
“AppleMusic will pay artist for streaming during customer’s free trial period” - jflowers45
https://twitter.com/cue/status/612824775220555776
======
JohnTHaller
Eddy Cue clarified that artists will not be paid at the streaming rate they
are paid during users paid memberships. They will be paid at a different rate
that isn't being disclosed: [http://recode.net/2015/06/21/apple-says-it-will-
pay-taylor-s...](http://recode.net/2015/06/21/apple-says-it-will-pay-taylor-
swift-for-free-streams-after-all/)

Also: "Cue says Apple will keep the existing royalty rates it has already
hammered out with the three major music labels for subscribers."

~~~
IBM
That's during the free trial period. The higher rates remain once people are
paid subscribers.

~~~
JohnTHaller
Right. But the trial could be significantly lower. They're not saying.

It's worth nothing that by "higher rates" we are talking about a hundredth of
a cent per stream.

~~~
MCRed
Yep. And it appears that the Artists, like the music industry, really don't
get that things have changed.

Hey, I'm old school. I can identify with them. I like to buy my music. I don't
get subscriptions where if I stop playing I can't listen to anything.... but I
find myself listening to podcasts-- 2 hour long podcast of EDM. My favorite
one has several _YEARS_ of podcasts and despite skipping months at a time I'm
still over a year behind. I'm not paying them anything[1], they're not paying
the artists anything (it's meant for promotion more than anything else.)

I did buy an album once.

So, even though my habits are different the industry has changed.

Apple is progressive. The whole point of the free trial is to get people
addicted to the service. In the long run Taylor Swift will make more money
from a free trial than if Apple offered the service without a free trial--
because more people will sign up and ultimately end up with royalties going to
Taylor.

I think it's hilarious that Apple is (as ever, of course) portrayed as the
bogeyman for trying to market a service that will make the artists more money.

Just like they are constantly derided for taking %30 of revenue (which is a
huge improvement over the often %95 and worse terms that you had to accept
before the iPhone came out).

Things have changed. I'll try this service and see if it changes my habits. If
Tayler didn't make out from it in 6 months then go ahead, complain away and
have some data to back it up.

But making a big to do about it now is kinda silly. Like people being mad that
Apple gave them a free U2 album. Sure they handled it clunky and If they do it
again I'm sure they will be better. But OH! Apple gave me free music!
#FirstWorldProblems

[1] near as I can tell, it's a record label that puts out the podcast and I
think it's their artists they're putting in it.

~~~
yabatopia
> In the long run Taylor Swift will make more money from a free trial than if
> Apple offered the service without a free trial-- because more people will
> sign up and ultimately end up with royalties going to Taylor.

Someone did the math and came to a different conclusion:
[https://www.baekdal.com/opinion/taylor-swift-is-right-
about-...](https://www.baekdal.com/opinion/taylor-swift-is-right-about-apple-
music) . Assuming Apple Music generates $ 10 billion in revenue per year,
artists never make up the cost while Apple saves $1.6 billion the first year
of Apple Music.

~~~
jasode
Thomas Baekdal's calculation model[1] is fundamentally flawed to conclude with
" _artists never make up the cost_ ".

Apple may be right or wrong with their optimistic projections but people need
to at least _understand_ the business proposition they are offering. The
concept of "making up the cost" has nothing to do with recovering the 3 free
months _from Apple_ as if it was a closed economic system. The idea is that
the musician recovers the 3 free months from _the entire music industry_
because Apple will have a wider audience and a bigger platform.

flawed model: get $0 for 3 months and never get it back whether the future
Apple payments total $1 billion, $10 trillion, or infinity.

Apple's model: get $0 for 3 months but you (potentially) come ahead because we
pay higher royalty AND we have the potential to convert a bigger % of 800
million iTunes accounts to paid streaming subscribers which will exceed
Spotify's 20 million subscribers.

In other words, the artist is supposed to make business comparisons based on:

\-- lost $$ for not being on Apple's platform and only providing music to
Tidal & Spotify

\-- more $$ from customers switching away from Spotify

\-- more $$ from new streaming customers that would never have paid for
Spotify but _would_ subscribe to Apple Music because the app is already
preloaded on the iPhone and there's less friction

(Each musician was supposed to weigh those bullet points to see if the _big
picture_ of skipping 3 months of payment made financial sense. It may or may
not.)

As an analogy, it's as if a merchant concludes that accepting credit cards
will "never make up the cost" because paying the monthly fees for the
VISA/Mastercard mag swipe terminal and the transaction rates of 2% will never
be paid back by the VISA/MC corporate entity. That's only true if one has a
bizarre concept of thinking of the payment network as a closed system.

However, rational businessmen think _outside of the CC payment system_ and
conclude that accepting credit cards is net positive because behavior analysis
shows that customers spend more when they can use a credit card instead of
cash or checks.

[1] Thomas Baekdal's arithmetic and logic:

    
    
      If we assume Apple Music will have $10 billion in revenue per year, we get this:
    
      First year: 
      70% royalty / no free trail = $7 billion to artists
      71.5% royalty / 3 months free = $5.4 billion to artists
      After five years:
      70% royalty / no free trail = $35 billion to artists
      71.5% royalty / 3 months free = $33.9 billion to artists
      After 10 years
      70% royalty / no free trail = $70 billion to artists
      71.5% royalty / 3 months free = $69.7 billion to artists
      So, the artists never make up the cost while Apple saves
      $1.6 billion the first year of Apple Music.*

------
batmanthehorse
First sentence of her letter was "I write this to explain why I’ll be holding
back my album, 1989, from the new streaming service, Apple Music."

So now, she needs to allow it on Apple Music or she'll look like a jerk. Apple
will have this album that no other streaming service has, and they got a ton
of press for it.

Probably worked out pretty well for them.

~~~
JohnTHaller
If she's smart, she'll still hold out. 1/2 a cent per play won't add up to
anywhere near as much as her sales are.

Correction: That estimate was based on the average Spotify rate over the last
few years. Apple has now said that the rate will be different during the trial
and isn't being made public.

~~~
bedhead
Except in her own words: "This is not about me." She is of course, lying. So
if she plays hardball with her own album's access, she will be exposed as the
liar she is. Streaming revenues matter to only but the top .1% of musicians,
so Taylor Swift leading the charge on this was a joke to begin with. It was
always about her, and Kanye West, and Drake, and the rest of music's elite.
It's like Bill Gates being the public face of abolishing the estate tax. Do
you think it's a coincidence that TIDAL, the streaming service that was
supposed to revolutionize the business, only had the world's wealthiest
artists on stage during its unveiling?

This is about a handful of artists grabbing a little more money, period.

~~~
robgibbons
And yet it's not OK to question Apple for doing the same? Every decision they
make is about gaining more power and money. More influence. More market. All
they care about is money, and they don't give two shits about the little guys.
Personally, I don't care about T. Swift, but I'm glad she used her fame to
combat Apple's power grab.

~~~
bedhead
Well, what I've learned by looking at comments and all my downvotes (despite
making perfect sense) is that people want Apple to pay musicians more, just
'cuz. Apple makes a lot of money and many artists don't, so, uhhh, like, pay
them more please. Oh well.

------
c-slice
Actually not that surprising, Taylor Swift was featured heavily in Apple's
promo video (first album art featured), so clearly contracts were in place. TS
was Apple's secret weapon and could be a key differentiator from Spotify. (TS
has no music on Spotify.) I think TS was in a really good bargaining position.
If she had pulled out, it would have been a big loss for Apple Music. Smart
Move.

------
ghshephard
The extraordinarily cynical side of me wonders if this is all just a massive
co-branding PR exercise to dominate the news cycle with "Taylor Swift",
"Apple", "Free Music", "Apple Music." Highly unlikely because it's not the
type of underhanded marketing that Apple engages in, but man - All I've been
reading about, seeing in my twitter feed, is talk about the 90 Day free Music
Trial with Apple coming up.

This has been far, far better marketing exercise than their WWDC keynote.

~~~
socrates1998
Wow, this analysis just seems right. They sign a deal with TS, get her to be
"outraged" then Apple does a 180 and then says it will pay the artists.

TS looks good and Apple gets a shitload of free press for their new music
service.

I feel dumber everyday I don't see this stuff happening.

~~~
jen729w
You don't really think this is the case, do you?

It's like any conspiracy theory: think about how many people would have to be
"in it" to make it work. Then think, what are the chances of _none of them,
ever_ letting anything slip. To anyone. Ever.

The chances are almost zero. People talk. The damage - to Swift, to Apple -
it's just too large.

Therefore, this is not what you think it is. There is no deeper story here.
Apple screwed up, Swift is influential, they probably thought they could get a
bit of good PR from changing their minds, and they did. End of story.

~~~
Eric_WVGG
Occam's Razor, man… the problem with conspiracy theories is that they require
everything to work flawlessly and EVERYONE to keep their mouths shut.
nonsense.

~~~
hellgas00
NSA was spying on people for years before it was made public, tens of
thousands of people had managed to keep their mouths shut. Collusion is a
thing that happens all of the time, and considering the money involved its
bound to happen again.

~~~
icebraining
No, it wasn't. In fact, many of us were surprised at the outrage of people
around here, since we thought it was common knowledge. Even the European
Parliament had issued a report back in 2000 about the widespread
communications/internet spying. See ECHELON.

See also Mark Klein's denouncement of their AT&T spying, which prompted a
lawsuit by the EFF back in 2006, charging them with having created an "illegal
and unconstitutional program of dragnet communications surveillance".

There had been plenty of leaks over the years.

------
timothya
Good for Apple. It's too bad it needed a really high profile artist to come
out against it, but I'm glad they could listen and make the right choice.

Taylor Swift has previously not put her music on other streaming services
(despite them paying artists during the trial period); I wonder if she'll
consider Apple Music for streaming now that they've changed their terms on
this point (and if she does, will she also put her music on other streaming
services?).

~~~
IBM
I hope everyone realizes that withholding 1989 was about a windowing strategy
to maximize overall revenue from iTunes downloads/CD sales. Now they've
essentially called her bluff and she'll have to cut that short when her music
is still selling like crazy 8 months later.

~~~
protomyth
I don't think she was bluffing as she has already withheld her album from
Spotify. If the follow up is correct, she can still withhold it as they are
not going to pay full royalties. This is attempted damage control for Apple on
a Sunday night and it looks ill handled.

~~~
IBM
The story then changes from "Taylor Swift making sure artists are compensated
for their work" to "Taylor Swift wants more money". Apple was never going to
pay royalty rates based on people that paid $10 a month for the service on
people that were paying nothing, asking that they do would make Taylor Swift
look poorly.

~~~
protomyth
The story changes to Apple is still going to short change artists to promote
its service. Taylor Swift will look fine as she has incredible fan loyalty and
communicates with her "customers" in a way Apple cannot.

~~~
IBM
Guess you didn't see the reaction to the Tidal unveiling. All those artists
have loyal fans as well.

~~~
protomyth
I did and it has nothing to do with this. Tidal has so many problems (e.g.
streaming rights to Beyoncé) and relations to other artists that the
situations are not similar.

~~~
IBM
The situation is absolutely similar because the outrage was about "rich
millionaires asking for more money".

~~~
protomyth
No one at Tidal said anything about Indy artists.

------
ekianjo
> Apple will always make sure Artists are Paid

You mean, except until yesterday where your plans said otherwise ? :)

~~~
SG-
Unless they always intended to pay them from the beginning and Taylor Swift
(or her managers) jumped to conclusions.

~~~
ekianjo
Actually they did not jump to conclusions, the trial wording about not paying
artists was VERY clear when Apple wrote it the first time around.

------
doctoboggan
I am surprised and impressed with how quickly Apple did this about-face. I am
also a little surprised that twitter was the medium they choose to announce
it.

~~~
cooper12
> I am also a little surprised that twitter was the medium they choose to
> announce it.

That way they can be brief and don't have to expand on the nuances of the
issue. People would rather hear "We were wrong and we've fixed the problem"
rather than: "We planned the service to balance human/monetary factors such as
x and y, but due to bad PR we've changed the way we're doing z. We thought it
was a good idea originally because...".

------
tfigueroa
"Pay artists" has a lot of room for interpretation. What does that mean? (I
work at Pandora, so I see this as an overly simple response.)

------
flashman
This just confirms to me what a big deal Taylor Swift is.

Can anyone remember a time Apple reversed a business decision, or promised to
fix some kind of technical issue, this quickly? (Critical security flaws
notwithstanding.) Certainly not when Steve 'Hold Different' Jobs was still
alive.[1]

[1] [http://www.engadget.com/2010/06/24/apple-responds-over-
iphon...](http://www.engadget.com/2010/06/24/apple-responds-over-
iphone-4-reception-issues-youre-holding-th/)

------
pasta_2
Spotify is truly fucked if Apple is going to pay during the free trial AND pay
higher overall royalties. When the negotiations come up again with Spotify,
who is already running increasing losses, things will just get worse.

~~~
balls187
I've been a spotify premium subscriber for a number of years now, and been
happy with it. Apple music seems interesting, and more competition is good,
however there isn't much that makes me want to switch just yet.

While Apple has a lot of things going for it, SaaS hasn't ever been their
strong suit. Spotify's entire business is streaming music. Apple's streaming
music service is a small fraction.

~~~
ghshephard
I was a Spotify Premium Subscriber, but then canceled when they didn't have
Mylo Xyloto. I'm wondering how many top albums missing it will take before
Spotify will restrict certain albums to their Paid Tier only.

Regardless, now Spotify is in the crappy situation of Apple having some top
albums they don't have, _and_ Apple offering it for free (to subscribers).

You really don't want to get into a $$$ fight with Apple.

------
w4
Well look at that - good on Apple for correcting course and doing the right
thing.

------
kdamken
I'm really glad to hear that they changed their minds on this one, though it's
sad they needed public shaming to do the right thing. Most people don't really
appreciate how hard it is to make money with music, nor the insane amount of
time and effort that goes into even a single, professional quality song. This
isn't a win for the big name, Taylor Swift type artists, but rather the ones
she mentioned in her blog post that are just trying to make ends meet, where
every penny and possible source of income counts.

------
a-dub
So if I were to sign up for this thing, and only listen to one indie artist,
would all the royalty money collected from me go to that artist (and related
rightsholders), or would it be the same crap we already have where good ol'
Taylor Swift gets a huge cut no matter what thanks to her "network effect"?

None of the press around Apple Music seems to even attempt to explain how the
royalty pie is actually cut up, and to me at least, that's by far the most
interesting part. (And why this space is ripe for disruption)

------
smegel
I wish he put ", period." at the end of that Tweet.

~~~
SG-
I think it could have used an exclamation point myself!

------
h_o
Apple must have calculated that her influence potential is greater than the
value of if the free streaming wasn't paying the artists.

I mean, she has almost 60M followers on twitter - ~20% of the US' total
population.

Now Apple can recalculate and pay them barely just enough to have their
original projections corrected. The free press is great - and they'll probably
even gain from it!

------
bobbles
It's great that they turned this around so quickly. I guess they realised that
having people talking about the service for the music instead of the payment
model would be better for them...

------
vermooten
Am I the only one who thinks that the Taylor Swift / Apple thing was just a PR
stunt designed to benefit both parties? Free advertising.

------
beaner
It's too bad, larger artists pulling their listings during that period could
have given less listened-to artists more promotion.

------
pablasso
Does anyone has numbers on Apple Music royalties? how do they fare against
Spotify, Rdio and the like?

~~~
IBM
They're higher at 71.5% in the US and 73% in the rest of the world.

[http://recode.net/2015/06/15/heres-what-happens-to-
your-10-a...](http://recode.net/2015/06/15/heres-what-happens-to-
your-10-after-you-pay-for-a-month-of-apple-music/)

~~~
plorg
I'm honestly surprised it's that low. I know the difference is supposed to be
that Apple Music accounts will all be 'paying'. But if they're only paying out
low-single-digit higher rates than Spotify, I don't see how it's supposed to
be meaningfully different than Spotify Premium or Tidal, except that people
paying for Spotify/Tidal through iDevices are paying $13/month instead of $10,
and $3 is still going to Apple.

And that actually makes the previous stiffing of artists an even more raw
deal. I had read elsewhere that the rate was rumored to be closer to 90%, and
at that rate it would take about a 10 months of someone subscribing to Apple
Music to pay out higher than Spotify Premium, which pays out at roughly 70%
(considering 3 unpaid months).

If you make the same comparison with Apple Music at 73% and 3 months
free/unpaid trial, Spotify at 70% and 1 month, it would take more than 4 years
before Apple paid out more. If you think you'll subscribe to either for more
than 4 years and you care about the artists, it might be worth it. But it's
going to take a long time.

If that payout number is correct, a conscientious consumer might as well
subscribe to Tidal (who pays out at a similar 70% rate), because they'd at
least get access to higher-quality tracks and the artists aren't getting payed
significantly more or less.

~~~
ghshephard
The Major Difference is Apple will not be offering an ongoing free tier to
compete against their paid tier. That's got to be attractive to people like
Taylor.

~~~
bestnameever
The free tier is supported by advertising..Does this not work well for the
artists?

~~~
ghshephard
The artists hate it - and the return is almost nothing. For example - look at
Youtube - you can stream _anything_ you want, including all of Taylor Swifts
catalog - zero to no advertising.

I was at a party this weekend with a bunch of 20 somethings here in Singapore
- and that's all they used - Nobody even mentioned Spotify - they just logged
onto the wireless and added their songs to the queue - it was slick and 100%
free (to the user) - and seriously, I don't recall a single ad in 3+ hours.

------
fezz
Cleverly played by Apple and Swift to force Spotify into the bad guy spot.

------
xname
"Music is art, and art is important and rare. Important, rare things are
valuable. Valuable things should be paid for. It's my opinion that music
should not be free" \- What a capitalist.

~~~
jevgeni
Is everyone's art equally valuable?

------
aamikalyan
That's what negotiating from the position of strength means.

------
jrlocke
One might say that their previous position was tone deaf

------
bedhead
I really, really lament Apple caving in on this. The deal they had before was
perfectly reasonable - everyone's interests were aligned and both sides
brought something to the table. Apple wasn't paying royalties during the trial
because it makes perfect sense to have a model that says, "you make money when
we make money." Besides, we all know that streaming revenues for everyone
except the top .1% of artists are largely irrelevant, especially during a mere
three month window.

It's obvious that Taylor Swift was motivated by one thing and one thing only:
maximizing her own revenue. That's it...and that's fine. But I cannot stand
her disingenuous "won't someone think of the children?!" nonsense. It's like
LeBron James publicly pleading for the NBA to share more of its revenue so
that the younger players can be better off in retirement, while leaving out
the fact that he'll personally take 90% of any incremental revenue. Taylor
Swift seemed so concerned about other people, but I sure don't see her
offering a pay cut or anything. Instead she successfully guilted Apple into
paying because they've got a ton of money. Pathetic.

~~~
nalsh
I'm trying to understand why you think it's bad that Taylor Swift tries to
maximize her own revenue, but it's fine that Apple does the same, using her
likeness and music to do so.

~~~
gambiter
This is the question all of the detractors need to ask themselves.

Honestly, when I first heard of the story (word of mouth) I immediately
thought she was not understanding how it really worked. I had flashbacks to
Metallica resisting streaming because they just didn't understand it. I
thought there was no way Apple _actually_ wouldn't pay artists during those
three months, so I dismissed it.

Then I realized she was right.

I wouldn't say I'm a Taylor Swift fan (at best, some of her music is fun to
listen to with my teenaged niece) but the amount of ire some people have for a
pretty person is just astounding. Yes, she's pretty. Yes, she sings about
things that tend to be targeted at teens, especially girls. But those points
don't change anything.

The letter accurately said, "These are not the complaints of a spoiled,
petulant child." I have no idea how many people are behind her persona (I
would guess it takes the equivalent of a small town) but I bet some of them
had a stake in helping craft the letter. This was a business-to-business
correspondence, even if it was written 'as a girl'.

At the worst, she's a logo for a company. At the best, she's actually got a
pretty solid sense of business. Either way, she has a right to use her persona
to make money.

~~~
bedhead
"All detractors"? Evidently I'm the only one :)

~~~
gambiter
Heh, I was sort of wrapping all of the negative comments I've seen (HN and
otherwise) into a singular reply.

