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The changing musical landscape: iTunes Radio, declining digital sales, Beyonce and more

The changing musical landscape: iTunes Radio, declining digital sales, Beyonce and more | Music Business - What's Up? | Scoop.it

In 2013, for the first time since the iTunes Music Store launched in April of 2003, digital music sales experienced a decline. The news comes courtesy of Billboard which reports that digital track sales dropped from 1.34 billion units in 2012 to 1.26 billion units in 2013, a 5.7% decrease overall. With respect to full-album sales, the statistics aren't as grave. In 2012 digital album sales checked in at 117.7 million units and only dropped to 117.6 million units in 2013, a minor decrease of just 0.1% year over year.

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Is Spotify Killing Music?

Is Spotify Killing Music? | Music Business - What's Up? | Scoop.it

For some artists, the situation is all too much. “There are tons of musicians who are leaving the business,” said Rebecca Gates. “In droves.” In the long term, the exodus will hurt us all, from musicians to consumers to the streaming services, according to some.                                          

“We’ll get the culture we pay for,” Ribot said. “I don’t think people will care if it’s just artists getting hurt. But this is going to be destructive to our culture.”

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All Ears: Multicultural Consumers Are Shaping the Future of Music

All Ears: Multicultural Consumers Are Shaping the Future of Music | Music Business - What's Up? | Scoop.it

African-Americans, Asian-Americans and Hispanics—the “Multicultural” consumers—are taking the music industry by storm. According to current U.S. Census Bureau projections, the American consumer is increasingly the multicultural consumer; forecasted to become the majority of the U.S. population by 2043. Given that Multicultural consumers account for 31 percent of the total spend on music and, on average, spend $7 more on music than the total market, this growing group is increasingly influencing the music market.

 

Not only are these consumers shaping the musical taste of the U.S. population as a whole, but they're also creating new and innovative ways to discover, buy and share music. Companies that wish to understand the future of music need to pay close attention to this growing demographic's consumer habits.

 

Fifty-three percent of the Multicultural population is under age 35, compared with 45 percent of the country's total population. And within the critical Millennial generation, 40 percent are Multicultural. Multicultural Millennials are young enough to consider music an essential component of their lives and old enough to have money to spend on it. And with these young consumers leading trends in smartphone use, online streaming and social media, they've become an essential asset to the music industry.

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Streaming Music Reduces Artist Revenue and Waters Down Creativity - hypebot

Streaming Music Reduces Artist Revenue and Waters Down Creativity - hypebot | Music Business - What's Up? | Scoop.it

Op Ed by John Dilley from HighSpeedInternet.com. When iTunes launched 10 years ago, it became the model for buying and legally downloading music. Soon services like Spotify came along and changed the game from a purchasing model to a licensing model. How has this changed the industry? For consumers it’s great, but for the music industry it’s meant tons of competition at the bottom, a vanishing middle, and more corporate domination at the top. 

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Music Industry Blog

Music Industry Blog | Music Business - What's Up? | Scoop.it
What Future For The Album In The On-Demand Age?

Playlists and individual tracks have become the dominant consumption paradigm. Even music piracy has moved away from the album to smaller numbers of tracks, with free music downloader mobile apps and YouTube rippers now more widespread than P2P. This is the piracy behavior of the digital natives who have no need to hoard vast music collections because they know they can always find the music they want on YouTube or Soundcloud if they want it.

The behavior shift is clearly evidenced in revenue numbers. Since 2008 alone US album sales (CD and digital) have declined by 22% (IFPI), while digital track sales outpace digital album sales by a factor of 10 to 1. The top 10 selling albums in the US shifted 56.4 million units in 2000.  In 2013 the number was 14.7 million (Nielsen SoundScan). Even more stark is the contrast between playlists and albums on streaming service. Spotify has 1.5 billion playlists but just 1.4 million albums (see figure). While the comparison is not exactly apples-to-apples (album count is a catalogue count and playlist count is a hybrid catalogue / consumption count) it is nonetheless a useful illustration of the disparity of scale. (In fact the 1.4 million album assumption is probably high due to a) duplicates b) singles and EPs c) compilations.)

 

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Exclusive: Spotify Crosses 11 Million Paying Subscribers... - Digital Music News

Exclusive: Spotify Crosses 11 Million Paying Subscribers... - Digital Music News | Music Business - What's Up? | Scoop.it
  Spotify has now reached 11.2 million paying subscribers, according to research just shared by Statistic Brain.  In May of this year, Spotify crossed the...
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Apple’s Beats Acquisition is Looking Even More Brilliant (AAPL, GOOG, GOOGL)

Apple's (NASDAQ: AAPL  ) decision to acquire Beats looks great in the face of declining digital music sales. A recent report from Nielsen reveals that music downloads continue to wane -- compared to the first six months of last year, digital track sales are down 13%.

 

Nielsen called out on-demand streaming services specifically as helping to spur the decline of the digital music download business, noting that on-demand streaming song plays were up 42% through the first six months of the year (compared to 2013).

 

Can Beats replace iTunes?
Beats Music has only a fraction of Spotify's subscribers, but under Apple's management, it could quickly grow its share of the market. Likely because of its deep integration with Apple's devices, iTunes Radio now accounts for about 8% of the streaming music market, up from nothing last year.

 

As on-demand streaming rises in popularity, Beats subscription service could offset, or perhaps even replace, Apple's iTunes business.

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The great irony of Silicon Valley’s curated-music craze | EW.com

The great irony of Silicon Valley’s curated-music craze | EW.com | Music Business - What's Up? | Scoop.it

After years of investing in algorithms that can figure out that someone who likes the Beatles would probably also be interested in Creedence Clearwater Revival, which has helped the online radio behemoth Pandora claim 250 million users, the tide has turned. “Curation” is now the buzzword du jour.

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You Won’t Believe How Bad Album Sales Have Got In 2014

You Won’t Believe How Bad Album Sales Have Got In 2014 | Music Business - What's Up? | Scoop.it

The latest data from Nielsen Soundscan, tracking album sales, singles sales, airplay, streams, and digital downloads for the six month period from 30th December, 2013 through to 29th June, 2014 shows a general trend in the American music sector that mirrors Australia’s 2013 sales year, it’s worst decline ever.

 

Generally, while the revenue from digital music sales and subscription based streaming platforms continues to grow, the concern is that it doesn’t seem to be happening at a pace quick enough to offset the sharp decline from physical music.

 

As Billboard reports, compared to last year, the first six months of 2014 saw overall album sales dropping 14.9%, from 235 million (in 2013) to 227 million. That includes digital album sales, which reached 113.2 million units in the first half of 2014, a decline of 15.9 million from the 129 million tallied in the equivalent sales period in 2013.

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How 12-24 Year Olds Discover and Consume Music [CHART] - hypebot

How 12-24 Year Olds Discover and Consume Music [CHART] - hypebot | Music Business - What's Up? | Scoop.it

How 12-24 Year Olds Discover and Consume Music

Catherine Hol's insight:

American only data, I presume.

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Moses Supposes: - Will Music Streaming Kill The Music Business For Good? - Moses Supposes:

Moses Supposes: - Will Music Streaming Kill The Music Business For Good? - Moses Supposes: | Music Business - What's Up? | Scoop.it

In 2001 the Internet community declared the music industry DOA, predicating total decimation by illegal P2P file sharing services within five years. The major record labels disagreed.

 

Today, after a decade of lawsuits and lobbying major labels make about the same revenue from albums while selling 30% less units then they did in the pre-Internet era. (1989-2000: $48.6B, 2001-2011: $53.3B)

 

Tortured album sales (which inched ahead since 2010 with the death of the two biggest illegal P2P services: Limewire and Kazaa) has inspired cost-cutting in the supply chain, thus reducing royalties and fees paid to music creators. Net result: the industry has hovered at $10 Billion a year and thus-far survived the Internet transition many other industries have failed to do.  Score one (a big one) for the majors.

 

But will it matter?

 

The latest music Armageddon theory is that subscription based streaming services like, Spotify, MOG, Last.fm and Rdio  (“Streaming”) will cannibalize recording artist’s main revenue: ownership, both of physical CDs and downloads from stores like iTunes and Amazon.


Why buy and maintain files if you can stream them on demand any time, anywhere, through any device for nine bucks a month?


The industry jargon for this is called going from an “ownership model to an access model.”


But, even if labels and artists saw half of that nine dollars from “access” and even if 1 in 2 people in the US subscribed (and those assumptions are optimistic) that would reduce the gross revenue down from $10 Billion a year to $6.3 ($4.50 X 150M X 12). More doom and gloom for the music trade, right? Nothing new here, except that this time–strangely enough–major labels are supporting this agenda.

 

Why? Streaming/access pays far less than direct sales and it contributed to only 0.3% growth in 2012 according to the IFPI. Yet the majors are embracing this fractional medium while the technocrats still call labels dial-up dinosaurs.

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What’s in the latest issue of Music & Copyright?

What’s in the latest issue of Music & Copyright? | Music Business - What's Up? | Scoop.it

This issue details the latest financial results for the world’s two biggest music groups, UMG and SME. Vivendi, parent company of UMG reported a 9.8% year-on-year fall in revenue for UMG in 1Q14. At constant exchange rates and excluding the impact of the sale of the Parlophone Label Group, revenue dipped just 2%. Vivendi said that recorded-music sales benefitted from significant growth in subscription numbers and streaming, but the gains fell short of compensating for lower download revenue and the continued decline in sales of physical formats.

 

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Business Matters: How Amazon Could Have ‘Tens of Millions’ of Paid Streaming Music Subscribers Instantly

Business Matters: How Amazon Could Have ‘Tens of Millions’ of Paid Streaming Music Subscribers Instantly | Music Business - What's Up? | Scoop.it

Last week’s leak of an Amazon music licensing contract (posted on Digital Music News) made explicit mention of the Seattle-based retailer’s plan to launch a subscription service, possibly as soon as later this spring. Details remain scant, but the document suggests that Amazon plans to bundle streaming music with its other services -- likely including Amazon Prime, its annual subscription program that gives users free two-day shipping from its online store along with unlimited access to a rotating catalog of streaming videos and a virtual lending library for books.

 

That’s bad news for the many standalone services that have appeared over the past several years: Spotify, Beats Music, Rdio, Deezer, and comparative granddaddy Rhapsody, launched in 2001. (These on-demand services differ from Pandora, which doesn’t allow users to choose specific songs and pay substantially lower royalties.) As each service has added new features, arrived in new territories and converted free users to paying customers, signup rates have accelerated. Not every company releases subscriber numbers, but Spotify is generally assumed to be the leader; it claims at least six million paying customers among 24 million active users (although it hasn’t released updated figures for a year). At $10 a month, most digital music subscribers pay roughly $120 each year for desktop and mobile access, though plans and territorial prices vary.

 

But if Amazon, for example, were to bundle a music service with its Prime memberships, whose price recently increased from $79 to $99 annually, the retailer would instantly rank among the world’s largest on-demand music services. Amazon won’t say exactly how many Prime members it has, but in a December statement, it claimed “tens of millions,” with the plural number suggesting at least 20 million. That would be more than three times Spotify’s paying customer base, and in the ballpark of its total (free and paid) user base, per its March 2013 figures. Amazon has also said it added “millions” during the third quarter of 2013 alone.

 

By bundling product shipping, video, and music together, Amazon can deftly hide the price of each of the services from consumers, encouraging them to buy all instead of none -- and overcoming signup barriers music services have always faced. (Bundling has stimulated subscriber growth in the past, most typically via mobile deals.) If Amazon can strike deals with record labels and obtain rights to a library of about 20 million songs as other streaming services offer, it may also be able to absorb content acquisition costs at a lower price per consumer.

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Record Store Day Retailers Report Big Spikes, Best-Ever Sales

Record Store Day Retailers Report Big Spikes, Best-Ever Sales | Music Business - What's Up? | Scoop.it

In a week when overall U.S. album sales were down 2.2% over the same week in 2013, the independent record store sector collectively rode the Record Store Day sales bonanza to an 11.2% gain, according to Nielsen SoundScan (charts below).

 

Indie stores represented 19.4% of the total U.S. volume of all physical album sales this week, the sector's highest share since SoundScan started tracking sales by store strata.

 

Moreover, within album sales, the indie store sector saw its vinyl album sales grow a whopping 57.5%. Finally, numerous record stores report that it was their best day ever.

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Spotify's latest partnership helps musicians sell 'experiences' to fans

Spotify's latest partnership helps musicians sell 'experiences' to fans | Music Business - What's Up? | Scoop.it

Spotify has added a new way for musicians to make money from its streaming music service, through a partnership with US company BandPage.

 

The pair have teamed up to enable artists to sell “VIP experiences” to fans from their Spotify profile pages, including access to exclusive concerts, meet’n’greets, Skype conversationsand limited-edition merchandise.

 

Country artist Miranda Lambert, pop singer Ariana Grande and dance star Porter Robinson are among the first musicians to take advantage of the new feature, which will sit alongside existing ticket and merchandise sales on their profile pages.

 

The experiences are similar to those offered by musicians as part of crowdfunding campaigns on sites like Kickstarter, although in this case, they’re being sold rather than offered as rewards for pledges.

 

Spotify is not the first streaming music service to work with BandPage in this way. In September 2013, it announced a similar partnership with US service Rhapsody. More than 500,000 musicians have profiles on BandPage already.

 

For the Spotify launch, fans can pre-order Grande’s new album for $9.98 and get access to an online stream of her concert debuting its songs; pay $39.99 to meet Robinson during his upcoming tour and get a mask prop from a recent video; or buy Lambert’s $25 t-shirt and beer-cooler bundle.

 

Other examples include US band Tea Leaf Green charging fans $200 to collaborate on one of their own songs with its drummer and producer, and The Stone Foxes charging $30 for fans to watch soundchecks and meet them on their next tour.

 

“Offering direct-to-fan experiences represents a massive opportunity for musicians,” BandPage chief executive J Sider told The Guardian, citing a report from research firm Nielsen suggesting that this area could be worth up to $2.6bn a year to artists.

 

“At BandPage, we’ve seen bands increase their net revenue by as much as 25% by adding experiences like VIP backstage passes, online concerts, custom recordings and more. And fans absolutely love the opportunity to connect with their favourite artists in this way.”

Spotify’s director of artist services Mark Williamson told The Guardian that the new experiences feature will be live in nine countries today – the US, UK, Ireland, Australia, New Zealand, Denmark, Sweden, Norway and Iceland – with more to follow.

 

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Here's What 13 To 40 Year Olds Claim About Their Experience Of Music - hypebot

Here's What 13 To 40 Year Olds Claim About Their Experience Of Music - hypebot | Music Business - What's Up? | Scoop.it

This week the Viacom Music Group released research finding regarding the "Music Experience" of today's 13 to 40 year olds. It's an interesting study with plenty that will be taken out of context leading to confusion (which isn't a bad thing if the confused people are your competitors) and some really interesting points that may not be pursued. Even so, the report paints an intriquing picture of what today's young yet soon to be old people have to say about their experience of music. Viacom shared their research findings in a blog post this week. 

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Lost Art of Negotiation: Part II – How Binge-Watching Netflix Is Bad For The Music Business | Substream Magazine

Lost Art of Negotiation: Part II – How Binge-Watching Netflix Is Bad For The Music Business | Substream Magazine | Music Business - What's Up? | Scoop.it

In a 2013 survey conducted by Harris Interactive, 78% of American adults confirmed that they watched TV on “their own schedule.” In other words, the majority of Americans are choosing to by-pass scheduled television programming for the convenience of on-demand TV on their computers. For the tech industry, this practice has launched a competitive market for streaming on-demand media providers that have given viewers quality content such as Orange is the New Black and House of Cards. However, for the music biz, watching television on the internet has taken its toll on songwriters’ income.

According to IFPI, revenues for synchronization licenses (see Part I for more information on these guys) decreased by almost 4% in 2013. Les Scott, who specializes in placing music in television and film for over 350 artists, remarks that revenue from sync will keep “going down and down and it will only continue to do so.”

 

Why is this the case and what does America’s habitual love for internet TV have to do with it? Scott explains that performance rights organizations (PROS), such as ASCAP, BMI, and SESAC, negotiate a flat fee (known as a “blanket license”) with television networks for the right to use a copyrighted work that is controlled by that particular PRO. Since the negotiations were established, the value of a blanket license has historically increased as more and more people started watching television. More viewers meant more advertising sales for the networks and, in turn, meant that the networks were willing to fork over more cash to the PROS to play their tracks in their TV shows. It wasn’t until recently that the revenues from sync began to decrease.

 

Scott argues that the problem arose when “viewers elected to go away from their television set and go watch things online.” As shown by a fall in TV subscriptions by more than a quarter million dollars in 2013, many Americans are finding it easier to pull up their favorite shows on their own schedules than accommodate television’s non-adjustable air times. The decreased amount of viewers on traditional cable, fiber, and satellite services has created a domino effect wherein companies negotiate lower prices for advertisement sales, allotting less in advertising revenue to television networks, and, thereby, driving down the bargaining price of blanket license fees. “[Networks] have less money when [PROS] come to the table,” explains Scott. “As a result, [PROS] are getting less money. Therefore [copyright holders] are getting less money because [PROS] are getting less money.”

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Indies Unite! 700 Labels Launch Campaign For Fair Digital Music Deals - hypebot

Indies Unite! 700 Labels Launch Campaign For Fair Digital Music Deals - hypebot | Music Business - What's Up? | Scoop.it

An ongoing battle with YouTube over alleged heavy handed negotiating tactics and unfair terms for their unlaunched subscription music service, has united the global independent music community on the broader issue of fairness in all digital deals. In a not so veiled jab at YouTube and other digital services, global indie trade group WIN has released an open letter signed by more than 700 independent labels that calls for fair digital music deals.

 

"The big print giveth and the small print taketh away.” 

That line from Tom Waits headlines the Fair Digital Deals Declaration, an open letter which calls not just for more transparency both between digital music services and labels, but also between the labels and their artists. Indie labels signing on include Domino Recordings, Beggars Group and Secretly Canadian.

 

The five key points of the manifesto are:

We will ensure that artists’ share of download and streaming revenues is clearly explained in recording agreements and royalty statements in reasonable summary form.We will account to artists a good-faith pro-rata share of any revenues and other compensation from digital services that stem from the monetization of recordings but are not attributed to specific recordings or performances.We will encourage better standards of information from digital services on the usage and monetization of music.We will support artists who choose to oppose, including publicly, unauthorized uses of their music.We will support the collective position of the global independent record company sector as outlined in the Global Independent Manifesto.
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The 100 Most Pirated Music Releases... - Digital Music News

The 100 Most Pirated Music Releases... - Digital Music News | Music Business - What's Up? | Scoop.it
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The Great Music Industry Power Shift

The Great Music Industry Power Shift | Music Business - What's Up? | Scoop.it

The long drawn out demise of recorded music revenue is well documented, as is the story of artists, labels and managers all trying to make sense of a world in which music sales can no longer be counted upon.  But the contraction of recorded revenue has occurred at the exact same time that the live music sector has undergone a renaissance.  The net effect, when coupled with publishing revenue holding its own and  the growth of albeit modest, merchandise revenue, is that the global music industry has largely held its own, contracting by just 3% between 2000 and 2013 (see figure).

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Here’s why the labels really want a stake in SoundCloud

Here’s why the labels really want a stake in SoundCloud | Music Business - What's Up? | Scoop.it
SoundCloud is reportedly negotiating with major labels, offering them an equity stake and per-play fees in exchange for being able to use their music. This means the service is about to copy YouTube’s licensing strategy.
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Streaming Isn't Saving the Music Industry After All, Data Shows... - Digital Music News

(source: RIAA) Yes, streaming is reversing recording industry declines… in countries like Sweden and Norway.  But it’s still not happening in the largest music markets,...
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Britain's media market set for solid growth - Tech City News

Britain's media market set for solid growth - Tech City News | Music Business - What's Up? | Scoop.it

There are more positive signs for our entertainment and media sectors as a report by PwC has revealed Britain will retain its place as the second biggest entertainment and media market in Europe, the Middle East and Africa.

 

Germany is currently leading but the UK is expected by grow by 3% annually.

 

The growth comes despite a the decline in physical music sales and shows the strength of some of the other entertainment and media sectors. As digital music sales have failed to take up the slack, other sectors are flourishing and helping the market grow.

 

The fastest growing areas will be internet advertising, internet access, out of home advertising, video games and TV advertising.

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Amazon's Streaming Service Launches in the United States... - Digital Music News

Amazon's Streaming Service Launches in the United States... - Digital Music News | Music Business - What's Up? | Scoop.it

  We recently covered the expected launch of Amazon Prime’s music streaming service. The expected time of launch was June or July. Expectation has become reality.  Amazon Prime Music is now available in the U.S.

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A2IM Lobbies Congress, Argues Majors' Digital Compensation Rates 'Out Of Proportion'

A2IM Lobbies Congress, Argues Majors' Digital Compensation Rates 'Out Of Proportion' | Music Business - What's Up? | Scoop.it

A2IM, which represents approximately 325 indie labels in the U.S., has been lobbying Congress to re-examine music licensing in a filing submitted to the federal Copyright office last week.

 

A2IM accuses the major record groups of using their distribution muscle to extract a majority of the royalties from services such as Spotify and Pandora, leaving the indie labels to settle for whatever is left.

 

The group, headed by Rich Bengloff, claims indie labels represent 34.6% of U.S. marketshare, making them bigger than any of the majors, though leader Universal pockets the biggest paychecks because it claims 38.9% of the market, a figure the group argues is “fallacious” in the filing as it includes the shares of distributed indie labels which are responsible for the likes of Adele (XL), Mumford & Sons (Glassnote) and Taylor Swift (Big Machine).

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Indies Band Together to Challenge Major Distribution Model

Indies Band Together to Challenge Major Distribution Model | Music Business - What's Up? | Scoop.it
A powerful collective of five independent labels is ratcheting up the tug-of-war between indies and major-label-owned distribution companies with a new agreement that allows its members to keep their digital distribution rights.

The labels -- Beggars Group, Secretly Label Group, Domino, Merge and Saddle Creek, which have dubbed themselves the Independent Distribution Cooperative -- are longtime clients of Warner Music Group's Alternative Distribution Alliance. Billboard estimates they were collectively worth approximately $45 million in sales in 2013. Artists in their stables include Vampire Weekend, Arcade Fire, Arctic Monkeys, Bon Iver and Bright Eyes.

 

The IDC's unique arrangement with ADA delivers a blow to the business model of major-label-owned distributors and sets a precedent other indies may follow. One senior executive at an ADA rival calls the pact his "biggest nightmare."

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