Evan Goldstein

About the Author Evan Goldstein

Evan Goldstein is a current student at Brandeis University majoring in Economics and History. He is the VP of Finance for TAMID Consulting at Brandeis.

Apple Inc. to Compensate Artists During Apple Music Free Trial

The decision of whether to pay rights holders for streaming music has been controversial. Many artists have felt the pain of their music being listened to on streaming services that don’t necessarily charge customers. Spotify, one of the largest streaming music companies has been publicly denounced by some artists and restricted access to music by others. Taylor Swift has been one of the most vocal opponents to Spotify and the movement towards streaming. Swift wants artists to be fairly compensated and for there to be an inherent value placed on art.

On the same principle she stated in opposition to Spotify, Swift wrote an open letter to Apple Inc. (NASDAQ:AAPL) on Sunday, criticizing Apple for not offering artists royalties for music played during the three month free trial period. Swift thought the move by Apple was “shocking [and] disappointing” and that Apple will continue the trend of hurting smaller artists and labels.

While Swift’s action was controversial and direct, she has respect for Apple and wants Apple music to succeed. ”

Apple has been and will continue to be one of my best partners in selling music and creating ways for me to connect with my fans,” Swift stated.

Coincidentally, hours after her letter, Eddy Cue, Apple’s software and services chief, announced that Apple will renege on its original claim and give out royalties during the free trial period. Artists will receive a per-stream fee during the free trial but will then receive a percentage of sales once customers become paying subscribers.

The change came directly from artists like Swift and labels like Beggars Group who complained about the lack of royalties during the trial period. The action was a joint decision by Cue and Tim Cook, Cue stated. Cue spoke to Swift personally, yet it’s not certain if the change will impel her to return her latest album to the service.

To many, Apple’s original refusal of royalties may seem confusing, considering the wealth and size of the company that can allow them to charge customers less and pay artists more. But if Apple were to spend it’s billions on making sure that they have the best service, the best prices, and all the artists they want, they could be on the other side of global anti-trust lawsuits. Many jurisdictions site the unloading of free products or loss leader products as against competition, giving way to government intervention. Spotify and Pandora would welcome such a lawsuit as they do not have the capital to make everyone happy or make a large profit.

Apple will have to sacrifice for its free trial, yet the remaining question is if the complaints of artists are worth more than the profitability of growing the user base.

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