Major record label reportedly bans “exclusive” deals with Apple Music and other services

Frank ocean Apple Music exclusive teaser 001

Apple’s practice of locking down long-term exclusive deals with artists has reportedly drawn ire from Universal Music Group (UMG), the world’s biggest major label. Frank Ocean’s recent exclusive deal with Apple was a wakeup call for the industry, with UMG set to curtail its practice of supplying Apple Music and other services with longterm exclusives.

“It’s our job to make sure that there’s not just one winner in music streaming,” a source told BuzzFeed News.

Here’s the full quote:

What we hope for is an ecosystem where all of these platforms are competing for audience and they’re competing for artist content. It’s our job to work across all of them and make sure that there’s not just one winner.

Following Bob Lefsetz’s earlier report saying UMG CEO Lucian Grainge sent out an email to other company executives “ending all future exclusives with Universal artists,” BuzzFeed has learned that he move was precipitated in part by the departure of Grammy-winning R&B singer Frank Ocean.

One of UMG’s brightest stars, Ocean walked away from UMG label Def Jam Recordings over the weekend in favor of dealing with Apple directly as an independent artist.

From the report:

The source complained that labels are investing millions of dollars to sign and promote artists around the world, only to then hand over their best chance at earning a return on that investment to potentially hostile distributors that have a limited reach in many important international territories.

“You’re leaving a lot of money on the table and you’re alienating a shitload of
fans who wanna go out and purchase the music,” the source said.

For the sake of completeness, it’s worth pointing out that Ocean’s desire for independence from Def Jam was born out of the differences between he and UMG which have become irreconcilable.

“Our view is that giving exclusives to individual streaming platforms for long periods of time is not good for the artist, it’s not good for the fans, and it limits the commercial opportunity for everybody involved,” as per a source familiar with UMG’s thinking.

UMG’s turn against exclusives does not amount to a “blanket ban,” the source added, as only exclusivity agreements of a week or more are currently being targeted. Shorter exclusivity periods on a two-day window may continue to be granted to Apple Music and other music-streaming services “on a case-by-case basis.”

Still, UMG may be unable to prevent artists like Taylor Swift (signed to Big Machine Records) and Drake (signed to Cash Money) from signing exclusivity agreements with Apple Music provided Apple goes to the artists or their labels directly.

So, is Apple actually becoming a record label for the digital age?

It certainly looks like it given Apple Music’s arrangements with top artists that typically involve exclusivity windows, special promotions and the fact that Apple is even producing their music videos and creating special documentaries around new releases.

A report Monday by Music Business Worldwide revealed that Spotify’s efforts to renegotiate long-term deals with record labels (don’t worry, Spotify continues to be licensed by all three majors on a rolling month-by-month basis) aren’t going well because the Swedish music-streaming service wants to lower its revenue split from around 55 percent (Apple Music pays 58 percent) to under 50 percent.

A senior major record label figure succinctly said this:

Spotify’s free tier is one of its only real effective advantages over tech giants with masses of resources. We all understand that—and the last place most of us want streaming to end up is a straight fight between Apple and Google.

Despite avoiding long-term exclusive deals with artists, Spotify is though to have changed its mind and is currently discussing windowing with major labels.

“If Spotify just windowed every new album for two weeks on premium, one rule for everybody, 90 percent of their problems would go away,” commented a rights holder who works outside the major label world.

Tellingly, Spotify recently hired former Lady Gaga manager and industry veteran Troy Carter in a new artist relations role that should bring exclusives to the service after all.

What’s your take on exclusives in the music industry?

I kinda don’t like them as they don’t bring any real value to these services.

I can only speak in my own name so let me just point out that I have never, nor will I ever, sign up for a music-streaming service just because it’s locked down a certain artist.

Clearly, exclusive arrangements only introduce tensions into the already complex web of licensing agreements and deals between the major record labels and the technology companies like Apple and Spotify which run these streaming services.

Source: BuzzFeed News