Apple Music and Labels Investigated in Two States | Hacker News Reader

Apple Music and Labels Investigated in Two States

nytimes.com

65 pointsdigital5555 comments

I get the feeling margins have gotten so slim in the music industry (at least for the big labels) that they feel they need to make a big play. Apple, with their almost iconic relationship with the music industry, seems like the right move to them.

What I think they don't realize is at this point (IMO) it's probably going to end up being a fruitless effort.

They're competing with empowered independent artists, whom alot of times only have to earn a paycheck to pay themselves, who simply love music and don't care about fame or becoming wealthy from their efforts. Most of them care about making great music and making a modest living doing so.

If the margins are getting slim, it's only because the music industry has gotten so big and bloated compared to the size it naturally should have in a digital landscape.

They've always insisted everyone else needs to change and play according to their tune, but I think they may (finally) have realised that the ones who has to change is themselves.

And that will have to be a change for something significantly slimmer.

>> "If the margins are getting slim, it's only because the music industry has gotten so big and bloated compared to the size it naturally should have in a digital landscape."

The margins got slim because people were able to get music for free. Some still want to pay but they don't want to pay a lot so the industry has to take what it can get and offer streaming.

People don't want to pay much 1. because they're cheap, but also 2. because they realise that digital distribution is a near 0-cost business.

The music industry can't pretend it's still offering the same value to artists and customers as it did in the pre-internet age. They haven't adjusted to that, and that's their error.

The value isn't in the distribution though, it's in the content. I'd be interested to know the cost of distribution in the pre digital age (when economies of scale are factored in obviously). I don't think it would be that high. If you look at iTunes the price of an album is significantly lower than it was on CD 10 years ago. In the UK it's around £10 digital now and before digital would've been £15-20 on a CD.

Pre-digital age distribution: 1. create master-copies. 2. Send master-copies (physically!) to the various printing plants. 3. print as many copies as you think it will be reasonable to sell. 4. hire security to prevent leaks of pre-release albums from the plant 5. send the media through your distribution-network, by trucks, trains, planes and boats to world-wide storage-facilities while waiting for a synchronized world-wide release. 6. send copies to actual brick and mortar stores, who may or may not sell all copies (I can't recall if they have the right to return unsold items.)

Remember that all those transports, plants and storage facilities not only cost money to establish, but cost money to keep running too. Unsold media kept in storage is now waste you need to pay to dispose of. And you paid to get it there in the first place. This is a loss-factor you need to factor into all actual sales.

Now compare this to the digital age: 1. Create a master-copy. 2. Encode in a format understood by HW decoders commonly found in consumer-devices (i.e. MP3/ACC) 3. Put on a webserver. 4. No distribution-network needed. You're on the internet, remember? 5. Bandwidth costs per sold copy: $0.000000000000000000000000000000001

I'm not an industry insider so I obviously don't know the concrete numbers, but it doesn't take a mastermind to arrive at the conclusion that operating in a pre-digital age was expensive and provided a valuable service. Thus warranting a significant markup.

In the internet age none of those services are needed nor wanted. Now they're just a middleman wanting money based on a historical role.

They will have to slim down. Significantly.

>> "They're competing with empowered independent artists, whom alot of times only have to earn a paycheck to pay themselves, who simply love music and don't care about fame or becoming wealthy from their efforts. Most of them care about making great music and making a modest living doing so."

Sorry but this is BS.

1. Independent artists are empowered in the way that they can distribute music in so many places online - getting people to listen is another matter. Even if your music is good marketing it by yourself is very, very hard.

2. Even artists who aren't part of a group (I'm thinking DJ's for example) have to pay more than themselves. They don't travel alone and every live musician usually has to pay a sound guy and probably a lighting guy.

3. I think very few musicians care about getting wealthy - they just want to make a living. They want to be able to play and make music 24/7. Even reaching that level is incredibly hard. I can't remember their name but there was a Medium article posted here a while back by a band (quite a well known indie band) who were trying to do just that. They sold out 1,000 seat theatres around the country but the costs of putting on a show caught up with them.

Artists need labels. Maybe not in the form we've always known them but they are still very important. I think it's also probably in the interests of artists if one place becomes king in streaming. You can focus your efforts there instead of having to distribute your music on all these streaming services with their own social sides you must also contribute to.

You describe that labels could provide usable service for musicians.

Fine, but labels do not work like this. They work rather as investment banks and their income does not come from service fees but from speculative bets in hopes to find few musicians with very high returns.

I.e. musicians do not get a product from labels but are themselves a product.

Think of it like a startup. Until they get to scale musicians make very little money. They therefore need investment. Their investment company (the label) also doubles as a marketing company. How do they get to scale without the label i.e. investors?

Although some service fees would be reasonable (recording an album, pressing small batches of CDs), most other things that labels offer are simply not affordable for musicians who did not make it yet, e.g.: hiring a good producer or setting up a nation-wide or world-wide PR campaign.

Although, it's not impossible to get there by slow, organic, growth, getting an investment can be much more effective if you are good[1]. It's not all that much different from starting a business.

[1] Of course, these days some labels do not pick up good musicians, but pretty faces that can playback to music written by label's writers, recorded with pitch correction, etc. But that's what a segment of the general public wants.

> I can't remember their name but there was a Medium article posted here a while back by a band (quite a well known indie band) who were trying to do just that. They sold out 1,000 seat theatres around the country but the costs of putting on a show caught up with them.

Are you thinking of https://medium.com/@jackconte/pomplamoose-2014-tour-profits-... ?

> 1. Independent artists are empowered in the way that they can distribute music in so many places online - getting people to listen is another matter. Even if your music is good marketing it by yourself is very, very hard.

Yes... except that the RIAA has the legal authority to collect royalties on behalf of independent artists (that's right, on behalf of artists who haven't even signed to a major label).

These artists have to petition the RIAA[0] in order to collect their earnings. Success in this endeavor varies widely; many artists complain that after years of effort they have failed to receive any of their money from the RIAA.

This same entity, by the way, has spent exorbitant amounts of money lobbying to (effectively) shut down Internet radio[1].

> Artists need labels.

This is true. In fact, artists need major labels, not just labels. But the reason for this is a tautology: they need major labels because we have created (by fiat) a situation in which they cannot operate without the oversight of a major label, whether they want to or not, so they might as well try and enter into a formal relationship so they can actually have standing with them as a client.

[0] Technically a former subsidiary that's now "independent" in name only

[1] https://en.wikipedia.org/wiki/SoundExchange#Lobbying_controv...

Well, I'd like to call shenanigans on your calling BS.

1. Distribution is the first step to social interest and therefore marketability. As in, until a tune gets heard by a marketing person or a film maker or Joe Q. Concert-Goer, it's relatively useless to have a recording. Fundamentally speaking, this is why Radio airplay is considered advertising and not due significant compensation.

2. The source of the money to go on tour is relevant, but not prohibitive. Willie Nelson is/was adamant that every musician needs a very good Jewish lawyer (his words). Contracts and getting paid are extremely important to longevity, whether it be licensing or crafting a tour.

3. I don't see how this point genuinely contradicts the parent assertion. Making a living in music is difficult, it always has been, and adding one additional layer of overhead - a label - is simply that - another layer of overhead. It goes back to having a lawyer / manager / publicist - sure, paying them XX% might seem expensive, but the amount of money that can be obtained as a gross sum will, hopefully, be larger on the net take-home basis.

Artists don't need labels - they need publicity. Labels have traditionally worked themselves into all sorts of publicity avenues such as...deep breath...rack jobbers - payola - 360 contract deals - ghost writing / manufacturing pop stars - digital rights management - pay-for-publicity on blogs...there are plenty of examples of labels creating successes and gambling on the small timers that they want to be successful. Now, Sony and Universal Music Group will sign distribution deals with labels for which they have no fiscal kick-back. It's a lesser known process, but essential for getting sh!t on the rack @ Best Buy (see: Macklemore).

No, what artists need are equitable channels for distribution and competent management for business affairs. You like Chvrches? I like Chvrches a lot. I especially dig the Soundcloud hat Martin Doherty seems to wear non-stop in gratitude for it being their big break / ability to negotiate their own terms in the modern system...but what excites me the most is what Chance the Rapper is doing along with Donnie Trumpet and the Social Experiment. No label. Free release. Now what? Time will tell.

I tried to keep this as much on-topic as possible:

If what you are saying in the last paragraph about the wishes of artists is true, imagine a society with a basic income (which is up for discussion in many countries in Europe - can't speak for other parts of the world).

As many aren't paying (enough) for music and (as you say) most artists aren't doing it for the money, it seems like a perfect match? Without dragging in other sectors and other aspects, specifically for music (and maybe other forms of art/entertainment): would that be a better situation? Or are the assumptions simply wrong?

Most musicians make their money performing, not from recordings. Recordings are seen as a kind of marketing expense, with customer purchases as a demand signal.

Basic income also has the side-con of being a generally obviously and trivially terrible idea.

I think it's inevitable that the world economies will eventually realize that everyone needs a basic income.

I imagine that will open the possibility for far more artists / musicians to spend their lives making art / music instead of struggling to make ends meet doing menial labor or other things that humans will eventually no longer be responsible for. Will it happen within our lifetimes? My guess is no, but given the trajectory of technology in the modern world I can't see a future without it.

It's a shame that major labels lost the plot that their primary function is to act as curators, floating the best of the best to the top and making them available.

90% of everything is crap, and the same is true in the music world. An astonishing number of independent artists aren't very good. Historically, publishers were able to sieve off the top 10% and push them. Even if 90% of that 10% was still considered crap by any one person, in aggregate it was generally better than the 90% it floated on top of.

The problem of course became profit maximization over curation and we've ended up with a hit driven industry, and everybody just remakes the hits over and over again.

There's also an astonishing number of really great indie artists [2][3], but since labels have lost their curation function they no longer get exposure.

So while independent artists have unprecedented access to self-publish, there's no curator anymore and great artists just get lost in the wash.

In theory, this function has been "crowd sourced" and facebook shares and likes and youtube views and such kind of fill-in for publishing house's ineptitude. But it ultimately becomes a popularity contest, again returning us to a kind of hit-driven system.

I think that good curators find an publish great music, and that in-turn builds and shapes the market, and that in-turn generates money for artists. The best example of this I can think of is the now defunct label "Windham Hill", during the 80s found an exposed a gobsmacking number of unbelievably talented artists. Their sampler albums are considered all-time classics.[4]

1 - http://www.smithsonianmag.com/smart-news/science-proves-pop-...

2 - https://www.youtube.com/watch?v=VYv6-5VmNEM

3 - https://www.youtube.com/watch?v=xZ1JUxeTg3U

4 - https://www.youtube.com/user/WindhamHillLovers/videos

I think major labels lost the plot as soon as technology allowed them to "manufacture" music superstars as opposed to what they had to do historically, which was to "find" music superstars.

Apple's a lot shittier of a company than many people seem to want to give them credit for here.

There's acting shitty, then there's acting illegally. This may be the later.

That said, you're unlikely to get very many people on HN to admit that post Steve Jobs Apple acts shitty. There are still a lot of people here drinking the kool aid.

Seriously though, grats on getting pinned tabs in Safari and transit directions in iMaps.

from the article: """Last month, Stephen Cooper, the chief executive of the Warner Music Group, the smallest of the three majors, warned that “before people conclude that freemium should be burnt at the stake, we should think very carefully about the consequences.” """

How do you guys/gals see the "consequences", preferably with details of how it's gonna happen ?

I'm thinking he's referring to piracy, as in if you take away streaming with ads people that aren't willing/can't afford to spend $9.99/month for subscription will resort to pirating music.

Yup.

And they've been down this road before, starting with Napster back in the day. At that time, the labels were offered a very serious and consistent amount of money, with tons of growth locked in. Was the dawn of broadband in the US, and Napster had 40 million users, many of whom would have paid some monthly amount without thinking hard about it.

They killed that, saw the growth of many different distributed schemes.

iTunes brought many back to the fold, and regular, common sense, moves to add value back to the process saw more people paying and fewer pirating.

If he's thinking about the consequences, he's right. Remove AD driven streaming, which is basically the replacement for aging and increasingly irrelevant FM radio, and people will just start sharing hard again.

Or use YouTube-- they're good but not perfect at takedowns, a lot more reliable and consumer-friendly than torrents, and the labels have a much smaller chance of winning against Google.

I hace a strong Anti-Apple bias BUT I don't think anything will come from this.

This is just the AG of NY and CT making sure Apple knows they are looking at them every time they make a deal.

Perhaps not, but to me this seems similar-enough to the Apple Books/Amazon suit that, if substantiated, it may well cause trouble for the company. E.g. if Apple went to the labels and said, "we would like you to sign on to our subscription service, and we would like you to cease allowing [Spotify,Rdio, etc] to stream your music on a free tier, because we think this will force prices higher", the "force prices higher" may look like an antitrust violation, since the company is using its market position (and not its supply chain or volume etc.) to shift (or, say, "manipulate") the price of a consumer good.

It was already pretty widely reported that Apple was trying to get Big Music to kill Spotify's free tier as an anticompetitive measure. And it fits in well with the standard Apple playbook if you look at previous music deals, ebooks, etc.

I think you might be right. I didn't think about them being stupid enough to actually say that in official circles.

> Last fall, the singer Taylor Swift removed her music from Spotify in a dispute over its free version.

What's the tldr version of this? She wasn't getting enough of the revenue?

Basically. Though it is a pet peeve of mine that they refer to "Taylor Swift" as having done this, as if she was sat at the Spotify admin interface deleting albums. It was her record label that did it - a company that, by coincidence I'm sure, is looking for a buyer.

Well she made public comments about it. She basically said something about if people value the music they like they should pay for it. So it wasn't just the label, Taylor Swift was involved.

As a spokesperson for the label?

You're really that skeptical that an artist who has been dominating pop stations for years is upset that more and more of her listeners are moving to a nearly revenue-less distribution stream?

As a spokesperson for the label?

See:

http://www.rollingstone.com/music/news/taylor-swift-scott-bo...

I guess I can't get to her conclusion that freemium = music has no value.

There are articles on here constantly about how freemium debases the value of the paid product. And you can't slap ads in the middle of a song and go viral with it if you're already the biggest.

I mean, her youtube videos do well, don't they? I don't really listen to Taylor Swift. I was simply curious about why she was upset about the concept. If it's a commentary about how when people don't actually buy the album there's something lost in the process, then yes, I absolutely can get behind that. But I'd challenge the idea that paying for the full album on iTunes or wherever online is somehow a replacement for owning the physical record. My father tried his best to make me a music purist, bestowing on me a pretty amazing collection of vinyls and those things are great...to pull out the cover and actually read the names of the people involved in creating that record...that has value, sure. But after Napster and iTunes, I was curious about the anti-spotify move from a business perspective.

How do you, as a wannabe monopoly, do business with a monopoly without colluding with a monopoly?

Pressuring a monopoly to harm your competitors isn't necessary to do business with said monopoly.

Don't engage in price fixing?

While I agree apple is a significant and big actor, in what way are they a monopoly?

Imessage has strong lock-in factor ,even for people who want to move to android. I'm sure there are other things.

> a wannabe monopoly

Android version of Apple Music not having a free version like the iOS/OS X/Windows versions can be another factor in that probe?

There's nothing to indicate that the Android version will have any difference in the content available. If you check out the Apple Music membership site it shows Android as a fully fledged member when the software itself is released in the fall[1]

[1] http://www.apple.com/music/membership/

http://www.apple.com/it/music/membership/ http://www.apple.com/es/music/membership/ http://www.apple.com/uk/music/membership/

> *Apple Music for Android features are limited to paid members only.

In other words, that should mean that either Apple will make their Beats One station exclusive to paid members if they use Android, or that this radio station will not be part of the app so that the app essentially becomes paid only.

Only that feature and the non-music parts of the artist pages (in which case their websites and Facebook pages are probably far more substantial in content) have been announced to be free.

I don't recall seeing that anywhere.

The app should be free everywhere, they're charging for the subscription.

Android version won't have the free tier that the other systems have

There doesn't appear to be a free tier for any device. I'm not sure what you're referring to.

Yes, there is, in the other devices Signed in with Apple ID you can: View artist feed on Connect Follow artists on Connect Listen to Beats 1 radio station Listen to Apple Music radio stations

Those options are not available in the Android app.

What is funny is that this disclaimer is not shown uin the main Apple site but in trhe international ones

This is just stupid.

Aside from the fact that the cost of access to music is at an historical low, there are vastly more important issues that I would love to see the the AGs investigate. The scandalous treatment of African Americans is a bonafide crisis.

Where are the indictments of the many individuals responsible for the unjust imprisoment and torture of Kalief Browder? This happened in Eric Schneiderman,s own state!

The military-industrial-political-financial-complex is bursting with targets for reform.

Don't even know why I'm posting this here, but once in a while I feel motivated to share my thoughts...

You're arguing that this isn't important simply because there are other important issues out there.

Surely two important issues can co-exist?

I love when the Apple apologists throw out stupid stuff like this. It's as if you think state attorneys are some solitary old man in a room, capable of doing only one thing at a time.

Reply on news.ycombinator.com