Apple’s platform squeeze holds back music and creativity, too – so will there be consequences?

Apple’s desire to tax and control its app ecosystem is earning outcry from developers, government, and outside observers. It’s a stand-off musicians and creators should watch closely.

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SoundCloud will now handle distributing your music – and give you a 100% cut

SoundCloud has a new pitch to creators: upload your music not just to SoundCloud, but to all major music services, too. Distribution is launching in a new beta as part of Premier service, and the terms look appealing.

Okay, first, to understand what digital distribution is, let’s go back in time. Digital music for many years meant primarily CDs and … well, piracy, despite some early (fairly horrible) stores. Then along came Apple’s iTunes Music Store. When it launched, you needed to have a label deal of some kind to make your music available; Apple dealt with those labels much as brick and mortar stores deal with labels and distributors. The first loophole was CDBaby – the name is a reminder that at the time, independent music producers were still largely duplicating releases on CDs. Pay for CDBaby, and you get your music on iTunes for sale.

Now, the landscape is different. Apart from DJs and specialists, most people get their music through streaming services. But the only major destination where you can upload music directly these days has been SoundCloud (though Apple and Spotify may soon change that).

So if you want your music on other services, you typically sign a distribution deal. Some of these are pay-once or subscription services open to anyone. More traditional distributors require multi-year contracts you can’t get out of – though they may offer personal relationships with curators at online stores, and the promise, at least, of getting you placed as “featured music” or on playlists.

If you just want to get your music out there, the issue is that the distribution costs can actually cost more than you bring in.

SoundCloud’s offering, then, could be at least cheap and convenient. Here’s how it works:

Qualified users with a SoundCloud Pro or Pro Unlimited account can sign up for an open beta right now.

You can select original music to distribute to a range of services, including Amazon Music, Apple Music, Instagram, Spotify, Tencent (the leading Chinese network), and YouTube Music, inside your SoundCloud account.

Then you keep 100% “of your rights” (need to read the fine print on that), plus 100% of distribution royalties from third-party services. There’s no additional cost for distribution.

Most other services either take a cut of royalties, or charge fees for distribution; here, what you’re paying already for your account already covers those costs.

So wait, what’s in it for SoundCloud if you get all the money? It seems the main goal is to attract users to their subscription services and provide monetization options to keep them there. In fact, you don’t have to include your music on SoundCloud or monetize it there if for some reason you don’t want to – like if for some reason you want it just on Apple or just on Spotify or some other combination. SoundCloud hopes you will, though; a spokeperson for the company tells us, “Monetizing tracks through SoundCloud Premier monetization gets creators the best revenue share rate on SoundCloud and fast payouts.”

I suspect SoundCloud does hope to use this offering to help build up their catalog, of course – which makes sense for them. The big challenge SoundCloud’s business faces is, while the service has a lot of original music the likes of Spotify and Apple lack, their catalog still lags the major music a lot of people want to listen to. And they’re in the unique position of wanting to attract both creators and listeners. That could be good in the long run for us as creators, but so far it’s meant that we tend to use SoundCloud as a way of building audience for other services (and for a lot of us, trying to convince people to buy downloads or physical music).

SoundCloud’s creator-facing tools are essentially unparalleled; the limited tools on Spotify and Apple are fairly weak and confusing. The real pitfalls here aren’t so much about SoundCloud as they are about streaming – streaming revenue for a lot of smaller artists is disappointing or even nonexistent. And this won’t help your music get playlisted or found on those services; it’ll just get you over the initial barrier of distribution.

In other words, I think generally the pricier services for distribution that just dump music on streaming are going to get run out of business, in favor of offerings like SoundCloud’s. But that leaves opportunities for distributors who do work on promotion, as well as the “we’re not dead yet” strangeness of cassette tapes and vinyl still being viable distribution formats in 2019.

Do you qualify?

The open beta requires a SoundCloud Pro / Pro Unlimited subscription, and you have to be an adult (18+ or age of majority).

You have to control all the rights to your music. So if you’ve signed music to a label, for instance, or you have an existing distribution deal, you can’t upload even your own music – technically, you’ve signed away the right to do so.

You also can’t have any copyright strikes against you on SoundCloud. That’s a dicey issue, I know, though SoundCloud points CDM readers to if you’ve got a question about copyright policy or you have a strike against you.

And you need at least 1000 plays in countries that have advertising available – US, UK, Canada, Australia, France, Germany, Ireland, The Netherlands, New Zealand.

It seems you don’t necessarily have to be living in one of those countries, however.

When do you get data or get paid?

This is the part I really like.

You get monthly reporting of numbers from all the services where you’re distributing.

There are monthly royalty payments, with no minimums.

This is a big break from the truly terrible way the industry often operates, which is to lock you into long-term contracts, take a big slice of the money you’ve earned, and then make data hard to retrieve and slow, and hold up what money is left based on weird payment schedules or minimum thresholds.

So the appeal of just logging into a SoundCloud account and taking care of all of this – leaving time for you to go figure out who to talk to to make your music popular – that’s hugely appealing.

There’s a separate music ecosystem of DJ services like Beatport and Traxsource, plus of course the isolatedbut artist-friendly world of Bandcamp. I hope to check in with both those services soon.

And there will still be room for distributors who offer more advanced customer service and relationships with those outlets, or bundle distribution with other services (including label management).

For everything else, though, the new SoundCloud offering looks like a significant breakthrough. I’ll be testing the beta, for my own music – even though the label we operate, Establishment, has a few weeks left on one of those terrible contracts I mentioned. Let us know if you have questions about this and we can ask our Berlin neighbors at SoundCloud.

For more or to sign up:
@creatorsonSC on Twitter

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Upload music directly to Spotify: streaming giant goes in new direction

Spotify has begun opening uploading not just to labels and distributors, but individual artists. And the implications of that could be massive, if the service is expanded – or if rivals follow suit.

On reflection, it’s surprising this didn’t happen sooner.

Among major streaming players, currently only SoundCloud lets individual artists upload music directly. Everyone else requires intermediaries, whether that’s labels or distributors. The absurdity of this system is that services like TuneCore have profited off streaming growth. In theory, that might have meant that music selections were more “curated” and less junk showed up online. In reality, though, massive amounts of music get dumped on all the streaming services, funneling money from artists and labels into the coffers of third-party services. That arrangement surely makes no sense for the likes of Spotify, Apple, Google, and others as they look to maximize revenue.

Music Business Worldwide reports that Spotify is starting to change that now:
Spotify opens the floodgates: artists can now upload tracks direct to the streaming platform for FREE

See also TechCrunch:

Spotify will now let indie artists upload their own music

What we know so far…

You’ll upload via a new Web-based upload tool. Check the tool and FAQ.

It’s invite-only for now. A “small group of artists” has access for testing and feedback, Spotify says.

It won’t cost anything, and access to releases will be streamlined. No fees, the full commission – the deal is better financially. And you’ll be able to edit releases and delete music, which can be a draconian process now through distributors.

Regions are a big question. The tax section currently refers to the W9 – a tax form in use in the USA. So clearly the initial test is US-only; we’ll see what the plans are for other regions.

You have to look into the future before this really starts to matter, because it is so limited. But it could be a sign of things to come. And bottom line, Spotify can give you a better experience of what your music will be like on Spotify than anyone else can:

You’ll be able to deliver music straight to Spotify and plan for the perfect release day. You’ll see a preview of exactly how things will appear to listeners before you hit submit. And even after your music goes live, you’ll be in full control of your metadata with simple and quick edits.

Just like releasing through any other partner, you’ll get paid when fans stream your music on Spotify. Your recording royalties will hit your bank account automatically each month, and you’ll see a clear report of how much your streams are earning right next to the other insights you already get from Spotify for Artists. Uploading is free to all artists, and Spotify doesn’t charge you any fees or commissions no matter how frequently you release music.

Now in Beta: Upload your music in Spotify for Artists [Spotify Artist Blog]

The question really is how far they’ll expand, and how quickly. If they use all of Spotify for Artists, as their blog news item would seem to imply, then some 200,000 or so verified artist accounts will get the feature. (I’m one of those accounts.) 200,000 artists with direct access to Spotify could change the game for everyone.

The potential losers here are clear. First, there are the distributors. So-called “digital distribution” at this point really amounts to nothing of the sort. While these third parties will get your music out to countless streaming services, for most artists and labels, only the big ones like iTunes and Spotify count to most of their customers. At the entry level, these services often carry hefty ongoing subscription fees while providing little service other than submitting your music. More personalized distributors, meanwhile, often require locking in multi-year contracts. (I, uh, speak from experience on both those counts. It’s awful.)

Even the word “distributor” barely makes sense in the current digital context. Unlike a big stack of vinyl, nothing is actually really getting distributed. More complete management and monetization platforms actually do make sense – plus tools to deal with the morass of social media. Paying a toll to a complicated website to upload music for you? That defies reason.

The second potential loser that comes to mind is obviously SoundCloud. Once beloved by independent producers and labels, that service hasn’t delivered much on its promise of new features for its creators. (Most recently, they unveiled a weekly playlist that seems cloned from Spotify’s feature.) And SoundCloud’s ongoing popularity with users was dependent of having music that couldn’t be found elsewhere. If artists can upload directly to Spotify, well … uh, game over, SoundCloud. (Yeah, you still might want to upload embeddable players and previews but other services could do that better.)

Just keep in mind: Spotify for Artists was 200,000 users at the beginning of summer. At least as of 2014, SoundCloud was creating 10 million creators. So it’s not so much SoundCloud losing as it is another sign that SoundCloud won’t really take on Spotify – just as Spotify (even with this functionality) really doesn’t even attempt to take on SoundCloud. They’re different animals, and it’s frustrating that SoundCloud hasn’t done more to focus on that difference.

But all this still remains to be seen in action – it’s just a beta.

Just remember how this played out the first time. Spotify reached a critical mass of streaming, and Apple followed. If Spotify really are doing uploads, it’d make sense for Apple to do the same. After all, Apple makes the hardware (MacBook Pro, iPad) and software (GarageBand, Logic Pro X) a lot of musicians are using. And they tempted to capitalize on their strong relationships with artists once, with the poorly designed Connect features (touted by Trent Reznor, no less). They just lag Spotify in this area – with the beta Apple Music for Artists and Apple Music Toolbox.

Meanwhile, I wouldn’t write off labels or genre-specific stores just yet. If you’re making music in a genre for a more specific audience, dumping your music on Spotify where it’s lost in the long tail is probably exactly what you don’t want to do. Streaming money from the big consumer services just isn’t reaching lesser known artists the way it is the majors and big acts. So I suspect that perversely, the upload feature could lead to an even closer relationship between, say, electronic label producers and labels and services tailored to their needs, like Beatport. (We’re waiting on Beatport’s own subscription offerings soon.)

But does this make sense? It sure does for the streaming service. Giving the actual content makers the tools to upload and control tags and other data should actually reduce labor costs for streaming services, entice more of the people making music, and build catalogs.

And what about you as a music maker? Uh, well… strap in, and we find out.

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Apple killing app affiliates is about more than just the affiliate program

Apple is terminating its affiliate program for iOS and Mac apps, effective October 1. That move is seeing a backlash from developers – and could discourage press outlets from covering apps.

Full disclosure: CDM added affiliate links for apps in our Apps section, which is helmed by Ashley Elsdon. In fact, this is at the moment how CDM supports Ashley’s contributions to CDM; we simply migrated his affiliate program from his former site Palm Sounds to CDM, and had planned to further develop this in the future.

But it’s not just media who are concerned about the change. I’ve heard from several developers who have emphasized that the move will cost them, too. Those developers often include affiliate links on their own sites, thus taking a portion of Apple’s own royalties. The logic is simple: if you go get an app through the developer’s site itself, it’s really their site, not the Apple App Store, that is helping you find that app. By eliminating the affiliate program, the argument goes, Apple is essentially claiming marketing services as part of their 30% royalty share without doing anything.

Some examples from public comments on Twitter:

(Intermorphic is the ground-breaking developer of interactive music tools that has worked with the likes of Brian Eno; David Lublin is a Mac developer and founder of Vidvox, creators of VDMX.)

This saga began effectively in 2017; Apple pledged to drop the commission rate from 7% to 2.5%, then, following a backlash, limited that change to In-App Purchases only.

The announcement from Apple is itself revealing:

With the launch of the new App Store on both iOS and macOS and their increased methods of app discovery, we will be removing apps from the affiliate program. … All other content types (music, movies, books, and TV) remain in the affiliate program.

[emphasis mine]

Forget 7% or 2.5% or 0%. The real story here is not just about affiliates, but about Apple’s intended avenue of discovery. That is, they want you to discover, learn about, and consume apps entirely on their platform. They’ve made moves to hire their own editorial staff. Effectively, they’re keeping resources inside Apple.

And that itself should be chilling. The Internet has transformed quickly in the face of dominance of a handful of corporations. And those corporations are all tightening their grip. In the phone market, two companies – Apple and Google – have an effective duopoly. In search, one company – Google. (One exception is the search recommendations provided by … Apple.) Online advertising is dominated by Google. Retail is dominated by Amazon. Social media is effectively now just Facebook (via Facebook, Instagram, and WhatsApp).

Long-time independent Apple publisher TidBITS has some tough words on the situation, from industry veteran Adam Engst. And you should listen to him, as Adam is very much in that “last man standing” category as we’ve watched independent technology media collapse.

Apple’s Termination of App Store Affiliate Payments Is Unnecessary, Mean-Spirited, and Harmful

I was going to say, it isn’t necessarily Apple’s obligation to keep us alive except … well, it absolutely is. Independent media contributed to the growth of Apple’s platforms, and now with iPhone device sales flattening, the massively wealthy corporation may actually be making a strategic error even as far as its own self interest.

But that aside, I think Adam says something here that’s bigger than app affiliate revenue or even Apple, rather reflecting on the state of the Internet:

Any media-savvy organization, whether it’s a multinational corporation or full-fledged government, can increasingly control public perception not just by manipulating social media but also by bringing content creation and dissemination in-house. It’s all about control in a media world that no longer has gatekeepers. Apple pulled out of Macworld Expo years ago because it could just as easily hold its own product release events, and now we’re seeing Apple do the same to industry publications by competing with them via App Store editorial.

And that’s really the issue. Whether Apple’s affiliate program makes sense either for Apple or for publishers, the message killing the program spells it out: Apple wants to be the editorial. And the companies I’ve mentioned (Google, Apple, Facebook, Amazon) in various ways want to be the Internet. Those of us not working for those companies are free to criticize. And we may have to face the reality that this changes the practicality of our businesses. That may or may not be an existential crisis, but it isn’t something to ignore and wish away.

Developers will have to consider this in their business plans, particularly as Apple charges them for advertising on top of the share of revenue they take as a royalty. (This is one reason, among others, pro audio developers have almost universally rejected the desktop App Store.)

And publishers face a choice about whether we can compete with Apple, or whether we should exit the business entirely.

That said, even if this sounds bleak for us on the independent side, consider: Apple can only be Apple. They can only be in the business of selling their devices and apps. But we can easily switch business in a way that ceases to contribute to their business. In the long run, that may be more Apple’s problem than our own.

I hope that Apple will still reconsider the decision in the face of feedback from developers and press. I certainly don’t consider this to be typical of the treatment of media relations, who in my experience do still value the media (ahem) as part of their job role. And whatever Apple decides, my personal bias remains: businesses work better together than they do apart.

Addendum: the competition

I realize I focused entirely in this story on Apple, which isn’t entirely fair.

It’s worth noting that Google has not ever had an affiliate program.

Who does? Microsoft does, with a 7% commission rate. That is available with generous rewards for apps, in-app purchases, and – crucially, given that they’re much bigger ticket items – Microsoft hardware.

Using the Microsoft Affiliate Program to earn additional 7% on Windows Store sales [2016 Microsoft developer post, but still relevant and a good overview of how this works]

Now, does that make the Microsoft platform better for the user or developer? That’s arguable, clearly. But what I think it may demonstrate is a difference in philosophy and strategic positioning. Google, for all their claims of “openness,” are first and foremost an advertising – and by extension, content – platform. Microsoft built value around an ecosystem and interoperability of businesses inside that ecosystem. What’s interesting about the Apple affiliate decision is, since there wasn’t any particular urgency to making the change, it suggests Apple is shifting their strategy to take more control over content around their platform and not just what gets delivered through the store.

When the affiliate decision is long since forgotten, that strategic shift may prove to have been meaningful.

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