APPLE IS SKILLED at attracting praise. Often, the tech giant deserves that praise. This is not one of those times.
This decision was a reversal of an earlier policy that became the center of controversy this weekend when megastar Taylor Swift wrote a blog post slamming Apple for its plan not to pay artists while Apple Music was in its trial phase. Sift said.
“It is unfair to ask anyone to work for nothing,”
She added that she would be withholding her most recent album, 1989—that of “Shake It Off” fame—from Apple Music.
Last week, BuzzFeed reported that Swift had pulled her wildly popular "1989" album from Apple Music because of the streaming service's decision not to pay royalties during its three-month trial period. That followed her decision last year to remove "1989" from Spotify because she didn't think the company gave enough money to artists.
Apple has always positioned itself as a company that stands by musicians. So Apple changed its policy. Cue wrote on Twitter.
“We hear you @taylorswift13 and indie artists. Love, Apple.”
Apple's Eddy Cue Tweets in response to Taylor Swift's music pullout (Click Image To Enlarge)
Swift responded saying she was “elated and relieved,” and Apple came out looking like the good guy in a crowded industry in which artists and the tech companies that profit from them are often butting heads.
Cue told Billboard in an interview today.
“We never looked at it as not paying them. We had originally negotiated these deals based on paying them a higher royalty rate on an ongoing basis to compensate for this brief time. But when I woke up this morning (Sunday, June 21) and saw what Taylor had written, it really solidified that we needed to make a change.”
And yet, the only change Apple is making is paying artists what they should have been paid all along. If Apple were really so pro-artist, would it have instituted a policy that withheld royalties from artists in the first place? It doesn’t seem surprising that artists would balk at the prospect of not getting paid. But Apple’s roots in the music industry run deep—all the way back to the birth of the iPod. It seems reasonable to believe that Apple thought it could get away with not paying because it didn’t think anyone would be bold enough to speak out against a company that is already such a force in music. And if anyone did protest—props to you, T Swift—the decision would be easy enough to reverse—and might even score Apple Music some good press.
Jeff Rabhan, an artist manager and chair of the Clive Davis Institute of Recorded Music at New York University, says.
“They only did the right thing because they got caught,”
A Band-Aid on an Open Wound
Apple has always positioned itself as a company that stands by musicians. With iTunes, it saved the industry from the Napster era of pirated music and has helped artists actually sell music even as streaming services threatened to shrink artists’ income. So while Rabhan applauds Apple’s decision to pay artists their fair share, he calls the original plan “a slap in the face” to musicians who have bought into Apple’s promise. Rabhan says.
“I think Apple felt that they could get away with it because they’re Apple. They felt the artists would just go along with it.”
Had Apple planned to do the right thing all along—that is, paid artists for their music—there wouldn’t have been a story. But its apparent change of heart has garnered big headlines—and more publicity for Apple Music. The company even got a full-throated endorsement from Taylor Swift out of it. That’s worth every penny of the millions of dollars Apple will now pay artists as a result of this change—millions, let’s not forget, that Apple can well afford.
'It’s the model that doesn't work.' - JEFF RABHAN
Meanwhile, smaller rivals like Spotify have been vilified by artists, including Swift, who pulled her music from Spotify in November 2014, arguing that artists deserved to make more from the platform.
Rather than bowing to Ms. Swift, Spotify CEO Daniel Ek wrote a blog post defending its royalty agreements, claiming that the company has paid $2 billion to labels, publishers, and music owners. That stance turned Spotify into the poster child for the ongoing battle between artists and streaming services, a reputation Rabhan says is not altogether warranted.
“They’ve (Spotify) become the beacon of the negativity surrounding streaming, but they haven’t specifically done anything wrong. It’s the model that doesn’t work.”
Spotify is still a young company, he argues, struggling to make a profit, and it pays about 70 percent of revenue to music rights holders. That’s not much different than the 71.5 percent Apple is paying. The only difference is Spotify’s future might actually depend on those margins. Apple’s does not.
For Apple to prove it truly stands with artists, Rabhan says, it would have to fundamentally change the way these contracts are negotiated, striking deals directly with the artists instead of music labels. Until that happens, he argues, Apple has done little more than “put a Band-Aid on an open wound” that cuts across the industry.
If anyone deserves the credit, Rabhan says, it’s Swift, who he says has emerged as the most unlikely advocate for artists’ rights. She’s not a crusty old-timer or an unknown artist with a lot to lose. She’s the most relevant star of our day, the person who needs the money least, but is using that power to stand up for emerging artists. Rabhan says.
“I would have never expected it to be her, but Taylor Swift is the voice of artists right now in a sea of silence.”
COMMENTARY: Taylor Swift also doesn't think music streaming services appropriately value her art.
In an interview for Time magazine's cover story in mid-November 2014, Swift commented on her decision to pull all of her songs from the streaming service Spotify.
She reiterated opinions she voiced in a Wall Street Journal op-ed in July, saying that artists should value their art and make sure that people are paying enough money for it.
Swift also notes that Spotify could hurt music sales. Music is available for streaming on Spotify even to those who don't pay for a premium subscription (those users are shown ads).
Swift told Time.
"[People] can still listen to my music if they get it on iTunes. I’m always up for trying something. And I tried it and I didn’t like the way it felt. I think there should be an inherent value placed on art. I didn't see that happening, perception-wise, when I put my music on Spotify. Everybody's complaining about how music sales are shrinking, but nobody's changing the way they're doing things. They keep running towards streaming, which is, for the most part, what has been shrinking the numbers of paid album sales. With Beats Music and Rhapsody you have to pay for a premium package in order to access my albums. And that places a perception of value on what I've created. On Spotify, they don't have any settings, or any kind of qualifications for who gets what music. I think that people should feel that there is a value to what musicians have created, and that's that. I wrote about this in July, I wrote an op-ed piece in the Wall Street Journal. This shouldn’t be news right now. It should have been news in July when I went out and stood up and said I'm against it. And so this is really kind of an old story."
Artists generally don't make nearly as much money putting their music on Spotify as they do selling digital albums and songs on services like iTunes.
Spotify says it pays 70% of its revenue to labels — which will amount to about $1 billion this year — but some artists feel they don't get a big enough cut. The streaming service revealed last year that it paid record labels an average of less than a penny per play, and that's just the money going to labels, not the artists.
Scott Borchetta, the CEO of Swift's record label Big Machine, told Time on Wednesday that the label earned only $500,000 from domestic streaming on Spotify in the past year. Spotify told Time that the amount the service paid for streams of Swift's music in the past year was actually $2 million if you account for global streams as well as domestic.
But it's unclear how much of that money was seen by Swift. Spotify paid the $2 million to Universal, which holds the rights to Swift's music, and then her label Big Machine got a cut.
CONCLUSION: KUDOS to Taylor Swift for becoming an unlikely lightning rod for music artists everywhere. She has become the "Joan of Arc" for all music artists by standng up to Apple. Score: Swift 1, Apple 0. Spotify needs to get its act together and change its royalty policy as well.
Whether the music labels will allow individual artists to negotiate royalty deals directly with Apple, Spotify and other online music platforms could be difficult to do since they incur a lot of costs to get an album produced, promotied and distributed. I am sure they will not give up their legal rights to the artist. Will this force artists to develop their own music production and distribution companies? That remains to be seen.