The plan was only disclosed to indie labels following an unveiling of Apple Music at WWDC. Andy Heath, the chairman of UK Music, says the plan has caused dismay among British labels such as XL Recordings, the home of Adele, and Domino the label behind Arctic Monkeys.
Mr Heath told The Telegraph that to his knowledge no British independent labels have agreed to Apple’s terms or intend to on grounds they will “literally put people out of business”.
“If you are running a small label on tight margins you literally can’t afford to do this free trial business. Their plan is clearly to move people over from downloads, which is fine, but it will mean us losing those revenues for three months,” said Heath. “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. They are basically putting all the risk on the labels. People will say ‘oh but you’re on Spotify’. Well yes, but we get paid for that."
“Of course my members want another player in the market but not at the risk of their survival", said Heath. “Apple is sitting there with this massive pile of cash and saying to us, ‘you help us start a new business’. Well I just don’t think it is going to happen on these terms.”
On Apple's end, it has promised labels a higher than average royalty rate once the free 3 month trial is over. Spotify gives labels 70% of revenues; however, Apple is reportedly giving labels 71.5% in the U.S. and around 73% internationally.
Apple Music is set to launch on June 30th, whether or not it is able to reach a deal with independent labels. Please follow iClarified on Twitter, Facebook, Google+, or RSS for updates.