losing revenues for three months.”

Taylor Swift previously caused much discussion over her decision to pull her album from Spotify – with some saying she was right to take a stand with the streaming service not suitably valuing musicians’ creations, and others saying she was simply being greedy and the only people suffering in the process were music fans.

Spotify later revealed it had 60m subscribers and had added an extra 10m in the last two months of 2014, following the Swift situation. The number of paid subscribers had risen from 12.m to 15m.

It remains to be seen how on board British labels will be with Apple’s terms and the effect some gaps in the catalogue would have. Adele’s most recent album, 21, is the biggest selling of the decade, while the Arctic Monkeys’ music has been a big driver of UK music sales overseas.

Image: Shutterstock

Heath suggested that while Apple had seemingly been biding its time before the announcement, it had been short-sighted on what the demands would mean for independent labels.

“Apple hasn’t thought this through at all and it’s not like them. They can’t spring a contract like this on us three weeks from release.”

He said detractors who would point to labels’ presence on Spotify missed the point. “People will say ‘oh but you’re on Spotify’. Well yes, but we get paid for that.”

The streaming service pays royalties for every song listened to via its mobile app. 

Apple has said once the free trial is over it will pay better than standard streaming royalties of around 70 per cent of the monthly subscription charge – UK pricing hasn’t been announced, but in the US this will be $9.99.

While Heath agreed labels want another player in the market, it wasn’t worth it if it meant risking their survival. “Smaller labels would be completely screwed. Apple just has to move on this.”

Image: Shutterstock

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