This article first appeared on WIRED.com
Apple Music, the tech giant’s long-awaited foray into music streaming, launches today. Apple is hoping it becomes the one, true streaming service that can get millions of people to pay to play, just like it got millions to pay for downloads from its iTunes Store.
Some indie insiders hope so, too. After holding out to ensure artists would be paid during Apple Music’s free trial period, big-name indie label clearinghouses like Beggars Group and Merlin Network have joined the major labels to sign on for the streaming service. The belief is that the revenue for indie artists on Apple Music—even if it’s minuscule per stream—may mean more bucks overall than what they get from streaming competitors. And with Apple Music’s new social network, Connect, indie artists may finally have the definitive place to interact directly with their fans—like Myspace a decade ago, but with way more weight behind it.
“It’s going to be huge. There will be exponentially more users, like a Facebook with a billion users,” says Tracy Maddux, CEO of CD Baby, one of the largest distributors of independent music. Maddux argues that if Apple can convert even a small percentage of the users that currently pay to download songs from the iTunes store, the company will bring in more revenue than with downloads—revenue in which artists will share.
“The pool of money available to all artists grows exponentially,” he says.
The Future of the Industry
For indie artists, labels, and distributors, digital revenue has become increasingly important. According to a survey conducted by Merlin, one-third of its indie labels and distributors reported that more than half of their digital revenue now comes from audio streaming and subscription services.
“The shift to streaming is marked and accelerating,” says Merlin CEO Charles Caldas. “I think in some ways we’re getting a look at what the future of the industry looks like now.”
And many in the industry are cautiously optimistic about that future.
“Apple has the clout and the brand loyalty to end up with a lot of subscribers if its service is good,” says Portia Sabin, the president of Kill Rock Stars and boardmember of the American Association of Independent Music. “If that happens I certainly think streaming revenue from that service could end up being significant.”
That success may depend, however, on how quickly Apple Music can scale. Mark Mulligan, the lead music industry analyst for Midia Research, is less enthusiastic. “The streaming pool might get bigger,” Mulligan says, “but the digital pool will get smaller.” He argues that it may take a few years for Apple Music to reach the number of paid subscribers that, say, Spotify has—and in the process people who used to pay upwards of $40 to $50 a month in the iTunes Store will switch to paying the $10 instead to stream all available songs.
Direct to Fans
Even as real revenue from Apple Music remains wait-and-see, its direct artist-to-fan platform, Connect, may be the biggest draw for indie artists and fans. CD Baby’s Maddux says Connect will let artists interact with fans in a new way, given Apple’s reach. “It levels the playing field,” he says.
In the past, artists haven’t had direct access to the streaming and downloading services where so many of their fans find and listen to their music. Instead, they’ve had to try to forge those connections directly, hoping that fans would seek them out on the web and social media.
As Benji Rogers, the cofounder and president of PledgeMusic, points out in a blog post: “iTunes and services like it owned all of the fan data. Therefore, they owned that connection.”
Now, Rogers says, artists can use Connect “to let their fans know in real-time what they are working on, link out to their pre-order pages, and gather their fan data into a destination that they actually use and control.” Rogers believes that by posting ticket links and exclusive content, for example, directly to fans, artists can better “control the conversation,” and, presumably, bring in more bucks.
For labels, distributors, and artists alike, a better connection to fans—plus knowing how fans listen to music and what they want from artists—may mean a better service overall, which could translate to more revenue. But, even with the direct connection to artists, Apple Music will still face stiff competition in its fight to become the dominant platform. In that fight, there’s a danger that it may wind up less concerned with the success of smaller, independent artists than beating its freemium competitors, such as Spotify.
“Artists want to believe that whatever the new platform is will have meaningful impact,” says Casey Rae, the CEO of the Future of Music Coalition, “but I don’t know how much Apple cares about that.”