Apple wants iTunes Radio to have special features and pay special rates, the way Slacker Radio does, rather than following the government-set rates and rules.
So before Apple announced iTunes Radio earlier this month, it made special deals with the “Big Three” labels that reportedly involve sharing ad revenue, paying a smaller per-song rate, and offering other non-standard features.
Digital Music News says it has confirmed that “Apple is now sending pre-filled, inferior contract terms to independent labels for iTunes Radio inclusion.”
It’s unclear whether those are the same rates the majors negotiated for. But since neither Merlin nor any other group of indies is apparently negotiate able to negotiate on behalf of multiple indie labels, that is doubtful — unless Apple simply just wants to be nice here. And in business, people are rarely nice without another reason to be.
Merlin chief Charles Caldas told Evolver.fm,
“Regarding [iTunes Radio], the licensing of the iTunes Music Store predated the formation of Merlin by some years and therefore our members all had existing deals with Apple long before our formation. As a result Merlin is not involved with iTunes licensing, including the iRadio product. However, given the maturity of Apple’s business with our labels, and the general feedback amongst our members that in recent years Apple has treated our members equitably and fairly, I would be very surprised (and the labels no doubt very disappointed) if they chose to discriminate against the independents at this juncture. We will wait and see what the outcome is.”
Regardless of how Apple tries to sign them, and what Apple decides to pay them, it’s clear that iTunes Radio needs indies — both independent labels and bands. Discerning music fans want artist radio stations for a wide selection of bands, some of them popular and some of them fairly arcane. Apple can get them without inking deals, by just paying the standard rate — the same mixed license approach employed by Slacker. However, under that standard license, stations can’t be cached for offline playback, skip limits must be enforced, and so on.
Another reason iTunes needs indies, despite its negotiating advantage: the labels represented by Merlin perform better on streaming services than they do in digital or physical stores. Merlin recently stated that its labels share of listening on streaming services “is 12-20 percent higher than their overall digital shares in US and UK.”
We asked Caldas to elaborate:
“The data we analysed in our recent survey shows that our members perform 12-20 percent better on streaming platforms than they do in the download market. Freedom of choice created by limitless ‘shelf’ space and a proliferation of social media tastemaker filters is leading fans, no longer herded by the expensive, tightly-controlled media channels and store fronts of physical retail, to discover and enjoy more music than ever before. The nature of the new-generation services has put a lot of control back into the hands of rights owners. As a result independents have a more open market and are performing far better in the subscription space than they have historically in the physical or download space. This is borne out by the figures we have seen in our survey, and by our analysis, as well as by the increasing success independents are enjoying in the mainstream charts across the globe.”