OMG, Taylor Swift and Eddy Cue are totes BFFs. You see, Apple was being mean and saying they wouldn’t pay artists for streams during the three-month-long free trials of its new streaming service, Apple Music. However, TayTay took to Tumblr and wrote a letter saying how naughty the company was being, so Eddy (senior vice president of Internet Software and Services) called her and they sorted the whole thing out. Now Apple are going to pay artists during the free trial. Hooray!
Or at least, that’s what my entire Twitter feed has been saying for the last 24 hours. Like everything though, there’s a lot more to this story than first meets the eye. Taylor Swift isn’t quite as wonderful as she appears and Apple’s U-turn merely masks some much deeper problems with the music industry’s relationship with streaming services.
Bully Bully Taylor Swift
Let’s get one thing straight, Taylor Swift is not a defender of the little guys, as much as she likes to portray herself as one. To quote:
This is not about me. Thankfully I am on my fifth album and can support myself, my band, crew, and entire management team by playing live shows. This is about the new artist or band that has just released their first single and will not be paid for its success.
Swift is one of the few throwbacks to an earlier age when musicians were superstars shifting millions of albums. There is now far more competition, both in the number of artists releasing music, and in how people are listening to it.
Clinging desperately to the collapsing status quo benefits the record companies and the biggest artists, but not the little guys. Tidal, which Swift has championed, is basically just a bunch of rich musicians throwing a hissy fit because they’re not being paid enough. It’s not a service designed to benefit indie artists.
A lot has also been written about the hypocrisy of Swift’s position, given the contracts she makes photographers sign before shooting her gigs. Photographers are required to grant her the right to use their images for free in perpetuity while being blocked from using them themselves.
Jason Sheldon, who initially raised the issue, makes some great points, although I actually don’t think they’re all that relevant. Jared Polin, in an extremely NSFW rant about concert photography, suggests that the contract is probably created by Swift’s management team and that she’d know nothing about it. It’s also, much to his ire, a fairly standard industry contract.
How Taylor Swift Could Actually Help
If Swift seriously wanted to help out smaller artists, a much better step would be to work to change the ridiculous recording deals they’re made to sign.
While Spotify pays out 70 percent of the money it earns to rights holders — and Apple Music will pay slightly more — record companies pass only a fraction of it on to the artists. A post on Techdirt breaks down some of the sneaky tricks used by record companies to, in essence, screw artists out of money.
For example, many artists’ contracts include breakage fees of 20 percent which come from their share of the money. This is a holdover from the days of vinyl where records would frequently be damaged in transit (just another reason vinyl sucks). As Techdirt points out, “CDs don’t break so much and … digital files don’t break at all”. Keeping this clause in contracts is a pure money grab.
Another similar throwback are container charges, which work out as another 30 percent deduction from revenues. These charges, which go towards “things like the jewel cases and inserts for CDs,” are clearly ridiculous in an age where so much music is bought digitally.
If an artist has more than $20 million in sales and fails to earn out their 10 percent advance of $1 million, they’re working with a severely broken system. If Swift really wants to help artists, using her privileged position to get record companies to create more favorable and relevant contracts would be a great first step. Sorting record deals would also stop situations where 34 million streams earn an artist a measly £1700.
The Music Industry Needs to Adapt
Let’s get serious here for a moment. Who benefits most from music streaming services?
It’s not the companies operating them; Spotify lost more than €20 million ($22 million) last year. It lost so much because 70 percent of its revenue goes directly to rights holders. While Apple is arguably in a better position to strike deals with record companies and has the capital to eat such losses for the indefinite future, it’s unlikely that Apple Music will ever bring them in serious revenue.
It’s the music industry which really stands to benefit most from streaming services.
As I broke down last year, when I argued that Taylor Swift is wrong about Spotify, streaming music is a huge opportunity for artists. Under the old, “sell CD, get money” model, artists made a dollar or two for each album they sold. With streaming services, the amount they can earn from each fan is unlimited.
I, like many others, listen to my favorite artists again and again. When I use Spotify, they keep getting paid, and will do so forever. Yes, they’d make more money today if I bought a CD, but over the next 10 years? The next 50? Long tail profits are a huge opportunity that the music industry is ignoring.
My feelings are entirely mixed on Apple’s U-turn. While artists, and other rights holders, do deserve to be paid for their music, they are the ones who stand to benefit most from the success of Apple Music. They need to start viewing their deal with Apple as a partnership rather than a service they are providing to Apple. A three-month trial period during which no one makes money, followed by getting more than 70 percent of the service’s revenue, is a more-than-fair partnership.
If the music industry continues to see its relationship with streaming services as adversarial then things will end badly. If Spotify, Apple Music and the like don’t succeed, people will not return to buying tracks from iTunes. They certainly won’t return to the glory days of expensive physical albums. Instead piracy will flourish once again.
Apple Music is an olive branch: a streaming service from the world’s largest company that promises to be 100 percent paid thanks to Apple’s dislike of free music. The music industry seems determined to burn that olive branch. The old days are over and this industry need to adapt or die.
To Taylor, Love Harry
Taylor Swift should focus less on securing three months worth of payments, and more on helping Apple, Spotify, and the other streaming services succeed over the longterm. Given her enviable position of power, she could also help ensure record companies give artists a better deal from day one. Choose your battles wisely, Taylor, because artists need a new champion.
As ever, we want to know what you think. Was TayTay right to throw her toys out of the pram over Apple Music? Was Apple merely ensuring Apple Music got a foothold in this sector? Should record companies be forced to change their way of doing business to better reflect the new music industry? Please let us know your thoughts in the comments section below.