Money talks; people listen. Absolute power corrupts absolutely. These are undisputed facts. However, after pursuing profits over equality, the world's richest and most powerful company has reversed its business strategy. After facing widespread backlash from musicians, in addition to a written critique by pop star Taylor Swift, Apple (AAPL) announced it will pay recording artists during Apple Music's 3-month free trial period.
This rare concession again reiterates the continuing decline of the music industry. Apparently it's no longer easy to make millions. Yet, Apple's policy reversal also underscores growing internal concerns: consumers are no longer paying for music. Therefore, one wonders whether Apple purposely lost this battle to win an impending content war?
Upon announcement of Apple’s new streaming service, Apple Music, it was revealed that the world's richest company would not pay any royalties during initial 3-month trial periods. This decision sparked a fire in the hearts of artists and Millenials alike, so much so that Taylor Swift released an open letter to the company entitled “To Apple, Love Taylor,” stating that she would withhold her popular songs from Apple Music. More specifically, Swift declared she would not release her newest album, 1989, claiming that Apple's choice to not compensate content creators is “shocking, disappointing, and completely unlike the historically progressive and generous [nature of Apple]."
Ironically, this is not the first time Taylor Swift has engaged in corporate battles over "fair" pay. Swift also recently pulled all her music from Spotify, stating that the streaming service was doing a disservice to all artists. In her explanation, Swift argued that “music is art, and art is important and rare. Important, rare things are valuable. Valuable things should be paid for. It’s my opinion that music should not be free, and my prediction is that individual artists and their labels will someday decide what an album’s price point [should be]." While economic models oppose this pricing conclusion, Swift's influence could nonetheless spark an era of music reform.
If she's smart, and I assume she is, Taylor Swift will partner with Apple to demolish Spotify. Although she may not achieve her pricing goals, Swift will greatly profit from aligning herself with the $740 billion giant. In the long-run, Swift stands to make a lot of money with Apple; however, Swift's blunt negotiating tactics may someday threaten her career. Although her $200 million personal net worth is impressive, Swift should remember that Apple generates $70,000 in revenue every second. While I'm a fan of "David vs. Goliath" fights, this showdown, if continued, will not end well for Swift.
*As a side note, Apple’s new music service will launch for free on June 30th. After 3-months, Apple Music will cost individual users $9.99/month, or $14.99/month for families.