{"id":52599,"date":"2015-06-23T10:20:24","date_gmt":"2015-06-23T02:20:24","guid":{"rendered":"https:\/\/canadianinquirer.net\/v1\/?p=52599"},"modified":"2015-09-20T15:29:09","modified_gmt":"2015-09-20T07:29:09","slug":"apples-about-face-reveals-cracks-in-music-industry","status":"publish","type":"post","link":"https:\/\/canadianinquirer.net\/v1\/2015\/06\/23\/apples-about-face-reveals-cracks-in-music-industry\/","title":{"rendered":"Apple’s about-face reveals cracks in music industry"},"content":{"rendered":"
\"Apple<\/a>
Apple Music (Photo courtesy of Apple)<\/figcaption><\/figure>\n

LOS ANGELES \u2013 Apple\u2019s abrupt about-face on paying royalties for songs during a three-month free-trial period for its new music service was a symbolic victory for superstar Taylor Swift and other artists, and a shrewd business move by Apple, at a time when the streaming phenomenon is causing major changes in the music industry.<\/p>\n

The olive branch extended by Apple comes as music is increasingly being consumed on streaming services like Spotify and Deezer \u2013 to the detriment of album sales and iTunes downloads \u2013 heightening tensions between artists, labels and service providers over who gets paid and how much.<\/p>\n

Apple had already agreed to share revenue from the new Apple Music service once users start paying a $10-a-month subscription fee for the service, which it plans to launch June 30. But the technology giant wasn’t planning to pay artists and labels directly for the use of their music during the free, 90-day trial period that it’s offering to get fans to try the service.<\/p>\n

That changed quickly Sunday, after Swift posted an open letter to Apple opposing the lack of royalties during the free period, and declaring she’d be withholding her latest album \u201c1989\u201d from Apple Music because of it. Apple Senior Vice President Eddy Cue reversed the company\u2019s trial-period terms, which had gone out to thousands of independent labels, including Swift\u2019s Big Machine Label Group, after the technology giant reached a deal with major label groups Universal, Sony and Warner in early June.<\/p>\n

The company needed to avoid a \u201cPR nightmare\u201d and quickly extinguish the firestorm that Swift had created, said Daniel Ives, tech stocks analyst with FBR Capital Markets.<\/p>\n

\u201cThey needed to handle this perfectly,\u201d Ives said, because Apple is facing an uphill battle against competing services like Spotify that are already well-established. \u201cThere can be no snafus or speed bumps, from the artists\u2019 perspective, or any type of consumer backlash.\u201d<\/p>\n

Apple hasn\u2019t publicly revealed how much it will pay in royalties for the free streaming period. Cue declined to offer financial details in an interview with The Associated Press on Sunday, but he said the payments will be based on a different formula than the company had already negotiated for sharing subscription revenue, since Apple won’t be collecting any revenue from the 90 days of free streaming. Instead, Cue said, royalties for the free streaming will be based on a standard amount for each time a song is streamed.<\/p>\n

Jeff Price, the CEO and founder of royalty collection firm Audiam, said the free-period royalties could amount to about $25 million per month in the U.S. alone if Apple Music pays the same as Spotify did in December 2014, according to publishers\u2019 data. Ives noted the cost to Apple is \u201cnot even a rounding error\u201d for a company that made $39.5 billion in profit and $182.8 billion in revenue for its last fiscal year.<\/p>\n

While Apple Music doesn\u2019t have any subscribers yet, compared to the 4.7 million Spotify had in the U.S. then, its global launch in 100 countries could quickly change that. Still, Price says the gesture will likely be worth it for Apple.<\/p>\n

\u201cIt got them an unlimited amount of public goodwill and artist goodwill,\u201d Price said.<\/p>\n

Some artists did praise Apple Monday for its decision, while many more cheered Swift for taking her public stand. Rocker Elvis Costello called Swift \u201cour future president\u201d on Twitter and added, \u201cYou tell \u2018em, Girl.\u201d<\/p>\n

Artist grumbling about the lack of compensation during Apple Music\u2019s lengthy free trial had been brewing since the unveiling of service at Apple’s developer conference two weeks ago.<\/p>\n

The American Association of Independent Music expected a flood of sign-ups at launch, suggesting to its members in an email they should reconsider releasing music to the platform right away: \u201cWe are struggling to understand why rights holders would authorize their content on the service before October 1.\u201d<\/p>\n

The fact that independent labels drove this change highlights their growing power in the music industry – and Apple’s practice of simply offering independent labels terms that had been negotiated with the majors, said Rob Enderle, principal analyst of the Enderle Group.<\/p>\n

\u201cIt certainly showcases to Apple that if they step on the labels, some of them can step back pretty hard,\u201d Enderle said.<\/p>\n

Withholding their latest releases from services like Spotify had already become the norm among top artists who see more to gain from download sales in the initial release period, including Swift and Adele, who herself is set to release \u201c25\u201d sometime later this year. But few artists have the same clout, and because download sales are falling in favor of revenue from streaming services, few spoke out publicly either for or against the plan.<\/p>\n

Cue wouldn’t comment on whether Swift will now make her album \u201c1989\u201d available on Apple Music.<\/p>\n

Ben Bajarin, a longtime Apple watcher and founder of research firm Creative Strategies, said he’d never seen Apple make such a quick reversal on a major business issue. But he said Apple had no reason not to change position after it was clear artists were upset. And it will likely even gain more favor among fans.<\/p>\n

\u201cIf there were people on the fence about trying the new service, there are tens of millions that will probably try it now, just to see what it\u2019s about, and that will help Apple achieve its goal faster,\u201d Bajarin said.<\/p>\n","protected":false},"excerpt":{"rendered":"

LOS ANGELES \u2013 Apple\u2019s abrupt about-face on paying royalties for songs during a three-month free-trial period for its new music …<\/p>\n","protected":false},"author":33,"featured_media":52600,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":["post-52599","post","type-post","status-publish","format-standard","has-post-thumbnail","category-technology","mauthors-ryan-nakashima","mauthors-brandon-bailey","mauthors-the-associated-press"],"_links":{"self":[{"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/posts\/52599","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/users\/33"}],"replies":[{"embeddable":true,"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/comments?post=52599"}],"version-history":[{"count":0,"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/posts\/52599\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/media\/52600"}],"wp:attachment":[{"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/media?parent=52599"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/categories?post=52599"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/canadianinquirer.net\/v1\/wp-json\/wp\/v2\/tags?post=52599"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}