22 Jun 2015

How Taylor Swift became more powerful than Apple

Apple will now pay artists during free trials of Apple Music, after pop star Taylor Swift threatened to hold back her latest hit album from the tech giant’s new streaming service.

She took on one of the world’s biggest companies and won, writes Channel 4 News Business Correspondent Helia Ebrahimi. But how did Taylor Swift manage to become more powerful than Apple?

If you missed all the hubbub over the weekend, here’s a quick summary. Taylor Swift, the 25-year-old best-selling pop star, forced the tech giant Apple (worth $730bn) into a humiliating U-turn over payment for online music streaming.

Originally, Apple was not planning to pay artists during a three-month trial for its hotly anticipated service, launched to counter the success of European rival Spotify.

But that, of course, was before Ms Swift got on her soap box. In a scathing attack published in an open letter on her Tumblr account, she wrote: “We don’t ask you for free iPhones. Please don’t ask us to provide you with our music for no compensation.”

The note, headed “To Apple, Love Taylor”, was tweeted to her 59.2m followers and claimed that while she was already an established artist (read: loaded), “up and comers and independent acts” would be badly hurt by Apple’s decision to withhold royalties.

“These are not the complaints of a spoiled, petulant child,” she wrote. “These are the echoed sentiments of every artist, writer and producer in my social circles who are afraid to speak up publicly because we admire and respect Apple so much.”

‘We hear you, Taylor Swift’

Within hours Apple’s Senior Vice-President Eddy Cue was forced to respond, tweeting: “We hear you @taylorswift13 and indie artists. Love, Apple.”

He certainly had. Mr Cue – who had already been unfollowed on Twitter by angry Swift fans – immediately went into damage limitation overdrive with a series of interviews.

When I woke up this morning and I saw Taylor’s note… it really solidified that we needed to make a change. Eddy Cue, Apple senior vice-president

“When I woke up this morning and I saw Taylor’s note that she had written, it really solidified that we needed to make a change… And so that’s why we decided we will now pay artists during the trial period,” Mr Cue said, adding that Apple chief executive Tim Cook had agreed to make the change on Sunday.

Ms Swift was magnanimous in her victory, tweeting: “I am elated and relieved. Thank you for your words of support today. They listened to us.”

Taylor Swift (Reuters)

‘Music is art’

This is not the first time that the US singer-songwriter has gone to war with a music company.

She famously pulled her music from Spotify in November last year, arguing that the notion of making songs free or virtually free was at odds with valuing music.

It’s my opinion that music should not be free. Taylor Swift

“Music is art, and art is important and rare. Important, rare things are valuable. Valuable things should be paid for,” Ms Swift wrote in the Wall Street Journal.

“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 is. I hope they don’t underestimate themselves or undervalue their art.”

Business shift

According to MIDiA Research, global streaming revenue rose 39pc in 2014 as more people switched from buying and downloading music to streaming in it said was the biggest shift in business models since the rise of the CD.

Free streaming services like Spotify, however, have divided opinion.

Spotify claims that 70 per cent of its revenue goes to rights holders like record labels, publishers and distributors. But on average Spotify artists earn less than 1 cent per play, between $0.006 and $0.0084. Although it’s a small per-stream royalty, for someone like Ms Swift, a 1 per cent stream model would rack up millions.

Massive implications

But this latest entente cordiale between Apple and Ms Swift could have massive implications for Spotify, most notably because with its cash pile Apple has the ability to strike a better streaming deal with artists than any rival.

That could mean artists opting for the whole free service – with its bigger audience size – or just on a pay-only service that maximizes short-term revenue.

I realise that Apple is working towards a goal of paid streaming. I think that is beautiful progress. Taylor Swift

Ms Swift was at pains to express her admiration for the “truly ingenious minds” at Apple, which “will continue to be one of my best partners in selling music and creating ways for me to connect with my fans”.

Revealingly, she added: “I realise that Apple is working towards a goal of paid streaming. I think that is beautiful progress.”

She has a bigger goal here. By using her extensive reach through social media to co-opt the might of the world’s biggest company, she wants to shape a more lucrative future for artists in the music industry.

After all, there is a common interest. Her fans and Apple’s iTunes customers are the same people.