Post-Apple Music, should Apple form its own label?

By

FNF-Apple-label

Apple Music probably couldn’t have gotten off to a much better start. Following its launch on Tuesday, the service has been widely praised by fans and critics for its user experience and terrific Beats 1 radio — but what’s next for Apple and its Beats team?

Friday-Night-Fights-bug-2Could the Cupertino company launch its very own music label? It has the talent, it has the resources, and it has already revolutionized the music industry once before. But does the move make sense?

Join us as we discuss that very question in this week’s Friday Night Fight between Cult of Android and Cult of Mac.

cartoonluke_360.pngLuke Dormehl (Cult of Mac): So we’re a few days into Apple Music and I’m loving it so far. It really does feel like Apple has changed the game in music in a way we haven’t seen since iTunes launched in 2001. My question, though, is should Apple go even further?

It’s got the team on board, it’s got the infrastructure, the ecosystem and the deals. Is it time for Apple to cut out the middleman completely, and become a music publisher in its own right? I’d buy an Apple music label in a Cupertino second.

Killian-FNFKillian Bell (Cult of Android): Apple Music really is fantastic. I’ve been enjoying Beats 1 radio more than the actual music streaming, and I think it’s incredible. I’m already discovering new music I wouldn’t have stumbled upon otherwise.

I think you have a neat idea, and perhaps it might work for a very small number of artists. But I don’t think a good music streaming service makes for a good music publisher. How would Apple even go about publishing new music?

And why would any artist choose Apple over a traditional label?

cartoonluke_360.pngLD: I was considering this with everything that happened with Taylor Swift en route to the launch of Apple Music. Whether you think it was Apple caving in to one of the biggest music acts on the planet or a cleverly-choreographed publicity stunt to make both parties look good, one thing it illustrated perfectly was how strongly a large number of people (particularly artists) feel about what streaming does to the value of music.

Everyone was acting like Apple was the bad guy in all of this, but the reality is that the micro-payments artists receive aren’t as much to do with Apple as they are the labels themselves. If Apple could cut out the labels and deal directly with the artists, both groups make more money.And Apple gets the exclusives it’s chasing after.

As I see it, Beats 1 isn’t just about Apple launching a radio station; it’s a trial run for dipping a toe into the production arena.

There’s no arguing that Apple’s got all the right people to do it. Trent Reznor, Jimmy Iovine and Dr. Dre know the music industry like the back of their hands. Apple’s already got the reputation to pull something like this off. What value are traditional music labels adding these days? They used to be able to get you played on the radio. Now Apple runs the best radio station out there. The sooner we move toward an App Store model of publishing, the better.

Apple Music is a game changer.
Apple Music is a game changer.
Photo: Apple

Killian-FNFKB: Apple might have the right people, and it may have more cash than it knows what to do with, but this isn’t as simple as you make it sound. The Beats team is great, but even so, they don’t have the time or resources to run Apple Music and their very own label.

You mentioned cutting out the labels would free up more money for artists, but that’s not strictly true; Apple would have the same costs to cover as those labels, and it would have to make those back in exactly the same way — by taking a cut of the profits.

Apple may have the best radio station out there in Beats 1, but there are still a lot of people out there who have no interest in it, or don’t have the devices to listen to it. If Taylor Swift’s next album was exclusive to Apple Music, lots of fans would miss out on it.

Then there’s the other streaming services. They might not be worth much to artists, but they’re worth more than nothing. Spotify, Rdio, Tidal, Deezer and others have hundreds of millions of subscribers between them, and Apple’s artists would miss out on reaching those — because you can be sure their music would only be available on Apple’s streaming service.

As for the App Store model, I just don’t think it works for artists. Labels pay out lots of cash in advance, and many artists have to live on that money while they make new singles and albums. If Apple won’t pay up until the music’s on sale, how do you expect new artists to get by?

cartoonluke_360.pngLD: It’s a fair point, but if I was an artist approached with this idea right now, I’d accept without hesitating. Major acts like Taylor Swift make the majority of their money through live touring, and their music sales are a (falling) revenue source. For a newer act, who wouldn’t want to be in at the ground floor as one of Apple’s specially-promoted acts?

The fact is that music is going through a massive shift right now, and the current way of paying artist isn’t sustainable because the traditional record labels still want their cut. There are plenty of examples of artists who can make a good living without selling millions of albums, though, and that’s what Apple could do by offering artists a bigger piece of the split that is currently going to the labels.

Is it easy? No. Do I have faith that Apple could do this? Absolutely. They’ve got a consumer reach that’s virtually unparalleled in history. All you have to do is to look at Netflix Originals like House of Cards and Orange is the New Black to see that Silicon Valley can think bigger than just being the digital equivalent of a Walmart. This is an opportunity tailor-made for Tim Cook and co.

Jimmy Iovine talks up Apple Music at WWDC 2015.
Jimmy Iovine talks up Apple Music at WWDC 2015.
Photo: Apple

Killian-FNFKB: So, if you signed on with Apple, how would you make money while you record your first album? Will you continue to write for Cult of Mac during the day and then get the band in at night? And who’s paying for the recording studio and the producer? Can you afford to?

Because if Apple pays for it, it’s going to need to make that money back, which means taking a bigger cut from you when your music goes on sale. It will also want to make its money back from all the marketing (which costs a fortune), and everything else that goes into releasing an album.

Again, cutting out traditional labels doesn’t necessarily save money; Apple will have the same job to do and the same costs to cover. I agree that the music industry is in trouble right now, and that it’s more difficult than ever for an artist to make money. But the labels still play an important role, and you can’t just cut them out.

I certainly think more exclusives would be great for Apple Music, but I can’t see any artist — especially an up-and-comer who needs cash — committing to Apple Music and only Apple Music for any significant period of time.

cartoonluke_360.pngLD: I’ll be the first to acknowledge that this isn’t straightforward. It wasn’t straightforward for Netflix to move out of distribution and into production, which comes with its own unforeseen costs and risk. It wasn’t straightforward for Amazon when it started Kindle and began pushing Kindle Singles authors — many of whom now make far, far more than authors with traditional publishing companies.

As much as I’d love to work out all the small print on a Friday afternoon, I can’t — but Apple knows that things are changing and it’s in the great position to do something about it. You talk about the costs involved with all of this, but the truth is that Apple has done a lot for democratizing the technology needed to lessen those costs.

Fifty years ago, people needed major labels because there was no way you were recording and distributing something in your own home. You needed the expensive equipment, you needed the studio, you needed the connections to get it played on the radio and sold in stores to drive your album sales.

Nowadays artists can record from their own homes with a MacBook and distribute it to millions for virtually nothing. Apple owns the stores, it owns the radio stations, and those magazine adverts of previous decades are targeted push notifications or Apple Music recommendations.

If things were otherwise good with major labels I’d accept your point but the fact is that for most artists sales, album budgets and advances have been falling for years. Apple may not have all the answers right now, but it’s in the best place to start asking the right questions.

One of the best features of Apple Music in Beats 1.
One of the best features of Apple Music in Beats 1.
Photo: Apple

Killian-FNFKB: You’re right: If anyone can make it work, it’s Apple. I’m sure the idea has already been thrown around inside the secret meeting suites in Cupertino, and if Apple can find a way to make it happen — and make it successful — then it will. But I just don’t see it right now. Let’s let the readers have their say.

Friday Night Fights is a series of weekly death matches between two no-mercy brawlers who will fight to the death — or at least agree to disagree — about which is better: Apple or Google, iOS or Android?

  • Hildebrand

    You clearly don’t know what a record label is about. I worked at one.

    • site7000

      And?

    • Aannddyy

      Wow!
      Do drop some celebrity names, I just can’t get enough.

  • CelestialTerrestrial

    I don’t know if Apple can actually do that since Apple Music Corp exists and I don’t think they are allowed to become a record label. I don’t know why they would want to. In case you haven’t noticed, record labels aren’t making much money. The internet has screwed things up since it’s too easy to obtain music for free.

    Maybe they should just hire Russ Hanneman as he brought the radio to the internet. /s

    • Luke Dormehl

      There are plenty of reasons why music would be of interest to Apple beyond simply selling the tracks on their own. Exclusive albums and artists, for instance, would be a great way of driving hardware sales. As for Apple Music Corp, it’s a good point — although Apple has negotiated that territory once before with iTunes and the iPod. No reason it couldn’t be done again.

  • chelsea vader

    I will say one thing you guys didn’t hint on is the cut Apple takes from streaming or album sales could go to the artists or get split down the middle since they’re already making money since they own the rights to the music

  • Kyle Dempster

    Just my two cents, but I think this may be Apple’s test at running something related to movies/TV shows. We’ve been talking for years about how Apple is going to “revolutionize the living room.” I’m wondering if they will create a monthly streaming service for the shows and movies they currently sell via iTunes.

    I have probably spent less than $30 through iTunes on music in the past six years, but with Apple Music, they will make $120 off me annually. I’m wondering if the same profit can be made in the TV space. Will it make people watch more TV shows?

    It very well might make me watch shows that I wouldn’t currently purchase a season of via iTunes much in the same way Apple Music (or previously Spotify) has me exploring new music simply because of the “use it or lose it mentality.” If you’re paying for access to such an extensive library, you might as well take advantage.

    As a recent college grad, I haven’t purchased cable, but I do have blazing fast internet. I don’t feel like I’m missing anything major not having cable, but it does suck not being able to watch a TV show the night it airs (minus HBO Now). If Apple were to create a TV streaming service and post shows a few hours after they air on cable (the same way the iTunes store currently operates but with single episode purchases), I think that would change the entire game.

    I’d love to hear some thoughts on this!

  • JimGramze

    Apple could be the label for artists who don’t have a label. There are a lot of serious hobbyists that are doing amazing things but they don’t want to tour or bother with all the BS involved in dealing with a label. There is already SoundCloud, but I think it would be cool to be able to market your own stuff without having an agent or a label.

  • TJ

    I think Apple is going in this direction. They’ve already called the service “Apple Music” if that isn’t already a shot at Apple Music Corp., I’m not sure what is. If AMC is not suing or having a cease and desist yet, then clearly some negotiation has already happened.

    20 years ago, to make money as a music artist, you needed money up front for a 12 song production in a recording studio with a staff to feed, and thousands of physical CD’s that cost money to make. Today, you can make a song on your laptop and some basic hardware, release a single, probably produced by the band itself, get it on iTunes, promote it via Connect, and make a little scratch to make another song, and take a bit by bit approach. If Apple Music staff catch whiff, they’ll play in on Beats 1, or put it in a for you recommendation and if it catches, you’ll pull in a couple grand to keep the ball moving. This is the new paradigm I think Apple Music is going for. It’s not a “Record Label” per se, it’s a Music Content Provider and Promotion company.