Independent record labels push back on Apple’s pay plans

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Independent record labels behind artists including Phoebe Bridgers and Vampire Weekend are pushing back on Apple’s plans to pay more money for songs recorded in higher-quality audio — a move they say funnels cash towards megastars and away from other musicians.

The friction surrounds Apple’s preference for songs produced using Dolby Atmos, a “spatial audio” technology that surrounds listeners with sound from all directions. Higher-end audio is a crucial edge for Apple Music over rival Spotify, but it costs more money to produce.

Apple last week told music companies that it would pay up to 10 per cent more in royalties for songs produced in spatial audio. But the tech group is not paying more money in total: rather, that extra 10 per cent will come out of a fixed pot of money. As a result, songs that are not “spatial” will receive less money.  

Some of the most influential independent record groups — Beggars Group, the company behind Vampire Weekend and Adele; Secretly, which houses acts including Phoebe Bridgers and Bon Iver; and Partisan Records, the label behind Ezra Collective — have expressed concerns about Apple’s policy in recent days, according to people familiar with the conversations. 

“It’s literally going to take the money out of independent labels and their artists, to benefit the biggest companies in the marketplace,” said a senior executive at a large independent record company.

“It’s going to benefit the biggest player, Universal, because they’re the ones with the resources to invest in that. Whereas the independent sector . . . we’ve found it hard to justify the expense of creating spatial masters . . . we’re not in the business of chucking money just because Apple is saying you should be spending money on this.”

Another independent label said: “The new deal will badly impact our revenues.”

The fracture pits independent artists against Apple, the trillion-dollar tech giant that has long positioned itself as a friendly partner to creative industries.

Producing music in spatial audio costs an extra $1,000 per song, or roughly $10,000 per album, executives say. Going back and reproducing an older song with spatial audio can double the costs. For a company such as London-based Beggars Group, which has some 3,000 albums in its back catalogue, reproducing its repertoire would cost more than $30mn.

The indie labels, even the largest ones such as Beggars, do not have the leverage to pull their music from Apple’s platform, according to several executives who did not want to be named. They hope to work with Apple to make changes to the new policy. If those negotiations fail, they would explore legal or regulatory options, said people familiar with the matter.

Apple had helped pay for some of the costs of reproducing music for spatial audio, but it had not been enough, according to executives at several labels.

“Apple is probably most people’s number-two digital partner globally in terms of revenue. If [this policy] takes between 5 and 10 per cent off of your global revenues, and not even because the songs aren’t performing but because you lose that money and it goes to Universal, the biggest player in the market, we’re definitely concerned,” said a record executive. “It’s hard enough to make money off of streaming.”

Apple declined to comment.

Apple introduced spatial audio to its music streaming service in 2021, at no additional cost to subscribers. Amazon’s music service also offers spatial audio. Spotify has long teased its own higher-end audio product, but has yet to offer it.

Some record executives also pushed back on the artistic value of spatial audio. “Forcing a spatial mix is the equivalent of hanging a digital 3D version of the ‘Mona Lisa’ and expecting Louvre patrons to prefer it,” said one music executive.

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