Taylor Swift praises Apple, but calls 90 day free trial of Music service 'shocking, disappointing' f

Posted:
in iPod + iTunes + AppleTV edited July 2015
Apple Music's planned three-month free trial, during which users can try the new music streaming service without paying -- and under which artists wouldn't earn any royalties for those streams -- has found a new critic: pop star Taylor Swift.




A series of smaller labels have already criticized the planned free trial, complaining that providing 90 days of unpaid streaming -- with no subsidizing assistance from Apple -- would threaten their operations as a viable business.

So much money, so unfair to spend it to kill competition

Apple has billions of dollars available to pay artists substitute royalties during users' free streaming trail, but were it to do so, the company would quickly find itself at the wrong end of global antitrust complaints. In many markets, "dumping" free or loss leader products would be considered anti-competitive.

Apple Music's existing media streaming alternative services, from Spotify, Rdio to Pandora, are much smaller firms with relatively little capital. Nobody is currently making significant profits from streaming music; if Apple were to enter the market and indirectly pay users to switch from those services for three months, it would be virtually impossible for its competitors to match that.

Instead, Apple hoped to negotiate a slightly higher payout rate for labels and their artists, while providing users with subscription rates compatible to its existing peers, along with providing new tools (like Connect, below) to help artists reach their fans.

Apple Music Connect


And to introduce the service to users, it hoped labels would share their catalogs for a three month period in hopes of finding a large paid subscriber base.

In contrast, while Spotify offers users only one month of free trial, only about a quarter of its active listeners actually pay for the service, the rest listen for free in exchange for ads presented within streams, similar to Apple's existing (but more limited) iTunes Radio service.

So much right, so little causing big pushback

Apple's proposed tradeoff has generated vocal criticisms, most recently from Swift, who wrote a "To Apple, Love Taylor" blog posting that introduced her issue with praise the company.

"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 wrote. "I respect the company and the truly ingenious minds that have created a legacy based on innovation and pushing the right boundaries."

Swift then noted that Apple's unpaid trial, where "Apple Music will not be paying writers, producers, or artists for those three months" was a showstopper issue, writing "I find it to be shocking, disappointing, and completely unlike this historically progressive and generous company.""I think this could be the platform that gets it right" - Taylor Swift on Apple Music

She added, "I realize that Apple is working towards a goal of paid streaming. I think that is beautiful progress. We know how astronomically successful Apple has been and we know that this incredible company has the money to pay artists, writers and producers for the 3 month trial period... even if it is free for the fans trying it out. Three months is a long time to go unpaid, and it is unfair to ask anyone to work for nothing."

While taking an critical tone with Apple's three months of free streaming, Swift also wrote "I say this with love, reverence, and admiration for everything else Apple has done. I hope that soon I can join them in the progression towards a streaming model that seems fair to those who create this music. I think this could be the platform that gets it right."

She concluded, "But I say to Apple with all due respect, it's not too late to change this policy and change the minds of those in the music industry who will be deeply and gravely affected by this. We don't ask you for free iPhones. Please don't ask us to provide you with our music for no compensation."

A short-term, solvable problem

Actually, Apple does provide "free" iPhones for a period of time, as it defers billions in revenue for accounting purposes and provides inventory as accounts payable to its own retail partners, knowing that it will make up the cost of doing business over time. Apple also provides free trials (or even fully free software titles and updates) for some of its own products, paying its own software artists, writers and producers to develop those titles.

However, Apple doesn't provide extended free trials for its bread and butter revenue generating products. Operating for 90 days without payment is a serious issue for music labels and particularly smaller artists who rely on monthly royalties. In comparison, Apple's deal with HBO Go only involved a one-month free trial.



While it would likely be illegal for Apple to fully subsidize its streaming content providers while offering users a three-month trial period, it may make sense for Apple to offer labels an estimated advance on future royalties that will be earned on Apple Music in order to ease artists from their existing dependance upon physical disc media and downloads into the subscription model of Apple Music.

That carries some risk, because nobody knows exactly how many Apple Music trials will result in paid subscriptions. But it would shift much of the risk from artists to Apple itself, making the two groups even better partners and making the new Music service an even greater strategic focus for Apple.

Virtually every media outlet has jumped on Swift's blog posting to suggest to their readers that the musician "condemned," "denigrated," "rejected" or "boycotted" Apple, apparently without noticing that Swifts' own blog directs readers to iTunes to purchase her latest "1986" album, the same one she said she doesn't want to make available for free streaming on Apple Music (or Spotify).
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Comments

  • Reply 1 of 135
    anantksundaramanantksundaram Posts: 19,383member
    I say this based on what I think is best for Apple, and its customers: having brought up the 90-day free trial, stick to it, but pay the artists. Period. Sometimes, a mea culpa is a good thing.

    (Oh, before people start to froth at the mouth, I am also a shareholder)
  • Reply 2 of 135
    boriscletoboriscleto Posts: 159member
    Know what's disappointing? Calling Taylor Swift an "Artist".
  • Reply 3 of 135
    wurm5150wurm5150 Posts: 763member
    I agree with most of what she said
  • Reply 4 of 135
    bobschlobbobschlob Posts: 1,074member
    Quote:
    Originally Posted by anantksundaram View Post



    I say this based on what I think is best for Apple, and its customers: having brought up the 90-day free trial, stick to it, but pay the artists. Period. Sometimes, a mea culpa is a good thing.



    (Oh, before people start to froth at the mouth, I am also a shareholder)



    If the artists 'sold' their music to Apple, that would make sense. But they don't.

    Apple is not the 'customer'.

  • Reply 5 of 135
    future manfuture man Posts: 100member
    Taylor Swift is free of course to not particpate in Apple streaming music application, maybe she has enough press exposure and money to forego this option for her music, yet many less famous and wealthy artists will need this 90 days of free publicity and exposure to launch their careers. Miss Swift could easily afford a 90-day window of free music exposure.
  • Reply 6 of 135
    bobschlobbobschlob Posts: 1,074member

    Just more public short-sightedness on Apple's grand plans. Nothing new here. Happens all the time.

  • Reply 7 of 135
    irnchrizirnchriz Posts: 1,590member
    Well, if they can't pay the artists and offer it for free due to antitrust can't they do the following:

    For every customer who uses the free trial and then subscribes, pay the artists for all of the tracks which were paid during that users trial. Then it's a deferred payment from that paying customers usage?

    Anyway, I don't see what the issue is, it's a one time 3 month trial then it's subscription only. It's not like spottily where you can just chain free trials using different email accounts.
  • Reply 8 of 135
    jungmarkjungmark Posts: 6,716member
    I see some main stream media headlines: Taylor swift rips Apple Music.

    This is nothing like that. Apple should pay royalties during the free trial period.
  • Reply 9 of 135
    cash907cash907 Posts: 893member
    irnchriz wrote: »
    Well, if they can't pay the artists and offer it for free due to antitrust can't they do the following:

    For every customer who uses the free trial and then subscribes, pay the artists for all of the tracks which were paid during that users trial. Then it's a deferred payment from that paying customers usage?

    Anyway, I don't see what the issue is, it's a one time 3 month trial then it's subscription only. It's not like spottily where you can just chain free trials using different email accounts.

    You can't get the free trial without subscribing first. Credit card has to be on file etc. You can cancel before the three months are up and not be charged anything, however. This is how companies have offered "free" trials in the past and avoided anti-trust issues, so using that excuse to not pay their content providers is garbage.
  • Reply 10 of 135
    irnchrizirnchriz Posts: 1,590member
    cash907 wrote: »
    You can't get the free trial without subscribing first. Credit card has to be on file etc. You can cancel before the three months are up and not be charged anything, however. This is how companies have offered "free" trials in the past and avoided anti-trust issues, so using that excuse to not pay their content providers is garbage.

    Do those companies pay for the content used in the free trial period and if so can you cite examples?
  • Reply 11 of 135

    This is a case of "I want it all my way".

     

    She removed her content from services that offered a free tier. That's fine. Apple is the best hope of the music industry for getting paid streaming to really explode. That's what Swift wants.

     

    But since she's not getting everything her way, she's decided to throw a fit.

     

    IMO, no more sweetheart marketing deals (or promotion of any kind) on iTunes for her, let her float on her own.

  • Reply 12 of 135
    Quote:

    Originally Posted by BobSchlob View Post

     



    If the artists 'sold' their music to Apple, that would make sense. But they don't.

    Apple is not the 'customer'.




    Exactly. And Apple isn't getting paid during the trial either, despite the fact they have incurred and will continue to incur millions and millions of dollars in costs.

  • Reply 13 of 135
    She's one hundred percent right. I am also a shareholder, but Apple's going to have to change this policy, and fast.
  • Reply 14 of 135
    brakkenbrakken Posts: 687member
    Iovine, perhaps?
  • Reply 15 of 135
    adonissmuadonissmu Posts: 1,772member

    This is a tough one. I don't see how Apple wins here TBQH. I sympathize with both sides. I think Apple should defer the 3 month trial TBQH until after this thing has launched for 6 months. This way artists don't take the hit right away. I think Apple doesn't have to dump loss leader products but they don't have to provide them all at once either. I think there is a middle ground. Release the paid product first then add in the loss leader stuff at a later time. 

  • Reply 16 of 135
    9secondko9secondko Posts: 929member
    What Taylor is missing is that Apple isn't generating revenue with a free trial, which is a great thing FOR HER FANS.

    But they will be steering many fans toward the service with such generosity which will in turn cause fans to enjoy a superior service, artists like Taylor to enjoy the higher revenue from Apple music, and apple to continue to lead. And let's face it, if Apple didn't lead, we'd be still back in the 90's with so many competing services getting it wrong.

    How about the artists see the big long term picture. Not a 3 month window.
  • Reply 17 of 135
    9secondko9secondko Posts: 929member
    Also swift and other can simply have it part of their contract that huge debut albums and such like aren't to be included in the rial period if they wish to remain short sighted.

    This is a huge plus for fans. Artists would do well to remember that.
  • Reply 18 of 135
    There is absolutely no reason to have a free trial. Either pay or don't pay. Are you telling me the consumer cannot risk $10 to try this??? Give me a break.
  • Reply 19 of 135

    And Swift is full of it coz she knows damn well that Apple has paid for the right to do this. Labels don't give music away free. There's a contract in place that permits Apple to do this. Cook & Co are not stupid enough to do something that would expose Apple to a multi-million dollar law suite from the labels. This open letter is nothing more than a publicity stunt and if it's not, then someone needs to sit her down and explain how this business works. 

  • Reply 20 of 135
    gatorguygatorguy Posts: 21,106member
    Antitrust charges?? Really?? Google Play Music is free for two months. Apple not paying artists wouldn't make any difference that I can see.

    If anything requiring the labels to all agree to forego any royalties when they don't make the same offer to other music streaming services would be more likely to get Fed or EU attention over unfair competition concerns IMO. The books issue wan't all that long ago.
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