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How did Apple assume they could get away with not paying royalties the artists were legally entitled to? Have I missed something in the story?

• JohnTHaller 11y ago
  Apple controls about 30% of the US smartphone market and their users are locked into the platform. Uniquely, iOS users don't have access to alternate music purchasing apps (Apple's required 30% cut makes it financially untenable) and iOS users can't download and add music to their music library on the go like other platforms. Plus, Apple devices are only high end (read: expensive) and their users have more purchasing power in terms of apps and music. So, Apple controls a larger piece of the monetary pie than their 30% market share would let on. Apple will use this market power to make themselves more money. The reason Taylor Swift's piece had to be couched in so many "I love Apple" statements is because Apple controls a lot of her music sales in iTunes, so Apple is in a position of power over her income. Apple had previously threatened a couple of indie artists with being banned from iTunes if they didn't agree to stream their music for free. This could have been the result of a few bad apples at Apple and not policy, though. Apple will use its power at the expense of artists if it suits their business model. Here, it did, until the negative PR proved it could cost them sales. So, they've made a deal to pay artists something during the free period, though it will likely be a lot less than the typical $0.005 per play streaming pays on average today. Apple has confirmed it will be less but won't say what the payment will be.
  • kitd 11y ago
    Thanks. I'm just (and probably naively) surprised that any contract an artist would make with Apple allows Apple to stream the artists music for free if that's what Apple want. Good job I'm not a music industry boss.
    • JoeAltmaier 11y ago
      Hey Amazon can give your book away for free if they want. Its part of the standard contract, where you give Amazon the right to market your book any way they want, including promotion. Which can mean, bundled with other slow sellers, or even given away as a loss leader.
    • JohnTHaller 11y ago
      Labels are part of it, since the major music labels control just about everything of the artists signed to them. And the 3 big labels all signed on with Apple Music but the details of what the labels themselves get will likely not be disclosed. Apple may or may not be engaged in tying. Some indie artists report Apple threatening to boot them from iTunes if they don't sign on to Apple Music. Google did something similar with YouTube a few months back. Independent musicians have almost no power or money in the industry, so they're stuck taking what they can get for the most part.
• quesera 11y ago
  They weren't legally entitled, just morally so. Record labels generally own streaming rights for their releases. The labels agreed to Apple's terms, in sufficient quantity that Apple was ready to launch. Taylor Swift might own her own streaming rights. Presumably so, since she had standing to withhold them. But she's a special case. High profile, to be sure. But very unusual.
• mcphage 11y ago
  > How did Apple assume they could get away with not paying royalties the artists were legally entitled to? They negotiated for not paying royalties during the free trial period (during when they weren't being paid either), in exchange for higher royalty rates afterwards.