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Apple Music Copies Other Streaming Music Services By Pissing Off Independent Labels

Apple Music hasn’t launched yet, but Apple has already managed to land themselves in hot water with artists and labels. Today, it’s being widely reported that a backlash is brewing among independent labels over last week’s leaked Apple Music contract, which revealed that Apple plans to pay out no royalties during the three-month free trial period open to everyone who signs up for Apple Music when it launches.

Originally, the leak, reported by Digital Music News, indicated that Apple would pay out nothing during the first three months, and would then pay 58 percent of revenues from Apple Music as royalties (compared to Spotify’s 70 percent and Tidal’s 75 percent). Since then, Apple has gone on record with Re/code stating that they will pay out 71 percent in the U.S. and around 73 percent abroad, although that last figure will vary by country. That first bit, however, remains true — Apple is asking labels and artists to give them a free ride for three months.

A statement from Beggars Group, which represents multiple independent labels covering many well-known artists including Interpol and Queens of the Stone Age, indicates that while the terms Apple is offering aren’t all bad, there are concerns that the contract offer was drawn up without consultation and is asking for three months of free plays. Interestingly, the statement also mentions concerns about the social aspects of Artist Connect being treated as royalty-free, despite that being a part of the value proposition that artists and labels are bringing to Apple.

Not everyone has been as diplomatic as Beggars, and it sounds like that might be for good reason. According to Music Business Worldwide, Apple is refusing to deal with the Merlin Group, which represents scores of independent labels in licensing negotiations, instead opting for a divide and conquer approach by going to individual labels and groups. The MBW report mentions that royalty-free trial periods aren’t unheard of, but many labels are of the mind that Apple, with its size and ready-made subscriber base of iOS users, will pull in significantly more streams over those three months than the usual streaming startup, which, for the smaller independent artists in question, could prove to be a devastating blow over the next three months. The concern is that streams that do pull in revenue will migrate to Apple Music en masse, leading to a three-month crunch for some acts that might not be able to afford it. Scores of Merlin-represented independent labels have refused to agree to the terms as a result, meaning that Apple Music could lack scores of major independent artists at launch.

Things took a turn for the sinister yesterday, as Anton Newcombe, frontman for The Brian Jonestown Massacre, related his experience with Apple over a series of tweets (via Crack). According to Newcombe, his suggestion that he wouldn’t agree to the three-month royalty-free trial period was met with a threat to remove his band’s music from the iTunes Store.

Earlier this month, the New York Times reported that some state governments are also taking notice, as New York and Connecticut launched investigations into Apple’s negotiations with major labels in search of antitrust violations, specifically stemming from use of power and size to convince those labels to move away from streaming services with free tiers, like Spotify. Apple has already been busted for the a-word when they were caught colluding with publishers to fix ebook prices and were ordered to pay out $450 million, a decision Apple is appealing.

Apple was also hit with an antitrust fine in Taiwan in 2013, which was upheld by the courts yesterday (per Deustche Welle). That antitrust complaint found that Apple had interfered with pricing plans and subsidies offered by Taiwanese telecoms for multiple iPhones, to the extent that Apple demanded to see pricing plans ahead of time and requested changes, in violation of Taiwan’s Fair Trade Act.

With this proactive approach being taken by New York and Connecticut over Apple Music, it’s starting to look like a pattern is forming — Apple arguably has more muscle than anyone else in electronics, and more and more people don’t like the way they’re using it. A lack of independent artists on Apple Music could be just the beginning of Apple Music’s woes.

Via Engadget