Apple Music Launches $50 Million Advance Royalty for Indie Labels
Thu, April 22, 2021

Apple Music Launches $50 Million Advance Royalty for Indie Labels

 

The coronavirus pandemic has impacted the music industry. / Photo by gornostay via Shutterstock

 

Music and video streaming service Apple Music has recently launched a $50 million advance royalty fund to help independent record label and music distributors weather the impact of the Covid-19 to the industry, reports entertainment media news site Billboard.

 

Apple Music helping the global recorded music market

Independent labels and distributors that earn at least $10,000 quarterly earnings from Apple Music are qualified for the royalty advances.

Global digital rights agency for the world’s independent sector Merlin’s CEO Jeremy Sirota said that he had conversations with Apple and the company is aware of the challenges that independents are currently facing. It is also finding ways to support the community. He said that Merlin members “greatly welcome the news” that Apple has made the advance fund available for indie labels but this advance is going to be optional, giving independents the flexibility to decide if they want to draw on it. 

Merlin, whose members comprise more than 20,000 independent record labels and distributors from 63 countries, controls 15% of the global digital recorded music market. Sirota said that they are anticipating healthy participation from the indies seeking support for their businesses, employees, and artists amid the pandemic.

Sirota is the former music exec of Facebook. While at Facebook, he led the company’s efforts to acquire and license recorded music rights from independent record labels and distributors worldwide to enable social music features in Facebook, Messenger, Oculus, and Instagram.

The technology giant will also support independent labels who have been struggling with their cash flow as the touring industry has been shut down and the film industry is at a standstill. While these industries are not directly connected to record sales, they contribute to the revenues of the indie labels through licensing revenue and deals with artists.

 

 

Music artists with independent record label companies

According to the 2017 report of database company Statista, Spain has the highest share of music artists that chose to renew their contracts with independent record label companies. A total of 97% of artists from Spain signed to indie record labels. This is followed by Brazil (94%), Netherlands (93%), Denmark (90%), Australia (89%), Finland (88%), Norway (87%), and Ireland (85%). France, Italy, and Belgium were at the bottom of the list with less than 50% of artists in said countries deciding to renew their independent label.

Apple has been offering industry relief amid the Covid-19 outbreak. For instance, it has donated more than 20 million face masks to healthcare workers in the United States, manufactured 1 million face shields to medical workers, and donated $15 million to pandemic relief efforts. It has also launched a coronavirus screening app that can be used in the US. Apple’s deal of launching an advanced royalty fund will be its first response to particularly bolster the music industry.

 

 

Difficult times for the music industry

The coronavirus pandemic has impacted the music industry. A letter sent by Apple to the labels reads that it has been a difficult time for the music industry worldwide. The multiple sources of income that the industry depends on vanished overnight. “We want to help,” Apple said.

The first consequence of the crisis in the industry was concert cancellations. Music festivals, such as South by Southwest and Coachella, have also been canceled or postponed. Streaming is supposed to be the silver lining of the music industry during a pandemic but figures have shown otherwise.

Official Charts Company (OCC), a British inter-professional organization that compiles official record charts in the UK, reported that UK audio streaming in the last week of March increased 0.4% from the past week but streaming only grew because there was a decline in the physical sales. Streaming services, such as Spotify and Apple Music, are the engine that is driving the music business in the United States. Spotify audio streams in Italy, a country hit so hard by the pandemic, were also down from 123m audio streams on February 21 to 95 million on March 13.

Streaming accounts for 80% of music industry revenue in the US in the first half of 2019. Other revenues come from digital downloads (9%), physical album sales (9%), and synch (2%). This is based on a report from the Recording Industry Association of America.

 

 

Quarantine playlist

While people are streaming music less, video streaming booms. Statista shows that 60 Minutes is the network TV show that experienced the highest boost of ratings between Feb. 24 and March 15, 2020. TV ratings of Young Sheldon, American Idol, The Masked Singer, and Hawaii Five-O also rose.

There are other power player moves aside from Apple that are helping the struggling music industry. US music recording company The Recording Academy, famous for its Grammy Awards, has established a $2 million Covid-19 Relief Fund together with its affiliated charitable foundation MusiCares. “Covid-19 has devastated our music community, leaving thousands of music creators and professionals without work and an uncertain future,” it said. Several million dollars’ worth of donations from high-profile music firms, such as Warner Music Group, Universal Music Group, StubHub, and Spotify, was added to that relief fund.

American events promoter and venue operator Live Nation also committed a $10 million worth of relief fund to help live workers that are currently out of job. The live music industry comprises concerts and gigs.

A-list stars, like Taylor Swift, also have enough cash to support their team. The pop singer has given a financial contribution to a Nashville record store that was in danger of going out of business due to the pandemic. Music store Grimey’s New and Pre-Loved Music’s co-owner Doyle Davis said they were “very surprised” and the donation from Swift gave them a “real shot” at coming back.

The Independent music industry has little financial backing for now. Labels, artists, promoters, record shops, agents, festivals, booking agencies, tour crew, merch companies, and all other people and companies in the industry remain under threat and are not sure what will happen post-pandemic. Because of the temporary stoppage of video shoots and closure of studios, many artists have opted to delay their album releases. Only a few managed to put their records out as scheduled.

So far, most of the support that the independent music industry received came from people within the industry itself.