Alison Wenham of the UK Association of Independent Music helpfully pointed out the problems with the 3-month free trial for apple music.
“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.”
She makes an excellent point. The free period would pay no royalties and has the potential (like all free streaming services) to cannibalize sales and subscription streaming revenue. So this brings up an excellent point. Where has AIM been when it comes to Spotify? Cause it does exactly the same thing?
Real Spotify revenue data from a moderately sized independent label 2014. Broken down by free, premium and trial tiers.
As we have demonstrated over and over again here on this blog Spotify free tier in the US pays about 1/7th per spin compared to the premium tier. AND since Spotify requires that your entire catalogue be available on both the free and premium tier, this simply allows the free tier to cannibalize not just sales but also spins on the higher paying premium tier. That is, Spotify does exactly what Wenham accuses Apple of doing.
While we certainly appreciate AIM and Wenham rallying and defending the indie community against Apples predatory pricing, it also illustrates the hypocrisy of advocates for indie music industry when it comes to Spotify. AIM’s licensing partner MERLIN has been a strident defender of all things Spotify. This blog was singled out early on by MERLIN for mildly criticizing Spotify. We suspect this is because Indie labels got stock in Spotify and they are willing to look the other way. Either that or MERLIN is corrupt. And I do mean corrupt in a legal way. Like there exists some sort of quid pro quo to defend and favor Spotify in the digital streaming space. Let us not forget that MERLIN cooked up a likely illegal and anti-competitive deal with Pandora in which indie labels trade lower rates for more spins. This certainly meets the letter of the law for Payola in the US.
We’d like to see AIM apply the same logic to Spotify free tier, because it’s increasing looking like they are giving Spotify a pass. Given that we now have multiple anti-competitive investigations into Apple in the EU, DOJ and New York and Connecticut AG offices, this is starting to look like “lawfare” between Spotify and Apple with the indie community as partisans. Apple partisans are already whispering that the EU action is “backdoor protectionism.” This is a terrible mistake for indies and artists. We might never get a fair shake from these institutions again. And there is gonna come a time when we need these government institutions to defend our economic interests.