Why don’t the top executives at Apple give up their salaries for three months, and pay musicians

Apple is going to offer users a three-month trial for its new Apple Music streaming service. That’s good. However, Apple will not pay the artists for any music streamed during that time. That’s not just bad, it’s downright wrong.

Apple is taking a risk by starting the streaming service, but it seems that it’s the musicians that are being asked to pay the price. That doesn’t seem right to me. If it’s Apple’s risk, it should be Apple paying.

I know a lot of people talk about the promotion artists will get, but you can’t ask someone to work for free. People ask me to write articles for them all the time, and then tell me, “we don’t pay, but you’ll get tons of exposure.”

Sorry, exposure doesn’t pay the bills.

While there are artist that can take the hit, like Taylor Swift, there are a lot of artists that just can’t afford this. What’s more they shouldn’t have to even consider it as an option.

According to Apple’s Robert Kondrk on Re/Code:

In the U.S., Apple will pay music owners 71.5 percent of Apple Music’s subscription revenue. Outside the U.S., the number will fluctuate, but will average around 73 percent, he told Re/code in an interview.

Apple won’t pay music owners anything for the songs that are streamed during Apple Music’s three-month trial period, a bone of contention with music labels during negotiations for the new service. But Kondrk says Apple’s payouts are a few percentage points higher than the industry standard, in part to account for the lengthy trial period; most paid subscription services offer a free one-month trial.

In that same article, Spotify shot back at Apple, saying:

Spotify spokesman Jonathan Prince points out that Apple offers its own free music via its iTunes Radio service, and will offer more via the Beats 1 radio service that it will launch alongside its paid service; Apple will pay music owners a much lower fee for music streamed on those options, which don’t allow them to call up songs on demand. Says Prince: “We pay royalties on every single listen, including trial offers and our mobile free custom radio service, and that adds up to approximately 70 percent of our total revenues, as it always has.”

I am disappointed in Apple. If the company feels so strongly that someone shouldn’t be paid for the three-month trial, why don’t the top ten executives at the company give up their salaries, bonuses, and stock for three months and pay the artists instead.

That should be enough to keep Apple music going.

  • James Hughes

    “why don’t the top ten executives at the company give up their salaries, bonuses, and stock for three months and pay the artists instead.”

    Jim, it wouldn’t even take three months salary.

    They could fill the void with a day or maybe three days worth of salary.

    I am not saying they don’t deserve what they make. I think they do, that’s not the point.

  • TWF

    People seem to think that ALL MUSIC SALES will stop during this trial, and that every single person on the planet will suddenly cancel their services and switch to the Apple Music trial, and that radio will cease to exist, as will concerts.

    None of that will happen. The artists will be fine.

    • Moeskido

      Not the point. Do you work for free? Are you ever asked to forgo your hourly rate or salary to help someone else pay for publicity?

      • TWF

        Plenty of times, or for alternate forms of compensation. And in this case both sides have a mutual goal of building a platform for the future. Asking Apple to make all the sacrifices hardly seems fair.

        • Moeskido

          Are you given the choice to forgo that compensation, or are you simply expected to, by people who have no stake in your work?

          Whose platform is being built? It’s a retail service, not a coop greengrocer.

      • JDSoCal

        Of course I’ve worked for free. All self-employed people, lawyers, real estate agents, Subway franchisees, anyone who’s ever wanted to get rich is willing to work for free a little.

        Union losers say “it’s not my job” or demand to be paid for the time it takes to walk to the loading dock. Go ask a small business owner how many uncompensated hours he works.

        • Moeskido

          Union members have the strength of numbers to refuse unreasonable demands. Even anti-union brats like yourself have the ability to choose whether you’ll work for free. Why are you denying Swift her ability to choose?

      • site7000

        Artists are not compensated for recordings on an hourly basis; nor are they uncompensated. It’s a false analogy. Apple is not wrong to believe that this is a fair exchange to increase both competition for the recordings and agree in advance to pay the resulting higher compensation rate for the recordings. Business-wise, if this was an perfect market, the artists would have only a Pyrrhic victory from withdrawing from a good venue—both sides would lose money. Nonetheless, this is bad PR for Apple, unless they quickly reverse their position. It’s worth the money for them to align squarely with artists. I doubt most artists will appreciate the solid being done them by Apple, but I hope they can and Apple will.

    • Jwcorey

      If you create something that you want to sell, Apple doesn’t get to just decide that they’ll give it away for free. It’s as simple as that. It’s not their decision to make.

      • TWF

        That’s not how this works. Apple is saying “Hold out for a little bit, and we’ll get you more profit than otherwise later”.

        • Jwcorey

          It’s exactly how it works.

          Apple does not guarantee that profit. There’s simply potential for it, but Apple is not saying “we’ll give you more” anything.

          What they’re saying is “we’re going to use your music without paying you for three months per trial account.”

          And that’s not okay.

          • TWF

            If they don’t get later profit, they probably wouldn’t get profit during a paid trial either; it’s not like people will listen to certain music only when their account is free.

          • Jwcorey

            What you’re describing is conjecture, not contracted licensing. It’s fine to speculate and say “well, if you didn’t make money in those three months then you probably wouldn’t get money after,” but that’s not how business works. Apple wants to make a profit from using music to promote their service, and if they want to do that then they should pay for that music. There’s absolutely no reason why they should unilaterally decide not to.

            There’s an ongoing myth among many people that creating music does not constitute real business, so license holders do not need to be dealt with in a professional manner. Apple is happy to reap the dividends of using popular music to promote their services, but they want want the right to not pay a standard fee.

            That’s not how good business is done. If you want something, you pay for it.

          • KaranM

            But they are doing just that. They negotiated a deal with the rights holder of that music and said we’ll pay you 71.5-73% – a higher rate than other streaming services pay – in order to get the additional 2 months and the labels agreed.

          • matthewmaurice

            The thing is, in most cases, I don’t think the rights holder is the artist. In addition, not every rights holder agreed to that. If the rights holder is contractually obligated to pay an artist X amount per stream and Apple is not paying the holder for 90 days of streams then the holder has to come up with that money on their own. Depending on how many plays occur during the 90 days and how many occur after, those extra percentage points may not cover it.

          • matthewmaurice

            Maybe, but any artist with a new album coming out during the trail period would be totally screwed because they sure as Hell get more listens in the first few weeks of a release than they do after it’s been out for a while.

            It’s a non-issue now, Apple is going to do the right thing and pay everyone. Hell, maybe they planned the whole thing to look responsive.

  • It’s unfair Jim to be quite so brutal on Apple here. There seem to be many nuances to the situation. I think Rene Ritchie’s article nails down the heart of the issue. http://www.imore.com/apple-music-dilemma-who-pays-free-trial

    As for comparing you writing free articles to artists is not quite the same. For you to write an article costs you time and effort. For the artist the song has been written and recorded, and they will get paid.

    In addition if I asked you to write an article, and said you won’t get paid for the first 3 months, but you will get paid more per view after those three months are up, wouldn’t you begin to think about it. (It would have to be a timeless article, one that would be on a constant rotation of views for the rest of the articles life). Which is what music on subscription services is. Producing income for the life of the service.

    • Moeskido

      Whose service is it? I suppose you’d say the same about a new magazine from a major publisher that asked professional writers to contribute articles for its premier issue without compensation, on the promise that sales and subscriptions would come later? Or perhaps you’d expect a supermarket chain to ask its distributors to waive payment for three months of groceries, while the chain establishes its presence in a new location?

      It’s not any artist’s responsibility to “help” establish this service, even for the promise of greater payment at a later time. It’s not fair to ask them to shoulder that burden, ever.

      • If I could teach 1 class, that was given away for free for the next 3 months and then for the rest of my life produce income for me, I’d be all over that. Even if it did establish the school providing the class.

        • Eugene Kim

          Nobody is guaranteeing that income for life, especially if after your initial marketing push, it gets buried in all the other free classes. You are also assuming you have other income or savings to support you for those three months, something many people cannot say. Another point is that for small indie labels, their initial release income will probably be a significant portion of their total income, with a steep drop-off after that, similar to indie app devs. Yes, they may get the exposure they need during the first three months, but without income to keep them going, that exposure won’t mean squat.

        • Moeskido

          Somehow, that class would magically produce income for the rest of your life, guaranteed? What a great deal that would be. Sign me up.

          • James Hughes

            Of course! It’s a guaranteed hit!

  • beafer

    I wholeheartedly disagree based on the fact that apple also has cost associated with this new service. No artist contributed to building (or rebuilding) of the infrastructure cost associated with apple music. None. Apple also gives a higher percentage of the money BACK to the artist after the service is in full swing. What did artist do to make THEIR music available to world of apple zealots / fans / whatevers? NADA. They just sign the contract and start pumping money from ANOTHER streaming service. Except, this service has the infrastructure and presence that makes spotify look like texas in the middle of United States. Don’t forget about the folks that don’t pay but just torrent or “borrows” it from their friends of internet. Long term goals outweighs the short term malice.

    • Bingo!

    • matthewmaurice

      No one forced Apple to go into this business, so their expenses developing it are their problem. If you open a clothing store, don’t expect the designers to give you free clothes because you had to pay to buy racks and cash registers.

      • beafer

        No, I don’t expect them to give me shit for free. But IF i’m in a ideal location in an ideal in a prominent mall, then there is this thing called consignment. And MANY designers HAVE to do it get there stuff into the right location. Apple has the location. Artist needs Apple because of their location. Apple spent money building this location. They didn’t spend money to have artist / designers to just come in and sell their stuff without a cut. But here is the one thing where they both need each other: to make this location the best location, they both need to make sacrifices. Apple built the infrastructure / location, Artist / Designers need to sacrifice something as well. If you leave up to the designers / artists, streaming business / clothing stores would sell their products and give all the proceeds to them. And then what?

        • matthewmaurice

          It appears to be a moot point now, but Apple wasn’t offering a Net 90 deal. it was give us 90 days of free stuff and after that we’ll pay you for what we stream after that.

          • beafer

            Quite right sir. Happy Streaming / Pirating folks

    • GFYantiapplezealots

      I’m glad someone else gets it besides me. It’s amazing everyone thinks Taylor is the victim here when she’s making more than any single person at Apple.

      I bet she pulls out the ‘I’m not paid as much as Jay Z because I’m female’ card next.

  • Scott Russell

    There is an important difference between you doing work for free and an artist not being paid during the free trial period. The artist has no out of pocket expenses associated with this trial and is not giving up any of their valuable time. In other words, the cost to them is nothing. That being said, even thought I think your analogy is fundamentally flawed I agree with you that Apple should foot the bill for its own marketing expenses, which is essentially what the trial period is. However, Apple, Inc. should do this, not individuals. This should be a budgetary line item, not largesse from the Apple executives.

    • Nunes

      “The artist has no out of pocket expenses associated with this trial and is not giving up any of their valuable time”

      This makes sense if Apple only brings in new people to the streaming market, who never use any other service. For the majority of users who will switch from royalty-paying Spotify (or any other) to non-paying Apple Music, the artist is losing revenue.

      • TWF

        It’s more likely people like that will sign up while keeping their other subscription. Then when the trial approaches its end, they’ll make a call on which to keep.

        • Nunes

          True, but on the period you have both services the artist still loses revenue each time you decide to listen Apple Music over Spotify

  • Stephen

    Totally agree, glad you voiced this. It will be heard by artists and Apple.

  • Scott Stocker

    Why doesn’t Apple just take a loss for the second and third months of the free trial by paying what they normally would for a paying user. Consider it an investment for the future and a penalty for being so late to the streaming market. Furthermore, is three months really necessary? People already familiar with streaming services will take a look and either really like it and switch or stick with what they are already using. To those who have never used Spotify, does it really take a 3 months to decide if it’s worth $10 a month?

    • TWF

      It’s called antitrust. The US DOJ is already well paid to be biased against Apple, they don’t need another Bromwich.

      • matthewmaurice

        How do you arrive at that conclusion? Please cite which parts of US Code you think that violates (including any applicable case law).

  • Johnny S.

    You seem to have forgotten that after the trial period, apple will be paying artists a rate that’s 3% above industry average.

  • How about the artists, actually the music rights holders, chip in a little bit for the infrastructure that will promote their music that will help them make money; i.e. servers, real estate, electricity, staff, software development, support, marketing, etc.

  • Steve

    Nothing like waiting to find out which way the wind is blowing before parroting, I mean posting a false analogy and disengenuous argument. Who are the artists that people would be playing during the 3 month trial that they wouldn’t be after the 3 month trial?

    • Moeskido

      Less-well-known artists who are directly supported by fans, and who already know that Apple Music isn’t much of an opportunity for them anyway.

  • StruckPaper

    There’s an interesting angle here: Presumably, Jimmy I. (he who cannot speak fluidly on stage), Trent Reznor and Dr. Dre were deeply involved in the decision about the free trial. They went along or perhaps even proposed the approach of not paying artists and labels. Why? To be a fly on that wall …

    • TWF

      Because they can see past their own noses, and think long-term.

      • Moeskido

        They can afford to. They have a direct interest in Apple’s business, and they’re not forgoing their salaries.

  • Moeskido

    Agreed. The level of disconnection from so many commenters on this issue shouldn’t be a surprise to me, but it is disappointing. Expecting any artist to forgo compensation for “exposure” is self-serving douchebaggery.

    • James Hughes

      Really though, how can people not see what this is all about? People keep referring to the fremium model. That’s not what this is about. It’s about a pay for play model, which is fine, I’ll pay for no commercials. But the fact that that Apple wants the artists, that will fuel this model, to be the ones losing out is ridiculous. It’s Apple, it’ll be a success one way or the other. If it’s not, it’s not the artists fault.

      • Moeskido

        Remember the writer’s strike. People thought there was such a thing as a community full of wealthy, spoiled writers out there, all trying to gouge poor, impoverished movie studios.

      • David Stewart

        You mean the artists and rights holders who will get 70+% of the revenue for doing nothing new?

        Apple has already invested what must be approaching a couple billion (Beats acquisition, datacenters, etc.). That’s more than the entire US recorded music industry takes in in three months.

    • David Stewart

      You mean all those artists who take free gear off guitar and amp makers? What about those luthier who made their custom Strat? Are they working for free or does Fender simply realize the exposure of having a band playing their gear is worth more than the cost of manufacture?

      Also software piracy is rife in the music industry, so I guess they don’t care much about software developers getting paid either.

  • JDSoCal

    Uh excuse me, but wasn’t this a deal bargained with BMI/ASCAP or some other music rep? It’s not like Apple just announced some music service without having clearances first!

  • TWF

    Copied from an Apple Insider comment:

    The reply I wish Apple would make:

    “An Open Letter on Music

    To Rich Artists, Love Apple

    Music, movies and the arts have always been important to me and to Apple’s customers. After much reflection from recent events surrounding Music, we’ve decided to take a step back. We’re going to close the iTunes Store.

    There are now many great options out there for consumers to enjoy whatever they want and whenever they want including YouTube and torrenting. And consumers have spoken loud and clear—they’re consumers alright. Consumers are unwilling to pay more than what the industry backed models like Spotify and Hulu charge—nothing.

    During our proposed 3-month free trial, artists would not make money. But neither would we at Apple. We’re not sure how to make music a workable business if only Apple is expected to pay.

    So we think it is time to say no to one more thing so that we can focus on areas where we really can make a difference.

    To the many artists out there who leveraged iTunes Store to get famous and then excoriated us and the labels once you became famous—we wish you well, truly. We think there are many profitable models out there for you including SoundCloud and local cafes.

    And to our customers we hope you enjoy our hardware and continue to Rip, Mix and Torrent.



    • Moeskido

      “Leveraged”? Because it somehow wasn’t an equitable business arrangement to begin with?

      That comment’s a tantrum.

  • Jwcorey

    I wouldn’t say I’m a Taylor Swift fan, but I was encouraged to see her speaking out against Apple’s practices even though the down side of it won’t really affect her.

    • But pulling her 1989 album from Apple and Spotify streaming will affect her greatly with respect to purchased music from the iTunes store and other outlets. Much much better to have album sales, and eliminating/limiting streaming will help that greatly.

      With respect to the “open letter” to Apple, it appears she’s engaging in a smokescreen and being disingenuous to justify the above. Notice she has not pulled her older music from streaming. Nor has she pulled any music from iTunes sales.

      In a year or so after 1989 sales have tapered off, I bet that album will be added to both the Apple and Spotify streaming pools.

      • TWF

        Exactly. It’s all about her.

        • Cranky Observer

          Capitalism – love it or leave it.

          Interesting how brutal self-interest is “unbecoming” in People Who Perform Music We Don’t Like(tm), particularly when the PWPMWDL are women. No one in the Apple ecosystem “value chain”, from Tim Cook down to the smallest subcontractor in the PRC, is doing anything other than maximizing their own take no matter how much they already have. But the musicians are supposed to take one for the team because reasons and I don’t like that type of music. Talk about kissing up and punching down.

  • Leon Speegle

    Easy solution here. Let artists choose: 3 months free and Apple’s terms going forward, or 1 month free and Spotify’s terms forevermore. Boom. Done. Pick.

  • KaranM

    I found this tweet storm from a music exec extremely educational https://storify.com/ethank/father-s-day-and-taylor-swift-with-a-side-of-apple

    It shows what most people don’t understand about the economics of the music business and how it’s changing with streaming services.

    Presales were key in the old model … conversion to paid in the new.

    • matthewmaurice

      “Taylor Swift could also point out that 0 dollars is more than most artists make pre recoupment.”

      Pretty much problem #1.

  • matthewmaurice

    Is Apple really paying artists, directly that is? From what I understand there’s about 4 different rights holders involved in streaming music and all of them need to be paid (in various amounts through various organizations). As I see it, the issue, for the Indies at least, is that they’re contractually obligated, in most cases, to pay their artists for streamed songs, and have to do so from their own funds if none are forthcoming from Apple. That’s just not tenable for these small labels, so they’re sitting out the trial period.

    Bottom line, it’s bad optics for a company with hundreds of billions in the bank to utilize, without compensation, the creative work of, many, others to leverage growth of a new business. The goodwill Apple could have derived, from all sides, by saying “we’re going to offer 90 days of free streaming and we’re going to pay rights holders the same rate they’ll get from paid subscribers.” Granted that’s probably an accounting nightmare, but when you have Apple’s cash pile it’s hard to poor-mouth.

  • GS

    Perhaps people should read Eddy Cue’s Twitter stream

  • Ruurd Pels

    I think you really are barking up the wrong tree here. Miss Swift can take the hit. No. The OWNER OF THE MUSIC she performs can take the hit. If that is Ms. Swift herself then she is a lucky girl indeed. Most artists won’t see a penny from all these royalties.

    It is the label fat cats that will get even richer. Thank you Ms. Swift for standing up for your fellow artists… NOT!

    We’re all falling over Apple over those poor artists that are deprived of their income. Well, forget it.

  • samdchuck

    Why didn’t they discuss this during negotiations? Oh wait, they did and they agreed to it.

    ♫ Moving right along…

  • AAPL.To.Break.$130.Soon>:-)

    Ha! Don’t make me laugh. Besides, accessible or not, Apple is still sitting on close to $200 billion in cash. It would seem likely that three days of Apple’s revenue would easily cover the three month’s trial. Apple is making a stupid amount of money and now that they’re paying the artists for the trial period, that goodwill should go a long way.

  • marcintosh

    Timing is everything.