Jun 02, 2014

    Musicians wary of Apple's Beats buy


    RECORDING artist Zoe Keating needs only to look at her earnings to zero in on why she has misgivings about Apple buying Beats Electronics.

    The cellist made US$38,196 (S$48,000) selling downloads on Apple's iTunes last year, along with about US$34,000 from three other download services. By contrast, five streaming outlets, from Spotify to Pandora Media, netted her just US$6,381.

    Apple's US$3 billion plan to purchase Beats Electronics and Beats Music is likely to alter that relationship, as the iPhone maker pushes further into streaming.

    Apple became an ally of musicians by selling tracks and albums on iTunes, loosening piracy's grip on the industry and giving lesser-known artists exposure. As consumers shift away from buying, artists like Keating worry the newer subscription services will pay far less in royalties.

    "iTunes downloads help me pay my monthly mortgage," Keating said in an interview.

    "Unless you're a mega-star, you can't count on the same for streaming services. Me and a lot of my music artist friends are worried about the switch from music buyers to music listeners."

    That is also the dilemma for the recording industry, which is finding that streaming, while growing, is not making up for shrinking purchases, physical and online.

    Worldwide, recording industry revenue is forecast to decline over the next few years from an estimated US$19.6 billion this year, based on data from Strategy Analytics, an industry researcher. Mobile and online streaming, including subscription and advertising revenue, will become the second-largest revenue source, behind spending on CDs and vinyl.

    "The question everyone in the industry is asking is whether spending on streaming will grow to compensate for declines in physical spending, which will never rebound, and downloads, which are flatlining," said Leika Kawasaki, an analyst at Strategy Analytics.

    So far it has not, and that is also a problem for well-known musicians, not just Keating.

    Radiohead's Thom Yorke and his group Atoms for Peace pulled songs from Spotify last year, the Wall Street Journal reported, saying major labels negotiated royalty rates that leave little for performers. Other notable holdouts with limited availability on streaming include the Black Keys and AC/DC.

    How low are the royalties? Higher than conventional radio, which legally pays nothing, but not a lot either.

    Last June, David Lowery of indie rock band Cracker published the writing fees he received from streaming music services that played his 1993 hit song Low.

    Pandora paid him US$16.89 for playing the title about 1.16 million times in the last three months of 2012. The Internet radio service, based in Oakland, California, pays a rate set by a government agency, one that is lower than streaming services. Stockholm-based Spotify, which played the song 116,260 times, paid him US$12.05.

    In response, Pandora pointed to a website analysis that showed it paid a total performance royalty of US$1,274.90 on the plays to Lowery - and others who share the rights.

    Still, Keating looks for a silver lining.

    ''Something we've been waiting for and something we've been dreading is the day when Apple gets into streaming," she said. "If they can get the fact across they care about the artist, want to get their story told and still make purchasing of tracks possible, that's all anybody'd want."