In a matter of hours, Taylor Swift has come out looking like music's most powerful artist.
On Sunday, Swift said in a blog post that she would withhold her album "1989" from Apple's new music service, set to launch June 30. The issue: Apple Music's policy of not paying royalties during consumers' three-month free trial.
But that night, Apple's software and services head Eddy Cue tweeted that Apple had changed its tune and would pay up. It was a stunning shift on an issue that independent label groups had been voicing concern about for days, and sheds light on some key facts about the music industry today.
Star-power counts: Swift's "Bad Blood" just hit No. 1 on Billboard, making it the fourth song from the album "1989" to top the singles chart. "1989" has sold 4.9 million copies to date, according to Nielsen Music, a massive number by today's standards. She has 59 million followers on Twitter. It's unlikely the blessing of one artist can make or break a streaming service banking on broad access to music for little money. But if anyone has sway, it's Swift.
It also matters how you use that power: Jay Z is also a huge star, but when he introduced his $56-million streaming service Tidal to get better royalty rates, his plea fell flat. The difference may have been that Jay Z appeared on stage with a horde of fellow top-earning stars, making himself and Tidal's co-owners look greedy. Taylor looked like she was standing up for the little guys. She also made it look like she was talking directly to her devoted fans, rather than staging a splashy news conference.
"Bad blood" is the last thing Apple wants: Apple would rather appear to be the music business' friend than its frenemy. When Swift pulled her songs from the Spotify to protest its "freemium" model, Spotify fanned the flame and intensified the feud. Apple decided to play nice and likely avoided a high-profile spat ahead of Apple Music's launch. Lest we forget, Apple's iTunes store was blamed for aiding the crash of the music business more than a decade ago by "unbundling" albums and selling individual tracks for 99 cents apiece.
Apple can afford to pay: It's safe to say that the Cupertino-based tech giant is not looking to Apple Music to drive its profits. Apple sold more than $100 billion worth of iPhones alone in fiscal 2014. Other streaming companies that don't sell hardware have to worry a lot more about their royalty costs. Spotify says it doles out 70% of its revenue to rights holders. Apple says its music app will pay slightly more -- 71.5% of its streaming dollars. That's a tiny difference for Apple, and paying indies for three additional months is worth it.
It matters deeply to indies: Even without the three months of pay from Apple, Swift will be fine, and she said as much in her letter. "This is not about me," she wrote. "This is about the new artist or band that has just released their first single and will not be paid for its success." Indeed, label consortium Beggars Group made a similar point, speaking up for bands that have the misfortune of trying to release a new album in the next three months. It might get a lot of plays on Apple Music, but under the old policy that would not translate into royalties.
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