Business

Taylor Swift's Apple-chomping a win for 'the little guys'

Already adored by millions, Taylor Swift won legions more fans this week when she forced Apple to change how it will compensate artists for its new music-streaming service.

Indie artists need streaming revenues as much as established megastars, say music industry analysts

Singer Taylor Swift prompted Apple to pay royalties to artists and record labels during the three-month trial of its new music streaming service. (Dimitrios Kambouris/Getty Images for TAS)

Taylor Swift has built her image on being a champion of the underdog, so perhaps it's not entirely surprising that the chart-topping singer chose to pick a fight with the world's most profitable company.

Already adored by millions, Swift won legions more fans this week when she forced Apple to change how it will compensate artists for its new music-streaming service.

That's a victory not just for a mega-rich pop star like Swift, but for struggling independent artists as well, says Matt Collyer, president of Stomp Records, a punk and ska label based in Montreal.

"I don't care about Taylor Swift — but now I like her," says Collyer, who believes her advocacy establishes a more equitable playing field for all musicians.

"The little guys need people like this to throw their weight around."

Earlier this month, Apple CEO Tim Cook announced the impending launch of the company's music streaming service, Apple Music.

Set to go live later this month in 100 countries, Apple Music will include a radio station and on-demand streaming. A subscription will cost $10 US a month, but to kick it off, Apple will offer consumers a three-month free trial period.

What Cook didn't publicize, and what Swift pointedly acknowledged this past weekend, was that Apple wasn't planning to pay artists for music streamed during the free trial.

And so Swift took to her Tumblr page to call Apple out.

"I find it to be shocking, disappointing, and completely unlike this historically progressive and generous company," Swift wrote, adding that she would withhold her latest bestselling album, 1989, from Apple Music's offerings.

The statement went viral, and within a day, Apple senior vice-president Eddy Cue announced on Twitter that the company had reversed its decision and would compensate artists fully, even during the trial period.

Cost of doing business

Andrea Johnson, a music business management professor at Berklee College of Music in Boston, applauds Swift's move, noting that streaming royalties "are Apple's cost of doing business."

Matt Collyer, president of Montreal's Stomp Records, says Taylor Swift's ultimatum to Apple Music over streaming royalties benefits not only her, but millions of independent artists, such as Stomp signees Los Kung Fu Monkeys. (Stomp Records)

"If they want to offer a free service [for the first three months], that's their business decision," says Johnson. "They have a right to discount their service, but they can't force it on their partners — the artists are their partners."

This is not the first time Swift has taken a public stand on streaming. Last year, the singer behind the recent hits "Shake It Off" and "Bad Blood" fired a similar salvo at Spotify, one of Apple Music's competitors, saying she was pulling all of her albums from Spotify because the service offered certain subscription tiers that didn't compensate artists.

One of the reasons these moves are significant to all artists is that music streaming is "the one sector of the ecosystem that is growing," says Geoff Kulawick, president of True North Records, which represents such Canadian artists as Bruce Cockburn and Toronto jazz pianist Elizabeth Shepherd.

Kulawick reports that in the past six months, the music industry has witnessed a key milestone — namely, that the sale of digital music via the internet has surpassed that of physical sound recordings like records and CDs.

And within the digital realm, Kulawick says download revenue has been flat or declining, while that from streaming, in which consumers can listen but don't take actual possession of the product, has been growing.

Streaming on the uptick

According to a recent report by the International Federation of the Phonographic Industry (IFPI), an estimated 41 million people paid for streaming services in 2014, up from eight million in 2010.

But while it's obviously a growth industry, artist compensation is still quite low.

Spotify, whose CEO is Daniel Ek, has also been the subject of Taylor Swift's ire. (Shannon Stapleton/Reuters)

Spotify, the putative market leader in music streaming, says that its average compensation for a single stream of a song is between $0.006 US and $0.0084.

What's more, when streaming rates are negotiated, the payment has to be split between the rights holders for both the song and the recording, a grouping that includes artists, publishers and record labels, says Susan Abramovitch, an entertainment lawyer with Gowlings in Toronto.

A graphic produced earlier this year by the data journalism website Information Is Beautiful suggests an artist's cut is more like $0.001128 per stream.

In this model, a megastar like Taylor Swift is getting paid the same rate per song as an underground artist with only a tiny following.

The difference is that Swift gets significantly more clicks — usually in the millions — which is what gave her the leverage to threaten to withhold her album and force Apple's hand, says Abramovitch.

'The future of music'

But even with Swift's intervention, indie artists are not going to get rich on streaming revenue, says Stomp Records' Collyer.

"At this point, [the payment is] not that great, but it is inevitably going to be the future of music," he says, adding that that independent artists and labels not only benefit from more consistent streaming rates, but from the potential for listeners to discover their music while browsing for other artists.

Given the ubiquity of illegal downloading from Napster to BitTorrent, many consumers have been conditioned not to think too hard about how — or even if — artists are compensated for their music, says Berklee's Johnson.

But when a star like Swift makes headlines for putting Apple on notice, it raises broader awareness of music's actual value.

"I do think people are beginning to sympathize and understand," Johnson says. For artists, "streaming is really the future income source, and we've got to start treating it as a valid service and commodity."

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