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Sunday, May 10, 2015

Apple Said To Be Without Key Music Deals Weeks Ahead of Rumored Streaming Service Launch

By Glenn Peoples | May 05, 2015 1:40 PM EDT

Doubts arise that Apple's expected Beats Music relaunch will take place next month.

A June launch of Apple's new subscription service is going down to the wire. Industry sources say Apple does not have the necessary licensing deals a month before the Apple Worldwide Developers Conference that will take place in San Francisco from June 8th to 12th.

There is widespread belief in technology and music circles Apple plans to introduce the service at the June conference. (At last year's conference the company introduced Jimmy Iovine and Dr. Dre as newly named employees.) Along with the company's spring and fall press events, the Developers Conference is one of three opportunities per year to launch a new product in front of a worldwide audience. Since acquiring Beats Electronics last May, the only music announcement was Apple's release of U2's Songs of Innocence at the fall press event.

Apple's Streaming Service Will Likely Be Premium-Only (Like Beats Music Was)

A June launch is still attainable. One source notes Apple has been able to quickly secure licensing deals in the past. "If any company can pull it off, they can," the source tells Billboard, adding that "labels are more likely to play ball with them" because of Apple's track record of generating revenue for rights holders.

Another major label source believes the Beats Music re-launch isn't coming soon. "June won't be the release date. The deals aren't done."

Apple's Streaming Service: Everything We Know So Far

Apple is overhauling and probably rebranding the Beats Music subscription service it acquired in its $3 billion acquisition of Beats Electronics. It is expected to carry the standard $9.99-per-month price tag and the same emphasis on human curation preferred by Beats co-founders Jimmy Iovine and Dr. Dre. Beats Music has been available only in the United States since its January 2014 launch. With the global presence of the iTunes Music Store and Apple phones and tablets, Apple will have the ability to significantly expand the subscription service's footprint.

Apple refused a request for comment.

Universal Music Agrees to Pay $11.5 Million to Settle Digital 'Sales' vs. 'Licenses' Suit

By Eriq Gardner, The Hollywood Reporter | April 14, 2015 3:20 PM EDT

Universal Music has agreed to pay up to $11.5 million and bump up royalties going forward to resolve a contention lawsuit that alleged it had cheated recording artists by improperly classifying digital downloads off of services like Apple's iTunes as "sales" rather than "licenses."

The settlement, filed on Tuesday and needing judge's approval, would compensate an estimated 7,500 artists including named plaintiffs Chuck D. of Public Enemy, Rick James (by way of trust), Dave Mason of Traffic, Whitesnake,Andres Titus of Black Sheep, Ron Tyson of The Temptations, Martha Davis ofThe Motels, Feliciano Tavares and a few others.

The lawsuit came on the heels of a 2010 appellate ruling in F.B.T. Productions v. Aftermath -- dealing with Eminem songs -- which suggested that "licenses" rather than "sales" were the more appropriate accounting treatment in an era where record labels no longer spend huge amounts on packaging physical CDs. The difference is substantial. Under "licenses" or "leases," artists have an even split with labels. Under "sales," artists only get about 15 percent of net receipts. Universal defended itself by questioning whether the FBT holding applied to many of the contracts of class plaintiffs.

Other big labels including Warner Music and Sony were hit with class action lawsuits. Both previously settled while Universal Music and subsidiary Capitol Records (as part of EMI) were hold-outs until fairly recently. Last month, after litigating a case that reviewed some 11,000 recording contracts, the parties signaled that a settlement was coming. According to a motion to approve the settlement filed on Tuesday, the Warner settlement (also $11.5 million) became a "starting point," but the parties struggled to reach their own conclusion, particularly on the issue of future relief.

As part of the deal, Universal makes no admission of wrong-doing, but it will be paying nevertheless. In a statement, UMG commented, “Although we are confident we appropriately paid royalties on digital downloads and adhered to the terms of contracts, we are pleased to amicably resolve this matter and avoid continued legal costs.”

Of the $11.5 million settlement, just over $3 million is going to attorney's fees and costs while about $200,000 is going to the named plaintiffs. The rest will be going to artists with contracts from UMG or Capitol Records between 1965 and 2004 with certain caveats.

Perhaps the most interesting aspect of the deal is the royalty bump that artists willnow be getting over future downloads. It's a 10 percent bump on the royalty rate, so if an artist previously got 15 percent of net receipts, that artist would now get an additional 1.5 percent, or 16.5 percent total. What's more, according to the motion to approve the settlement, "Class Members will also lock in certain additional benefits in the calculation of their royalties on Download/Mastertone income preventing reductions for, e.g., 'packaging' and free goods from being implemented in the future on Downloads/Mastertones."

Of course, digital downloads are on the decline as streaming income is surging. At least one lawsuit is currently in play that challenges whether Sony is improperly characterizing those receipts in an accounting-favorable way.

In the meantime, Len Simon, one of the lead plaintiffs’ attorneys, said, “This settlement is a fair resolution of this controversy over how to compensate artists for their valuable work in a new medium which we believe was not contemplated by their contracts, many drafted in the 1970s or 1980s. And it compensates these artists now, rather than after additional years of litigation and uncertainty.”

Read the full motion below.

This article was first published by The Hollywood Reporter.