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

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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?