Apple Music's royalty-free trial period puts indie labels at risk

Apple Music, the tech giant's new streaming service is set to launch June 30th. In the run up to its release, big name labels have already joined the fray, but Apple has yet to secure any independent record labels. Although Apple is reportedly offering higher than average 71.5% to 73% of the revenue to copyright owners, they have to endure a revenue-free trial period, first.

Apple could be starting its new industry relationships off on the wrong foot by offering a three-month trial period for its streaming service. The move is good for users but rubs some rights holders the wrong way. As Apple won't be earning any subscription revenue from individual users during that time, it won't be paying out to labels either. That's right. Under Apple's contracts, reportedly, the music owner won't see a dime from the trial period.

It's also important to distinguish that "rights holders" and artists are not synonymous. The publishing rights owners are often an amalgam of label and publishing honchos with a sprinkling of songwriters. Therefore, labels and artists don't necessarily have the same goals in mind.

Speaking about indie labels, UK Music, a British lobbyist group says the deal would, "literally put people out of business." The group continues, "Apple can't spring a contract like this on us three weeks from release. They are basically putting all the risk on the labels."People tend to think of independent labels as homes for unknown artists, when really they are the base for rising stars. Sometimes those stars can't be swayed to move to big labels even after they hit it big. Heavy hitters like Adele and the Artic Monkeys along with the up-and-coming Alabama Shakes still belong to indie labels.

Indie labels have some trepidation towards entering any kind of deal with Apple where they give their product away for free. Smaller labels are often barely meeting their costs. They can't afford to take a three-month hiatus from collecting revenue. We'll have to wait until Apple Music's release to see if smaller labels decide to compromise their short-term earnings for the sake of a long-term partnership with Apple.

Source: Fortune