In the charmed (and, let’s be honest, talented) world of Taylor Swift, the young pop/country star scored another victory over the weekend. She actually made the world’s most successful brand step down.
Apple will be launching Apple Music at the end of this month, offering customers a free three-month trial. However, to the artists, it was just a little too free. Turns out, none of the artists would have had their royalties paid during that free trail, so Swift turned to Tumblr and posted a blog saying that her newest album would not be available during the trial.
Apple immediately responded on Twitter, saying “#AppleMusic will pay artists for streaming, even during customer’s free trial period. We hear you @taylorswift13 and indie artists. Love, Apple.”
In some ways, it was a no-brainer on Apple’s part as not paying artists for their work is potentially unlawful and certainly an affront to the artists who make up the content for Apple Music.
But the Taylor Swift Apple situation does bring up a balancing act all streaming services must manage. You must pay artists, but not so much to make the streaming service unaffordable to customers.
Look at what happened with Tidal.
That’s why Jay Z’s Tidal service has fallen on the deaf ears of listeners. It charges $20 a month, twice what it costs to stream music on Spotify. Apple Music will also be $10 a month (with a $15 option for a family of six).
The launch of Tidal was a bust because it was inadvertently marketed as a cash grab for the artists involved. At the launch event, all Jay Z and the other artists in attendance talked about was how this was fair to artists, nothing about the listeners it was targeting.
It was inside-out thinking that has left the service with less than 1 million subscribers, compared to Spotify’s 15 million. (Even Deezer and Rhapsody have more subscribers than Tidal.)
The Taylor Swift Apple situation is different, of course, as artists should definitely be paid. But it is this kind of situation that has investors nervous when it comes to streaming services. Netflix is beholden to what licensing fees it must pay for its content while keeping the cost of subscriptions down. That is the reason why Netflix and other streaming services like Amazon Prime are producing their own content. Despite the budgets, they can be more profitable for the services in attracting new customers than licensing other content.
Taylor Swift won a victory here, and it was well deserved. But it won’t be the last time we see a service and the content providers battle over how to make the streaming models work.