Taylor Swift Turns Activist On Apple

June 23, 2015 0 Comments

People often ask me why I purchase all of my music. Aside from the numerous laws against piracy and the penalties that occur, I believe in supporting work that I like. Unlike movies, I’m very picky and choosy about what artist can occupy space on my iPhone/iPad/MacBook.

Needless to say, if I like your stuff I’m going to support you as an artist. That means I’m going to purchase your music and if I dislike your stuff, I’ll pass on it. However, even if I really hate your music, I’m not going to try to download it off the internet for free.

Despite being grossly overpaid for providing nearly nothing to society (although, now debatable, considering the way we measure GDP now), I don’t ask musicians and artist for produce music for me for free. However, this is basically what Apple Inc. asked other artist and producers to do for three months.

At Apple’s Worldwide Developers Conference (WWDC), Apple unveiled their new music streaming service called ‘Apple Music,’ which allows users to select over 30 million songs in the Apple catalog, whether its on iTunes or from a ripped CD. Scheduled to start on June 30th, fees for the service cost as lost as $9.99/month, and $14.99 family subscription for up to six devices. However, Apple is offering a special promotion, which allows users to sign up for the first three months for free.

The problem: During that three month period, Apple isn’t going to paid royalties to artist for their music.

The biggest and most vocal critics of this policy came from Platinum recording artist, Taylor Swift, from an open letter on her Tumblr page. While most of it was a very interesting read, what hits it home are the last three paragraphs:

I’m sure you are aware that Apple Music will be offering a free 3 month trial to anyone who signs up for the service. I’m not sure you know that Apple Music will not be paying writers, producers, or artists for those three months. I find it to be shocking, disappointing, and completely unlike this historically progressive and generous company.

This is not about me. Thankfully I am on my fifth album and can support myself, my band, crew, and entire management team by playing live shows. This is about the new artist or band that has just released their first single and will not be paid for its success. This is about the young songwriter who just got his or her first cut and thought that the royalties from that would get them out of debt. This is about the producer who works tirelessly to innovate and create, just like the innovators and creators at Apple are pioneering in their field…but will not get paid for a quarter of a year’s worth of plays on his or her songs.

These are not the complaints of a spoiled, petulant child. These are the echoed sentiments of every artist, writer and producer in my social circles who are afraid to speak up publicly because we admire and respect Apple so much. We simply do not respect this particular call.

I realize that Apple is working towards a goal of paid streaming. I think that is beautiful progress. We know how astronomically successful Apple has been and we know that this incredible company has the money to pay artists, writers and producers for the 3 month trial period… even if it is free for the fans trying it out.

Three months is a long time to go unpaid, and it is unfair to ask anyone to work for nothing. I say this with love, reverence, and admiration for everything else Apple has done. I hope that soon I can join them in the progression towards a streaming model that seems fair to those who create this music. I think this could be the platform that gets it right.

But I say to Apple with all due respect, it’s not too late to change this policy and change the minds of those in the music industry who will be deeply and gravely affected by this. We don’t ask you for free iPhones. Please don’t ask us to provide you with our music for no compensation.

And what was Apple’s Response:

First, to address Taylor’s comments regarding Apple being a “historically progressive” company, I guess Swift isn’t too familiar with Apple’s business tactics. Avoiding taxes by using tax havens in Ireland, outsourcing majority of their production in developing nations, hoarding their cash overseas, etc. For such a progressive company, people would really think its unfathomable that Apple is getting people to work for free. But I’m going on a limb here and assuming that when Swift mean ‘progressive’ she mean’t ‘innovative & revolutionary.’

However, Taylor Swift is a huge recording artist. She’s won seven Grammy’s, has a minimum of at least 4 million unit of sales per album and a massive fanbase. Naturally, went she says something, people are bound to listen, especially a company such as Apple.

It’s almost as if Taylor Swift decided to channel in her inner Carl Icahn, the activist investor who often purchases a large number of shares to gain a position on the board and effect changes in the company. I’ve already mentioned in previous blog post how Carl Icahn is a big influencer in Apple’s share buyback program. In the same regard, Taylor Swift is capable of effecting changes in the company though her success and clout as a major recording artist.

While this may be a win for Swift, is this a win for the music industry in general, more specifically, the artist and producers Swift is advocating for? It’s pretty difficult to say, considering the streaming music business is still in its infancy, and there isn’t exactly a perfect business model firms can utilize to maximize returns for the streaming companies, record labels and artist.

The way it works is that streaming companies pass on revenue they gain from their subscriptions to the record labels before any of it gets into the hands of the artist. Pandara was the only publicly traded company in the streaming music business, before Apple decided to throw their hat into the ring. Despite their marketshare, the company is struggling to become profitable. So you can imagine how difficult it must be for any artist to retain any money for their work.

Spotify passes about 70% of its subscription revenues along to the music labels. Apple reports that it will pay a rate of 71.6%, according to the Re/Code source I’ve used before. After the record labels get their cut, artist can expect to collect anywhere from 0.6 cents and 0.84 cents for an average stream, according to Spotify. This means that a song has to be listened to 166 times minimum before an artist can see a single dollar.

From a business perspective, what Apple is doing totally makes sense. The streaming industry is a place you can go to for long-term income, however, you need the margins and the scale to become profitable. Apple had the idea to offer a free trial for three months to attract a consumer base large enough to provide royalties. However, since the open letter from Swift, they will be offering royalties at a rate lower than expected.

This may have put a damper on Apple’s plans to provide an alternative streaming service that could actually provide decent returns to all parties involved (streaming services, labels and artist), but from Taylor’s perspective, some money is better than no money at all.

So who exactly is correct in all of this? Taylor Swift is young, but I think she qualifies as a veteran in the music industry by now (at least, she knows much more about it than I do); however, Apple didn’t become a 700 Billion dollar Corporation by being clueless. One thing is for sure, Apple and Swift are fighting over mere pennies, and I’ve heard of sillier reasons to lose money.

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