The real reason behind Apple’s ‘Swift’ U-turn on royalties

If much of what has been written on the internet in the last few days is to be believed, Apple have been forced in to an embarrassing retreat after an open letter from unaccountably popular music phenomenon Taylor Swift. Apple claims that it was already reconsidering it’s plan not to pay artists or labels royalties for any songs during the 3 month free trial period it currently offers on it’s new streaming service, after representations from independent labels. However, the truth may be more to do with the long game that Apple is playing.

Apple is late to the streaming music arena. Having been the market leader in music downloads (of the legal kind at least) it probably didn’t see the point of doing so. But the playing field has changed. The way that people listen to music has outgrown the old model, leaving Apple looking as much of a dinosaur as the record companies did when they insisted on physical media, and if there is one thing Apple dare not risk it’s being seen as old fashioned.

Since the return of Steve Jobs to the company, the whole focus has been on making Apple seem hip and cool, starting with multi-coloured iMacs before the truly golden period of the iPod, iPhone and iPad. Certainly there has been some real, original, innovative design in Apple’s hardware and software but the real money spent is not in R&D, but in advertising. Apple’s massive spend in this department ($1.2 billion last year, goodness knows what it will be this year with the Apple Watch to plug) is designed to exude an air of effortless cool that you too can obtain, just by buying an Apple product.

Publicly getting into a row with Taylor Swift is bad for that image. Swift is one of the small group of pop stars who are more brands and icons (like Apple itself) than mere musicians. People like Dre, Jay-Z, Kanye West and of course Beyonce may have entered the celebrity world via music, but they have used their image as leverage to sell all kinds of things to their adoring fanbase, each of them is the centre of a multi billion dollar mechanise industry. If they were to deem Apple not cool and withdraw their music (or worse still, stop being seen using Apple products) this would be a massive loss for the Cupertino giant, not just because none of their fans would sign up to Apple Music, but also the knock on effect to product sales and that all important image.

Beyond all this is the long game I mentioned earlier. Apple is a latecomer to the streaming arena and needs to pull punters away from the acknowledged king of the hill Spotify. Since it has chosen not to offer a free tier it’s going to have to rely on lock-in (Apple Music will undoubtedly soon be a pre-installed app on iOS) and offering something different, which means exclusives from top artists, hence the very public capitulation seen this week.

It may go even further than this. Apple could offer these megastar brands a new home, cutting the record labels (and their cut of the royalties) out of the loop completely. Even if Apple didn’t get a bigger slice of royalties as a result, it would get exclusive access pre-release and be able to ride on the coat tails of this to even bigger profits. Compared to this, a few pennies on royalties now, especially given their financial reserves, is chickenfeed.

Image Source: The Guardian

Darrell Jones

Geek Power's answer to Jeremy Clarkson. That's to say he's a sad, middle aged man with a big mouth who's trying to act like he's still in his twenties. he remembers the days of punch cards, paper tape and hard drives the size of toasters with the capacity of the kind of usb stick you might get in a Christmas cracker.

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