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Apple Music Reverses Position on Royalty Payments after Getting a (Taylor) Swift Kick in the Behind

by Michael Goodman | Jun 22, 2015

Taylor Swift is an immensely talented recording artist but who knew she was an equally adept businesswomen and that she wields as much influence as she does? Less than 24 hours after Taylor Swift penned an open letter to Apple on her Tumblr page, criticizing them for not paying royalties to artists during Apple Music’s three-month free-trial period Apple reversed its position. In her letter Swift wrote "We don't ask you for free iPhones. Please don't ask us to provide you with our music for no compensation."

Taylor Swift is not the only one who had serious reservation about Apple’s royalty plan. Independent labels such as XL Recordings (Adele) and Domino (Arctic Monkeys), while in negotiations with Apple did not see themselves reaching an agreement so long as Apple was unwilling to pay royalties during the free trial period. For a company that billed itself as a friend to musicians and the recording industry this was a funny way to show it.

Apple does not want to get into a battle with musicians during this critical launch period, particularly one who knows how to wield her influence as well as Taylor Swift. As a result, Apple reversed its position with Eddy Cue, Apple's Senior Vice President of Internet Software and Services tweeting out “#AppleMusic will pay artist for streaming, even during customer's free trial period,” further adding “we hear you @taylorswift13 and indie artists. Love, Apple." (for Strategy Analytics take on Apple Music check out this Digital Media report Apple Takes on Spotify with the Launch of Apple Music)

While seeing Taylor Swift contribute to Apple backing down is amusing there are several key takeaways from all this.

  • The absence of Taylor Swift’s music has not prevented Spotify from recruiting new users. Spotify now has 75 million active users with 20 million paying, 15 million and 5 million more than a year ago respectively. The question is what impact will Apple Music’s defacto exclusivity on Swift’s music, along with a free three month trial have on Spotify’s future growth.
  • Apple is putting “its money where its mouth is” and gets to show artists that it truly is receptive to their concerns. You don’t like our plan for royalty payments, O.K. we will change them to something more palatable.
  • One of the big reasons Taylor Swift wields as much influence as she does is because she has control over her own work, rather than following the standard practice of signing all rights over to her record company. If artists really want to have a say in what the music industry look like today and into the future then they must put themselves into a position where they have a seat at the negotiating table.
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