While Apple remains tight-lipped about its plans for the interactive streaming service many expect to launch early this year, the company has made big changes in its download store in the last month, and label executives believe the moves are tied closely with whatever they are planning for its soon to be revamped Beats digital streaming service.
The changes appear to benefit the major labels at the expense of indies, leaving the indie label sector in a diminished showing compared to where they were previously inside the store. iTunes didn’t respond to a request for comment.
Most noticeably, Apple has continued to clean up its store, a project that began over a year ago. In recent months the company updated its style guide, and in January began taking down thousands of titles that do not conform to it. As part of that move, Apple also removed titles that, indie executives claim, do conform to the stylebook but that were removed due to “editorial discretion” on the part of iTunes and Apple — much to the chagrin of indie labels and distributors.
In another big move, Apple has switched how what will be featured in album carousels on each page. Previously, those carousels were chosen by editorial iTunes’ editorial staff, but now sales velocity determines what to feature. This is also seen as a major benefit to the major labels over indies, who tend not to have platinum-selling artists.
Label executives, even those at companies that have had albums taken down due to editorial discretion, say they understand why iTunes is making the moves to clean up the store. “In some ways, the store has become a junk heap — with a lot of public domain records, re-records, sound-alikes, karaoke and tribute albums showing up in artist searches,” one indie distributor tells Billboard. However, indie executives are wondering whether or not Apple executives are being sensitive to not throwing out the baby along with the bath water.
“If you are a big major label executive with a superstar artist and want to make sure when someone enters that artist’s name they only see your product, you might be happy,” says one indie distributor. “If you are a fan of having clean and unambiguous product on your website store, you might be happy. But if you are an indie distributor or label who is very compliant with Apple’s guidelines and yet has been most adversely impacted in the recent round of changes, you might not be so happy.”
So far, major labels’ executives don’t yet appear to be surprised by anything Apple has pulled down, but the same can’t be said for the indies.
“If Apple is updating and publishing a style guide and if titles in the store conform to the style guide, it should be in the store,” says another indie executive. “Yet, they are taking down stuff without saying why they are taking it down; they just say editorial discretion; that is not right.”
However, some music publishing executives speculate that some of the music that is being taken down might be due to preparations for Apple’s in-the-works streaming service. In streaming, Apple will be responsible for paying music publishers — something that it doesn’t have to do in its download store, where labels use a “pass-through” license and pay the publishers themselves, music industry executives speculate. If the publishing rights on a song are muddled, Apple might be putting such titles on the wayside until the rights are cleared up and the publishing adds up to 100%.
Moreover, one indie executive points out that all digital service providers have deals which give them discretion over what’s offered on their sites.”Its not like anyone has any grounds to complain if their album is taking down by editorial discretion,” that executive says. “But when there is a sea change as to what iTunes will accept, that is another story.”
Nonetheless, that indie executive says that, for now, they will not sweat the takedown of seemingly compliant titles because of editorial discretion. “We will discuss the issue with iTunes, and hopefully after we make our case, they will trust us enough to put the titles back up,” he says.
Indie executives are also fearful that they will lose out in another big way through the changes at iTunes. Before, under Apple’s curation, indie titles got respectable representation. The switch to using a sales velocity algorithm to determine what is featured on iTunes’ carousel will ultimately favor the major labels, indie label executives complain. One digital label executive says that the algorithm to update the carousel kicks in about every 90 minutes. Or to put it another way, any initial curation by editorial discretion has a short shelf-life.
Major label executives point out that editorial discretion still plays a role on iTunes’ theme and genre pages. Moreover, labels can get lucky, with titles priced at a certain point, if iTunes decides to feature that price point, they add.
Other big changes at the iTunes store including offering a lot more free music; taking away the live music page; and changing the “classic hits” page to a “greatest hits” page that seems to only feature greatest hits albums, instead of classic catalog titles or even new titles from heritage artists, as it once did.
Apple has also become more price-sensitive, while also paying more attention to catalog and genre pages. “One of the goals is to have a better funnel between the home pages and the genre pages,” says another major label executive.
Some indie executives are wondering if iTunes is transitioning from being like a Tower Records to becoming like a Best Buy store, with and emphasis hit titles and leaving the niche genres and long tail as an afterthought.
“The infinite shelf space that streaming services have has been very good for indies, who have larger market share there than they do in the sales worlds,” says an indie executive. “Up until now, iTunes have been really good to the indies. If iTunes is going backwards on the subject of infinite shelf space, that is painful.”