Also: "Cue says Apple will keep the existing royalty rates it has already hammered out with the three major music labels for subscribers."
It's worth nothing that by "higher rates" we are talking about a hundredth of a cent per stream.
You can't hand out other people's stuff for free and then refuse to pay anything because you didn't make any money from it. And I'm saying that as someone who thinks the current copyright system is incredibly broken.
It doesn't matter how much money you make. You're using someone else's property and that's what you pay license fees for. Although I generally object the equivalence of physical and intellectual property -- this isn't any different from selling physical goods:
If you want to give a thousand records away practically for free, you still have to buy the thousand records and the producer has no obligation to give you a discount just because you're not going to make money with it. Not even if you have to pay for the cars to pick up and drop off the records and the wages of the people delivering the records. If you want to burn your own money, nobody is stopping you. But don't ask other people to add their money to the pyre for free.
Plus, there's the fact that Apple Music will cannibalize a lot more iTunes sales than Spotify does.
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, 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
 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.
1) most producers are DJs as well, and often (or at least historically) singles were used as much to promote the DJ as they were a revenue stream.
2) the few producers that weren't DJs were also engineers for other DJs who weren't very good in the studio. Thus they made their money engineering
3) most clubbers wouldn't be interested in a 7 minute unmixed single of their favourite club track. So the single sales generally go to other DJs (and there's thousands of DJs who never make it out of their bedroom - so the DJ scene is considerably bigger than it sounds).
The modern EDM scene is likely a little different these days since many EDM DJs are now also pop artists. But I think they still essentially follow this model.
Someone did the math and came to a different conclusion: https://www.baekdal.com/opinion/taylor-swift-is-right-about-... . 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.
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.
 Thomas Baekdal's arithmetic and logic:
If we assume Apple Music will have $10 billion in revenue per year, we get this:
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.*
The costs of trial offers are to be born by the company attempting to obtain subscribers or long term service. You don't have other people bear that cost for you, let alone product you have no legal right to profit off of.
I know, its a trial, how can their be profit. The profit is in the idea they will get a subscriber from the trial which is where the risk comes from. Apple should be taking the risk getting subscribers, not artist Apple chooses to play during the trial
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.
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.
This is about a handful of artists grabbing a little more money, period.
As for Spotify et al, label artists can't opt out. Their contracts won't let them. The reason Taylor Swift's current album isn't on any streaming services is because she makes a ton more selling it and streaming would cannibalize sales. And her current album (and only her current album) she did without a major label... so she's one of the few that gets to make that call.
Streaming services want current music to get and keep subscribers. Musicians want their latest music to be sales and their back catalog streaming (ala Netflix, etc) to maximize income.
This has been far, far better marketing exercise than their WWDC keynote.
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.
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.
Far more likely than apple planning this with her is apple anticipating her reaction (or if not her, somebody. Jay Z likes to make noise about streaming royalties too). Either they get a reaction from a celebrity and get to dominate the news cycles with their new product for a while, or they get to set a new precedent of not paying artists. Either way, apple wins.
No one did anything. A thing happened, it backfired, some people sat down and figured out a solution, are still richer then you will ever be at the end.
TS, her lawyer, some top guys in Apple and their marketing division? It could very realistically be less than 5 people.
I don't say I support the theory, just want to point out that it doesn't take much to write an open letter and then respond to it on Twitter.
From what authority do you speak on this topic?
TS has so far given me the impression of being business savvy and if I'm charitable to assume competence of her management company, I'd assume she would shy from legal minefields
Given the above priors, my estimation is that her lateat blog-post (like all others) was vetted by publicist(s) & legal advisor(s). YMMV.
I could similarly claim "OS X El Capitan is being QA tested six ways to Sunday" without being in Cupertino. You could ask me for proof and I would have none.
It doesn't require everybody to be in on it to execute this. It only requires one entity and that's apple.
Apple pings indie artists they know will get mad. The singer of the brian jonestown massacre is known for his rants. They get a bunch of people pissed off "Free music.. free music..." and wait for it to go viral. Then, flip the script and campaign done.
But again, i think they just did a good job of turning this nightmare into a positive.
Wearing my altruistic tin-foil-hat, I would argue that Apple wanted to pay indie artists all along (because it's art and they respect them!), but were afraid of the antitrust implications of doing that (re: ebooks litigation). So they made this deal (of not paying artists) to go public, knowing it will 'backfire' and Apple would have the grounds to 'reverse' their decision and pay artists.
swift has a lot of influence on her fans. It's not a minor threat that apple is facing.
a) Successful secrecy of new product development at Apple
b) Snowden revelations
c) Other things that we don't know about because people can keep their mouths shut
Now days pretty much every Apple product leaks in some way prior to announcement. From manufacturing CAD schematics to actual hardware prototypes.
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.
It's nonsense to think Occam's Razor is a kind of proof.
1. People care enough about what's being kept secret, e.g. the Apple Watch. As a result, it leaks and the agreement didn't work.
2. People don't actually care about what's being kept secret because it's really boring, e.g. almost every corporate agreement. So yeah, nobody talks, but that's because nobody cares.
Independents claim they could be forced out of business by free trial of new streaming service and withold popular artists such as Adele
This was the british press about 5 days ago, so I don't think it was that cynical. TS seems to have been the straw tha nudged the issue over the top.
Losing adele and taylor swift starts to give the product a black eye at some stage.
Apple has $$$$ plenty in the bank to subsidze a 3 month operating loss (or whatever).
Case in point: a mere six months after it launched, iTunes Radio had more listeners than Spotify:
Once they unify everything under Beats & iTunes Radio and make it an in-your-face feature of iOS, they'll have all the visibility they need. No reason to engage in some weird false-flag PR campaign like you describe.
Taylor Swift has previously not put her music on other streaming services (despite them paying artists during the trial period); I wonder if she'll consider Apple Music for streaming now that they've changed their terms on this point (and if she does, will she also put her music on other streaming services?).
You mean, except until yesterday where your plans said otherwise ? :)
That way they can be brief and don't have to expand on the nuances of the issue. People would rather hear "We were wrong and we've fixed the problem" rather than: "We planned the service to balance human/monetary factors such as x and y, but due to bad PR we've changed the way we're doing z. We thought it was a good idea originally because...".
Can anyone remember a time Apple reversed a business decision, or promised to fix some kind of technical issue, this quickly? (Critical security flaws notwithstanding.) Certainly not when Steve 'Hold Different' Jobs was still alive.
While Apple has a lot of things going for it, SaaS hasn't ever been their strong suit. Spotify's entire business is streaming music. Apple's streaming music service is a small fraction.
Regardless, now Spotify is in the crappy situation of Apple having some top albums they don't have, and Apple offering it for free (to subscribers).
You really don't want to get into a $$$ fight with Apple.
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)
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!
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.
It does not at all seem clear that you're going to convert a ton of free users - like you said in a child comment, there are numerous other places where people can stream music for free. It seems like an admirable goal, but then that's how Spotify pitched it's model to begin with as well.
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.
"Apple won’t pay music owners anything for the songs that are streamed during Apple Music’s three-month trial period, a bone of contention with music labels during negotiations for the new service. But Kondrk says Apple’s payouts are a few percentage points higher than the industry standard, in part to account for the lengthy trial period; most paid subscription services offer a free one-month trial."
the ONLY thing i can find is:
> In many ways the deal structure is very progressive, but unfortunately it was created without reference to us, or as far as we know any independents...
>At the moment we do not have an agreement with Apple Music that would allow us to participate in the new service.
so what does that mean? does it mean they are upset because they won't be getting paid, or does it mean that they are upset because their content won't be on the new service?
the above article was cited in
>The group’s main problem is with the three-month free trial Apple is offering to users when it launches on June 30. During that time, artists won’t be paid anything when their music is played on the platform.
however, the blog post they cite doesn't at all say that. it says they won't be a part of the new service.
I mean, it's also possible that Eddy Cue's Twitter account was hacked by Taylor Swift, well known infosec thought leader that she is. Why is nobody reporting on the real story here??
And here's the 'real story' you're talking about. [laugh] It seems like Infosec Taylor Swift has changed her(his) Twitter handle...
> Cue says he talked to Swift today about the change. “I did reach out to Taylor today, and talked to her, and let her know that we heard her concerns, and wanted her to know that we were making changes,” he says. “She was thrilled to hear from us and that we were making the change, and we were grateful for that.”
Why would Apple contact Taylor Swift to let her know they were making changes if they weren't, y'know, making changes?
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.
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.
Could be a bit of a stretch, and this note wouldn't be made public if she didn't sign off on it, but I think this is more measured than an artist just pushing for revenue.
When she previously removed her album from Spotify she implicitly let it be known what her motivations were: maximizing her own revenue, even if it was at the expense of other musicians. End of story. She would rather you give your $12 entirely to her instead of Spotify (or another album), which spreads it around. And I'm totally fine with that decision since she might seriously be the only musician alive with enough juice to get away with it. But the point remains that she's already made her motives perfectly clear, so when she wrote that letter to Apple it was purely about making sure she got paid during that three month trial. Of course, other artists will get to ride her coat-tails some, so she played up that angle and pretended it was a moral crusade. If she tells Apple, "Tell you what, take the money you'd pay me during those three months and distribute it evenly to everyone else." then I'd applaud her. Until then, she's a hypocrite going after more money.
Apple is offering a 3 month free trial in order to win market share for their service from the established streaming services. Doing that benefits Apple but does not benefits artists.
Say I'm a Spotify subscriber. I cancel my Spotify service and switch to the Apple service. Artists suffer a 3 month gap in revenue during which they're not being paid either by Spotify or Apple for my listending to their music. The only people who really benefit are Apple who now get a split of the revenue instead of spotify, and the only people who really lose out are the artists who lost 3 months pay.
There's no reason artists should have to forgoe revenue in order to benefit Apple in that way.
There is give and take to every deal. Telling artists, "you make money when we make money" is perfectly, 100% reasonable, especially considering each side was bringing important things to the table.