I don't understand why a company with such a professed love of music and simultaneously so much in the bank can't back its own product and a) pay artists for that three month period and b) offer the service at cost going forward.
> These are not the complaints of a spoiled, petulant child.
I am starting to doubt that Taylor Swift really is as 'representative' as she wishes to portray, and not simply greedy, considering the extent to which she avoids non-profit-maximising revenue streams (e.g. Spotify).
That is literally her choice to make, as it's her name and her work that's being sold here. And good for her (and her management team, and her management team's management team) for making it.
Well, the same argument of "This is a terrible thing for up-an-coming (or niche) artists" could be made against Spotify's business model.
And slightly off-topic, I fail to see how anyone could call any of this the complaints of a spoiled child even if she would flat out say "fuck you, pay me". Are you not allowed to ask for your dues if you're rich already?
Hate to make the comparison, but drug dealers have a saying "the first hit is free." In this context, I think making the first months free lowers resistance to get people on the service, and will ultimately serve artists better in the long run. That said, I don't know what rates Apple pays out to artists who use this service, so I can't comment there. Anyhow, Apple has always run its business very aggressively so this move does not surprise me. $0.02
> In this context, I think making the first months free lowers resistance to get people on the service, and will ultimately serve artists better in the long run
So, Apple should pay for it, rather than attempting to enforce themselves as a middleman who takes only profit as they have done in every other sphere.
Let's have a hypothetical scenario with simplified numbers. The trial distributes $20M in music and leads to $10M more in customers after a year. Half the revenue goes to Apple, half to the artists.
If Apple doesn't pay the artists for the trial, then they run the trial and get $5M extra profit. The artists get $5M extra profit. The audience gets more music. Everyone wins.
If Apple pays the artists for the trial, they see that it will cost them $10M licensing to get back a mere $5M. They don't run the trial. Nobody wins.
In your comparison, the dealer has to pay the cost of this free sample, not the drug producer.
Offering several weeks/months for free is nothing new in the music streaming industry but usually the service is the one that has to swallow that cost.
Both sides of this disagreement are hilariously petty. Both desperate to hold on to every last penny they can get hold of.
The music industry has been dying for a while but this really is a fantastic example of it. Everyone who thought Apple cared about artists now has to come up with a new rationalisation.
Did you not read the whole post or do you just not believe her?
> This is not about me. Thankfully I am on my fifth album and can support myself, my band, crew, and entire management team by playing live shows. This is about the new artist or band that has just released their first single and will not be paid for its success. This is about the young songwriter who just got his or her first cut and thought that the royalties from that would get them out of debt.
Except the loss-leader is being used to steal users from other streaming radio services that _are_ currently paying labels & artists. So any users that switches from Spotify to Apple for example is a user that was paying artists but is now not for 3 months.
That analogy would apply if the loss got people in the door, but they bought SOMETHING ELSE that ensured profits. For example, in this case if free music got them onto Apple's platform (loss) where they then bought a bunch of apps (unrelated to music and the source of profit).
For anyone who doesn't know, a loss leader is something advertised like bread for 50 cents or something, where the store loses money on each and every sale. It's a customer acquisition cost, and the goal of this is to "lead" with the loss, get people in the store, and there they will buy not only bread but anything else they need at the time, at normal market prices. Normal market prices give enough profit to offset the loss taken on the "lead." This works because people don't just go to a store and buy the one marked-down item and nothing else. (Or more specifically the extra profit for people who buy other things after only coming in due to the loss leader, covers the loss on them, and on everyone who only gets the loss leader.)
well, if you type "loss leader" into Google an infobox pops up that says "A loss leader (also leader) is a pricing strategy where a product is sold at a price below its market cost to stimulate other sales of more profitable goods or services" which it got from Wikipedia, whose article doesn't mention what you call the strategy.
Not sure I understand this argument. Shouldn't she complain about the record companies rather than Apple? It's not like Apple's making money during that free 3 month period.
In deals like this, service providers don't have the upper hand, content providers do. Apple wouldn't have been able to offer free 3 month trial if record companies wouldn't have agreed to it. Maybe I'm misinformed, but did Apple come out and say that if she doesn't put her albums on its streaming service, she'd be off iTunes music service? Why on earth would they do that? It'd be a PR nightmare for them and they'd lose money.
It seems really weird to me that apple would get away with paying nothing for the 3 months. Especially since it's not like they are anything but yet another competitor in an already crowded space.
It's okay, the notice is in your e-mail inbox and your music is already online... If you don't like it, write them an e-mail, put: "2 legit 2 quit" in the subject line. /s
This whole "pay nothing" idea is strange to see on HN.
Apple developed the software, is footing the server, power, bandwidth, and ops bills for three months all for free. The labels are chipping in their content for three months.
Sounds like everyone is bringing something to the table. Apple is incurring real costs. The labels, not so much.
Three kinds of customers will try the service:
People who buy their music: these will either become long term subscribers or not like the service and buy the songs they want anyway. Perhaps slightly delayed.
People who currently freeload: no loss for the trial. Possible huge win if they subscribe.
People using another streaming service: this is where the labels might actually give something. If a customer cancels their existing service while trying Apple's that will reduce the label's take by up to ~25% for the year. Month alignment and a comparison period will both drop this.
I suspect the third category is not the target audience. A small loss on service switchers is worth the big win for the labels in converting freeloaders to customers.
> artists have already incurred the costs to produce the content, their costs do exist.
no one is arguing that their costs don't exist, but that they have nothing to lose to put it on. It's not like the artist will somehow have a lower cost by _not_ putting it up.
Except they do have something to lose if they put it on. They will have a lower profit if listeners that would subscribe to another paying service or buy their music switch to Apple streaming.
You have zero evidence of this. We don't know and may not know for a number of years whether Apple Music is more profitable for artists (or not) than competitor services.
Apple is giving away three months of its software and servers for the streaming service. After the 3 month period, both Apple and the label/artist get paid.
Hmm, this comment needed more text, but I was about to step on stage using my phone, sorry…
In the creation of Apple Music, Apple didn't not require any musician to create more music. Apple did have to develop their delivery system.
Apple does not require any music owner to put their music in Apple Music. But if a music owner does want to be included, then when Apple isn't paid, the music owner doesn't get paid. When Apple isn't paid the music owner does not have to chip in on the operations costs, that's nice of them.
Stated a different way, during the promotional period which the music owner agrees to, to promote their music in what they believe will be a profit making venture, Apple will pay all of the distribution costs out of their own pockets.
About Pirate Bay (which I didn't really want to comment on, but HN won't let me edit the grand parent) The content owner's, by and large, did not agree to put their material on Pirate Bay. If the content owner's did, I'd use Pirate Bay all the time and pay for the privilege. Instead I have to wander the balkanized world of video content looking for which of the four services I subscribe to might have the video I want to watch. It is a terrible solution and should burn in fire, but we are stuck there for now.
But once Apple's service starts, the costs to develop it are already paid. Therefore it's a sunk cost, and we don't need to consider it here. ...right?
I get the typical arguments that things being available free might not affect sales - but in this case I think they'll see a direct impact.
I think they'll get a pretty large amount of trial users simply by advertising it in iTunes - oh you're about to buy this album? Why don't you listen to it and the majority of our catalog free for three months instead?
Other than Android they have a lot of music use cases supported, free of charge - why would you buy?
I honestly don't know how much this will affect sales but Apple are certainly in a position to push users away from those sales and toward the free service.
> oh you're about to buy this album? Why don't you listen to it and the majority of our catalog free for three months instead
I think it was Eddy Cue who said specifically in an interview that they will not do this.
Edit: from the Guardian
He also denies a recent report that Apple is planning to aggressively promote its new streaming service to people buying albums on the iTunes Store. “That’s the wrong way to look at it. You shouldn’t take a customer who’s buying an album, who’s happy buying an album, and try to tell them that what they’re doing is wrong,” he says.
“But we don’t have to, and we shouldn’t try to kill the iTunes Store or kill people that are buying music. If you’re happy buying a few albums a year and that’s the way you’d like to continue doing it … but if we can help you discover some new artists or some new albums through Connect or through listening to Beats 1 radio, great.”
I don't think you understand how music usually works for most independent bands. As I've helped a couple friends put out independent albums, here's the basics.
A band will put in a long time creating an album: writing the songs, orchestrating, rehearsing, reworking, etc. Then they pay real money for recording, editing and mastering as well as paying an artist and photographer to create the album art. They're also creating marketing materials online and off. This is all for a usually small time period when a new album will sell. And when streaming (which generally makes them next to nothing) will hit its peak. All these costs are front loaded and then there's a usually short time period where the band hopes to make this money back. During this time, the band is spending additional money and time doing marketing and promotion as well.
Apple's deal is a raw one for these artists as they'll lose a good chunk of revenue during that small time period. And it will leech purchases away from iTunes as well. I can guarantee that Apple will have prominent notices within iTunes about which albums are available on Apple Music and suggest that would-be purchasers sign up.
Plus there's the fact that Apple is threatening independent artists with removal from iTunes if they don't agree to stream for free on Apple Music. And the fact that these artists can't just decide to sell the music themselves on their website to iOS users because, thanks to Apple's carefully-designed walled garden, iOS users can't download music from the web or 3rd party apps and add it to their music library like they can on Android.
> Wrong. Apple has unequivocally stated that this isn't happening.
A couple different independent artists online have stated that Apple told them this.
> Wrong. You can just add it using iTunes.
Did you purposely take my quote out of context to make your answer seem correct? I specifically said that iOS users can't download a song from the web or a 3rd party app and add it to their music library like they can on Android. On Android, I can download a song while out on the go from anywhere I want and add it to my music library. Every app can add music, every app can play music. Can you do that on iOS... or do you have to go back to your home computer, add the song to your computer, add it to your iTunes library and then sync it to your iPhone/iPad? The last time I helped a friend do this, this is what we had to do.
> A couple different independent artists online have stated that Apple told them this.
Well I am far more likely to take the measured, legally considered statement from Apple over a single independent artist's Twitter posts. Apple would be in a for a world of hurt if they deliberately mislead people.
> Did you purposely take my quote out of context
No. I am an iOS user and half my music collection is from the web. It is completely legitimate to use iTunes to add it to your collection. Otherwise third party apps exist which allow you to download from the mobile web. I am not saying it isn't as flexible as Android but it is disingenuous to say it isn't possible.
> Well I am far more likely to take the measured, legally considered statement from Apple over a single independent artist's Twitter posts. Apple would be in a for a world of hurt if they deliberately mislead people.
Considering the way Apple lied... ehem... misspoke? misled people?... about ebooks, lying about music isn't that far fetched.
> No. I am an iOS user and half my music collection is from the web. It is completely legitimate to use iTunes to add it to your collection. Otherwise third party apps exist which allow you to download from the mobile web. I am not saying it isn't as flexible as Android but it is disingenuous to say it isn't possible.
So, as I said, it is impossible for an iOS user to just download a song and add it to their music library on the go. It would be technically easy for Apple to enable this, but they purposely disallow this to make it harder for customers to purchase from 3rd parties. The same way they won't let 3rd parties sell music within their apps without paying 30% to Apple (making it financially impossible).
Having to go all the way home, add your music to iTunes, plug your phone into your computer, and then sync to iTunes just to be able to add a single MP3 to your phone's music library may be "legitimate" but it's anything but reasonable. It's in this state solely to make it inconvenient to the user and push them into the open arms of iTunes.
They don't even have to be lying. Apple is a huge company, and it's entirely possibly that its representatives may have been making threats that were not, ah, officially authorized.
> 30 years playing in and recording with independent bands. Dong just fine on understanding up front investments.
Apologies, then. Though I am curious about your take on this... specifically why it differs from my other friends. All of my independent musician friends I know online and off think this is a raw deal as soon as they learn the details. I understand why it makes sense for the big labels (they don't care about artists' incomes and likely got a sweet payoff from Apple). But I'm curious why a smaller musician/music producer would be happy with it.
I suspect mostly because I started making music in an age when duplicating a CD was not possible and MP3 hadn't happened. I view my music projects as producing something and then working to get it into customers' hands. Radio stations would play our music and not pay us any royalty (except the songwriter portion), and that was fine.
Enter MP3 and suddenly musicians are looking at a hostile world where their primary consuming demographic believes it is silly to pay for music at all. Bands have traditionally felt screwed by labels, now their customers are screwing them. Apple sets up a service where the labels contribution to the free trial period results in no revenue for bands and that's the distributor screwing them. That makes it pretty much the entire industry top to bottom.
I don't see it that way. Apple Music will likely tap a huge population that doesn't currently have a streaming service which is a great thing.
As far as "losing" micropayments from song plays during the trial… If someone is forced to listen to my song by their robot DJ and doesn't care enough to come see a concert or buy something, or listen to it in the future… that wasn't really a sale I missed out on. That was some poor schmuck that wasted 4 minutes of his listening time on my song and in some alternate economic system would have paid me for the privilege, but didn't.
Also: I'm eating in August no matter how this plays out.
I think you haven't quantified the artists' opportunity costs. The idea is a customer may swap a streaming service which pays artists for Apple's streaming service which doesn't pay artists. Therefore artists may be losing money they otherwise would have typically made.
Apple's enormous cost in launching the service is the best counterpoint I've read. 3 month free trial means no revenue for Apple too. Apple is certainly in a better position than most to endure atartup risk through trial.
There's another point being overlooked regarding how music is consumed: music is listened to repeatedly over months, and the free trial is no different than a promotional period. Artists, even indies, will still receive income from the myriad other services, and will soon receive a better rate from Apple. Distribution is an enormous service to the artists, and it's value shouldn't be overlooked.
That being said Taylor Swift has every right to pass on Apple's offer, and it's great for the recording industry to have a major check/balance like Swift.
Unrelated, but interested to see if artists will ever abandon the labels and go direct to distribution. I'm sure labels provide more value than people want to acknowledge.
I must say, Swift is a pretty good writer; yet this perception is warped by my surprise to be honest. I guess I'll go looking out for more of her written works when I next have a free moment to make a better judgement.
You'd be surprised. I'm not a fan of her music (if I had kids they probably would be) but she's very hands-on with her image and if it's on her tumblr page, she wrote it. I respect her as a person and from what I've seen she's very intelligent and articulate.
There was a time when people used to calculate how much money would have to be lying on the ground for it to be worth Bill Gates' time to simply stop, lean down, and pick it up...
And when asked during his last AMA BillG said he would stop, lean down and pick up any money he saw on the ground. But then he'd give it to his foundation.
I hope you do realize companies get paid handsomely to properly manage PR and make people believe they are actually the person they are representing, writing the PR. Or do you also believe Obama writes his own speeches? In fact, you believing she actually wrote that is exactly why those PR companies are in business.
She absolutely didn't write that, she has an entire PR firm at her disposal. The same way most politicians do not write any of their speeches. Do you really think most "stars" directly manage their "own" tumblr,facebook or twitter accounts? of course not.
I got vilified as a troll on reddit for suggesting such a thing. A reply to me earnestly said something to the effect of: I don't know anything about twitter, but I'm sure <washed up star> follows <big movie franchise>.
"Swift gets her fans, and instead of keeping to herself she builds a relationship with her audience through Twitter and Instagram. She acts as her fans best friend as opposed to their untouchable celeb crush. And she does it all herself, no assistant at hand."[1]
I get why you think that way, because most celebrities do indeed hire PR firms and assistants to handle their fan relationships. Ms. Swift is unique in the fact that she doesn't, and it's documented well enough that even a non-fan like me knows about it. I wouldn't have said what I did above if I didn't know it to be true.
I'm sure she wrote it, but I'm also sure not a word of it didn't get approved by her lawyers and PR people, and they probably had to do a hefty amount of editing to ensure the tone and words are just right (and don't harm any contracts they may have with apple.)
I mean I'm sure she's great, but she's also a brand and a business in her own right. Stuff like this is too important to let an artist just go off and say whatever she feels.
As compared with whom? Ariana Grande? Metallica? Madonna? Jello Biafra? Efrim Menuck? Nicki Minaj?
Sure, she's probably market-positioned as "more authentic" than Paris Hilton. You shouldn't be blinded by the marketing any more than you should believe Iron Maiden to be devil-worshippers.
> intelligent and articulate.
Which usually translates to "White, non-Southern American accent". ("British" also applies, but usually to men.)
3 months free to buy market share makes sense but I am amazed to hear that they are doing it by just not paying the content producers during those 3 months. I'd be doing the same thing in her place. Apple has the cash to run a loss leader on this.
From http://www.aboveavalon.com/notes/2015/6/13/apples-cash-dilem... it seems like Apple may not actually have the cash to do this, not in the USA at least and it would need to pay taxes on the cash it is holding outside the US to pay the majority US labels/producers/artists.
Not that this excuses what they're trying to pull here or anything. By trying to weasel out of paying any US taxes, they can't spend their own money. So in this case they really might be too poor to make this deal work otherwise.
Good for Taylor Swift to stand up to this kind of crap.
Not defending apple for not paying artists, but I will defend their 'weaseling' out of US taxes. U.S. Corporate taxes are among the highest in the world and until Washington starts lowering their confiscatory tax rates, I would encourage all businesses to avoid repatriating earnings. A 10% tax rate is high enough.
US taxes contribute more to violent deaths and unnecessary punishments/imprisonments per dollar than taxes paid in most other countries. The US spends a greater proportion of GDP on "defense" than almost all other Western countries, so a tax dollar paid in the US is more likely to contribute to "defense" and less likely to contribute to education, healthcare or whatnot than a tax dollar paid in e.g. Sweden or Holland. Similarly, the US has 25% of the world's prison population yet only 5% of its total population, so necessarily spends a relatively higher percentage of tax dollars on incarceration.
There are actually people who do everything they can to minimise their tax liability in order to reduce the money spent on things they consider unjust: https://en.wikipedia.org/wiki/Tax_resistance.
Every dollar not paid in US tax is a dollar that won't contribute to blowing up people in the Middle East who have the misfortune of being in proximity to suspected terrorists (tens of thousands of people over the past decade) [1]. Similarly, every dollar not paid in US tax is a dollar that won't be spent putting poor people in prison for smoking a weed that causes less violence in a decade than alcohol causes in a day.
Bolling said the United States has "the highest corporate tax rate in the free
world." He was referring to the statutory rate, meaning the rate before
deductions. On that score, he’s right: The United States does have the highest
statutory rate among developed countries. However, the United States’ corporate
tax rate doesn’t appear to be the highest once deductions and other exclusions
are taken into account.
I found it an interesting article so I decided to share.
There's also some countries that have relatively "low tax rate" but very high social security costs which are not always counted as tax rates by studies.
The US effective corporate tax rate tends to be 25% to 27% in normal times, which is still one of the highest effective tax rates in the world. The median S&P 500 effective tax rate is 30%, also one of the highest rates in the world.
You often see 12% or 13% bandied about as the effective rate, but that's intentional intellectual fraud: they refer to 2010 numbers, when the US was coming out of the great recession and corporations had lost a ton of money.
I agree with corporations who attempt to legally pay as little taxes as possible. That's what I do. If someone doesn't like it, then get the laws changed.
Changing the laws requires a sizable investment in lobbyists and bribe money before any ROI can be achieved. Most individuals simply don't have enough taxable income to make the investment worthwhile. Megacorps do. The situation is not morally symmetrical and not practically symmetrical.
Yeah! None of this one-man-one-vote crap, back to some good old fashioned plutocracy. After all if the top 10-20% own 90% of the wealth, it's only right and proper that they also own an equivalent share of the political power. ;-)
That exists: Mayday PAC. Lawrence Lessig organized it last year. They raised $11 million and tried to influence some key Congressional races, but it didn't really work. Now they're trying some different things:
Interesting link, but $11 million bucks is probably not enough to buy even a single Senator, even if his district is an extremely cheap media market.
A recent Senate campaign in one of the nation's cheapest media markets (Jon Tester's) was run for ~15 million bucks[0] in coordinated campaign funds, plus probably-larger undisclosed amounts of "independent" campaign funding through PAC's etc.
In the same cheap media market, Senator Max Baucus raised >$5 million[1] for the coordinated campaign in his final Senate race, in which he ran effectively unopposed. Again this $5 million does not account for his pre-existing war chest from thirty five years of Senate campaigns or the (vastly larger) fundraising of his GlacierPAC or other related "independent" political organizations.
So the minimum single-senator campaign cost is probably somewhere between those two bounds. Therefore I don't regard the core idea of Mayday PAC as a failure; instead it seems like they need to scale it before we can decide if it's workable.
I think it could be either way, but many object to the fact that it is both. In other words, corporate tax is seen as double taxation, since the earnings (after taxes) are then passed on to shareholders, who pay tax on it again.
I could see a coherent tax code that taxes corporations, but not individuals, or one that taxed individuals, but not corporations (Of course with either of these there would no doubt be all sorts of new loopholes to deal with). But taxing both seems odd to me.
If there are loopholes allowing corporations to not actually pay their taxes and the capital gains tax rate is a fraction of the income tax rate, is it really fair to call it double taxation?
I'm not sure how the tax system works in the US, but I was just talking to my accountant about this issue the other day.
In Australia, my company gets taxed at a flat 30% on all profits in a year. If I want to take cash out of the company after that tax has been taken, I pay "top-up" tax that brings the total tax paid to the level of my income tax rate.
For example, if the company earned $10000, after all expenses, then it would pay $3000 in tax, leaving $7000 left that I can take out. If I earned no money in the year, my income tax rate is 0%, so the top-up tax is -$3000 (I.e. I get a tax refund for $3000). If I earned $50000 in the year, then my income tax rate is 32.5%, so I would have to pay top-up tax of $250 (I.e. 2.5% of the original $10000, which has already been taxed 30%).
Double taxation shouldn't happen, and while my company was set up for tax minimisation purposes, international corporations are able to do an insane level of fuckery to avoid almost all taxation.
Sales taxes are deductible in the US, sort of. You can deduct either state and local sales taxes or state and local income taxes. No idea what the rationale for that is, but if you live in a State with no or very low income tax and deduct your sales taxes, it's kind of like you're not getting taxed twice.
Isn't double taxation really a choice that the owners make? I.e. an unlimited liability company wouldn't be taxed twice. In essence, corporate tax is a fee for the legal protection given by a corporation/limited liability entity.
Corporations are just a straw man. Any profit that a corporation makes is either held as cash, reinvested by the corporation, or returned to the owners of the corporation (i.e. shareholders) as dividends. The profit that's held and reinvested is intended to generate even more profits in the future, which means that eventually, all of a company's profit makes its way back to individual shareholders. Those shareholders, in turn, pay income tax on those dividends. So a corporation's profit is already taxed at the point where it performs the intended purpose of corporate profits--to provide income to the shareholders.
Taxing corporate profits directly at all only accomplishes the following things:
* The profits that are redistributed to shareholders end up being double-taxed; the corporation pays tax on them, and then distributes them to shareholders who pay income tax on them.
* The profits that are reinvested end up being taxed, which reduces the amount that the corporation can reinvest. This directly reduces economic activity, since reinvestment often manifests itself in things like hiring and construction; in other words, increased economic activity. In practice, it might be possible to avoid taxes on these reinvestment activities by accounting for them as expenses and saying, "I guess we didn't make any profit this quarter".
* The profits that are held as cash are taxed, and this isn't actually as big of a deal unless the company is building up a massive stockpile to reinvest later, but in this case it would be fairer to just tax a corporation's cash holdings directly. This would also incentivize corporations to either reinvest their profits or distribute them as dividends, either of which is better for the economy as a whole.
Nice usage of the word 'confiscatory'. My experience with people who use this word in relation to taxation is that they use it in derogatory sense and is used primarily by conservatives and libertarians. I don't know if that is the case for you. What do you consider the optimal corporate tax rate? You said 10% is high enough. Do you think it should be 0%?
If you are in the libertarian and/or conservative branch of U.S. politics why do you look to other countries' tax rates for guidance on what our tax rates ought to be? I have been under the impression that looking to other countries for guidance on our social policy is bad and contrary to the notion of exceptionalism.
The U.S. uniquely, I believe, considers corporations persons. Hence the Citizens United decision. Given this shouldn't the tax rate on these citizens be the same as on other citizens with like earnings?
There is no sense setting up a strawman about a topic, exceptionalism, which the parent did not even raise or mention.
Blaming Citizens United (certainly a harmful decision) on corporate personhood is, while popular, unduly reductive; the actual ruling was more about freedom of association. Even in the context of the debate about corporate personhood, your rhetorical question about tax rate is pure demagogy.
Have you ever heard of someone refer to taxes as confiscatory and it be the case that that person is not a conservative or a libertarian who holds the beliefs mention in my post? I haven't but I did acknowledge that perhaps those beliefs were not shared by the person I responded to. Thus the questions I asked. It was not demagoguery. The argument was quite rational.
People who refer to taxes as confiscatory rather than as being too high are attempting to frame the topic of taxation as it being, necessarily, wrong. It's a ridiculous starting point. These same people almost always scoff at arguments that the U.S. ought to adopt some social policies because all other industrialized nations have them. It is, with this fact in mind, quite rational to ask why looking at the corporate tax rate of other countries is a good argument.
Why is it demagoguery to ask why a person in the form of a corporation should pay less in taxes than a person in the form of a human?
I appreciate you responding to my criticism. The first part - there is definitely an association between believing A and believing B, but I don't think it's fair to assume B when they only talked about A.
As for what I called demagoguery: I mean, corporations are considered legal persons in most countries - that's where the word corporation comes from - which is what allows them to own property, enter into contracts, etc., as well as to violate the law. So then the US has been more uniquely inclined to allow corporations to claim rights originally intended for natural persons (such as free speech, contract rights, property rights, rights of the accused); and there is valid criticism of that idea for various reasons, the most obvious one being that they're very different from actual people, so Congress should have to explicitly decide what privileges corporations should have rather than the judicial system tacking on existing ones. But on the other hand, it's not completely ridiculous to say that since corporations and people have similar sets of abilities in the eyes of the law, the same principles should apply, especially with respect to commerce.
Even in the case of corporate free speech, there are certainly situations where governmental restrictions on a corporation's speech would feel fundamentally wrong - e.g. suppose Congress decided political activism groups, from the EFF to the NRA, were only allowed to use corporate funds to spread their message at all if Congress liked them. Citizens United, as I said, approached this in terms of freedom of association more than corporate personhood, but neither does it seem immediately absurd to try to solve it the latter way. (Incidentally, the need to find, and the partial arbitrariness of, a dividing line between that example on one hand which should have constitutional protection, and super PACs on the other which should not, is why "corporations aren't people" is a bit simplistic as an approach to solving the Citizens United problem. You really don't want to remove protection from the former.)
Anyway, it seems self-evident that corporations and individuals need at least somewhat separate treatment by tax law (e.g. because of the double taxation issue when corporations pay out earnings to shareholders). Given that corporate personhood in general is not fundamentally and irrevocably an evil or unfair idea, merely specific implementations of it, it's not fair to be reductive and say that the person analogy must be taken to absurd extremes.
I think in some ways, you have a fiduciary responsibility to your shareholders to use reasonable means to maximize the value of your company. It seems to me that includes both operational efficiency and prudent use of available tax breaks.
I'm uncomfortable with the line of reasoning that we "can't do anything until we change the system," but I do wonder how Wall Street would react to a company that decided for moral reasons to avoid the schemes and pay more taxes.
Per the RIAA, the entire recorded music industry in the US recorded under $7 Billion in revenue in 2014. Apple has north of $20 Billion in cash in the US. There are likely many reasons for Apple to make the move they did, but it is unlikely cash on hand was one of them.
That's astonishing. I'd be interested in seeing some more statistics on the amount of lobbying vs market size compared to other industries (e.g. Transportation, Hospitality, Pharma).
Something tells me we'd see a direct correlation between the amount of lobbying and the amount of legal backing your "product" needs in order to have value (copyright protection, patents, brand trademarks, etc).
Would they have to pay taxes all of the overseas earnings if they use just some of it? I figured they only paid tax on what they actually bring back here.
No, just what they repatriate. But they already have $22 BILLION in cash in the U.S., and they can borrow more for far less than their income tax rate, so why incur even a little tax?
The only reason for them to be concerned, is they've accumulated a vast amount of debt in a very short amount of time, all to put off dealing with the cash / tax problem.
That debt starts to add up, even when you're paying record low interest rates on it. Right now they're losing a billion a year just in interest on their debt, that's up from nothing three years ago. At the rate they're taking on debt, they'll be losing two billion dollars per year to interest within another two years. That starts to become a lot of money to be pissing away just on interest, all to avoid taxes. Over time it'll become a net larger sum than they would have paid in taxes on the cash.
It's not just about avoiding taxes. Bond rates are extremely low. If one believes rates will soon start to go up, taking on fixed rate debt can be a smart thing. As rates rise, the cash lying around can be used to generate returns above the rate on the debt. The tax angle makes it a double win.
They "only" have about 22 BILLION in American cash! They can raise capital in the bond market in perpetuity secured against all their global cash. There's demand for debt like Apple's. SO, they absolutely, unequivocally, unquestionably can pay the artists. This is a business decision based on greed - just like leading a wage suppression cartel. They are not too poor!
Hmmm I was under the impression that cash was part of their operating expenses. They have retail stores, their campus, most of their employees and all their most expensive employees are all in the US too. But you're right, it's probably still enough to eat 3 months worth of royalty payments.
Also likely, this isn't going to be the only or last fuck-you Apple is going to be giving artists or content producers. The ones who agree to be screwed for the 3-month opening trial will be push-overs who can be leaned on again when the time comes.
> By trying to weasel out of paying any US taxes, they can't spend their own money.
It's not about avoiding paying any US taxes, it's about avoiding paying US taxes on earnings abroad. This is why so many Americans living abroad are giving up their US citizenship. I'm a Brit living in London and I know several American born friends that have become British citizens to avoid paying both UK and US taxes on their earnings. In fact the current mayor of London, Boris Johnson, is Anglo_America and even though he has never lived or worked in the USA, because he had US citizenship the IRS hit him with a massive tax bill on his lifetime earnings in the UK. On what possible basis could anyone consider that appropriate? He promptly gave up his US citizenship.
The US Government's attitude to earnings abroad is IMHO utterly reprehensible. I'm not aware of any other country that does this. I'm not a US citizen but I do work for a US owned company.
The US Government's attitude to earnings abroad
is IMHO utterly reprehensible.
I'm also a Brit and I disagree - at least in the case of multinational companies like Apple. If you have a lower tax rate for profits from abroad, the American operation can "license intellectual property" from shell companies in tax havens, then the American operation makes no profits (and hence pays no tax) while the tax haven shell company makes big profits (but pays no tax).
America has a system of foreign tax credits - so if the American tax rate is 35% and the company was taxed 20% in the country where they made the profits, when they repatriate the money to America they only have to pay 15%.
This is much fairer than the British approach to tax-dodging which appears to be "ignore it and maybe the crooks will donate to our political party".
It's normal that companies can choose where to book revenue by performing various forms of cost shifting. The entire EU system of corporate taxation is based on that principle (tax is paid where your HQ is registered). Global tax treaties, ditto. It's the USA that is weird and exceptional in this case.
So the British approach is not to "ignore tax dodging". It's to theoretically apply the same system it's always used, along with everywhere else, whilst simultaneously trying to appease populist anger over spending cuts by branding various foreign companies as socially irresponsible, although (a) there is no chance of this making any different to austerity and (b) those companies were only following rules that were considered uncontroversial not so long ago.
> On what possible basis could anyone consider that appropriate?
Not a US citizen here, but I think the reason is that a US citizen has more privileges than someone else: it's easier to travel and get a work permit abroad, if something goes badly they are still under protection of the US government, etc.
This is due to the fact that USA are the most powerful country on Earth, and one of the reasons for that is its military power, which is very expensive.
So the US citizen residing somewhere else would still have to pay their share to be protected by their country.
Not saying that I completely agree but I think it's a valid reason.
> I think the reason is that a US citizen has more privileges than someone else
Not the case. I have read that the most powerful passport in the world (as in, getting into countries visa free) is the British passport.
Additionally Americans, unlike citizens of other countries, get no protection from their host government. If they get evacuated from a disaster zone they get charged for the costs. And as everything the US
Gov does is horrendously price inflated, there are cases of people getting "rescued" and then wishing they'd been left behind after being served with massive bills.
The way the USA taxes citizens abroad is indefensible. There's literally not one single defence for it.
(btw: there are two different Mike Hearn's posting in this thread! I am the other one)
> If they get evacuated from a disaster zone they get charged for the costs. And as everything the US Gov does is horrendously price inflated, there are cases of people getting "rescued" and then wishing they'd been left behind after being served with massive bills.
Citation please? The only thing I've ever heard of even remotely close to this ate the occasional local search and rescue operations that are caused by poor judgement. That has nothing at all to do with the U.S. government.
The next time there's a disaster in almost any country - look around. That's a U.S. Navy carrier providing electricity for emergency relief. Those are U.S. Marines distributing rice, ponchos, and water. Those are U.S. Navy Corpsmen delivering first aid to the wounded.
As bad as people like to make this country out to be, we are the first ones there with the biggest shovel any time another country needs to be dug out.
Click the "Will the U.S. government pay for my travel? How much will it cost?" section.
As bad as people like to make this country out to be, we are the first ones there with the biggest shovel any time another country needs to be dug out.
It's not so. Go look at Yemen. The Chinese, Indians and Pakistanis evac'd their citizens when the war started. The USA left theirs to rot.
If an entity pays for an Apple product or service in the US, Apple has earned an income. This income is without doubt subject to taxes in the US. As far as I know Apple does pay US taxes on these monies. Do we agree this far?
I don't see why we can fault Apple for not repatriating income it earned abroad. They can do as they please with it as long as they don't bring it back in the US. I'm not saying they shouldn't pay a tax if/when they bring it back. I am just saying we should not demonize them for not bringing it back.
America invented the transistor and Internet with tax money, plus educated most of the engineers who built those products up to grade 12. But everyone acts like it'd be some moral tragedy for Apple to pay taxes back into that system. It's disgusting. Our society has been overrun by MBAs. Nobody thought like this 30 years ago.
Also you completely ignored my actual point about the flexibility of where money was 'earned' if you have good accountants.
Are there even any artists that agree to this?
The first three months of Apple Music will essentially be “free music from artists who would give away their music for free”.
It's not content producers, it's content right holders. Presumably they entered into this deal freely.
Is this a dick move from Apple? Sure. But the day I'll be arguing on behalf of music labels and distributors is the day the hell freezes over. Their situation is entirely of their own making.
The other rationale I've heard is that if Apple paid for it out-of-pocket it could be considered anticompetitive for using predatory pricing.
This circumstance, in which Apple essentially pre-installs the service on every device and subsequently offers it for free, isn't so different from 1990s Microsoft bundling IE with Windows to undercut Netscape.
I suspect the record labels, with whom the deal was cut, would see themselves as the music producers, in more than just the pedantic sense of the word.
Someone somewhere invested an absolute shit-ton of cash in getting Ms Swift famous, producing her records, promoting her concerts, payola, etc, with absolutely no promise of return.
Can anyone at Apple (or perhaps formally at Apple) explain why this is the case? It seems like a raw deal that no sane musician would ever agree to. Imagine if when the first iPhone came out AT&T told Apple they were giving every customer a free trial with the device for 3 months before they pay for it Apple would have laughed and chose another carrier for its exclusive deal. I don't agree with the model of payment that musicians currently expect (imagine if developers recieved payment everytime a user used and app!) but if that was the norm I don't think many would just agree to put their app on the appstore for 3 months without payment.
It depends on how much uptake you get, doesn't it? For example, I spend less than $10/mo on apps (and for that matter, music too). If that's the case for enough users who get the new deal, this would be a net gain for developers. I think that's why you get developers(/musicians) to agree to it.
You're suggesting a simple view where you look at the average amount people who subscribe to this (e.g. $10/month) service would have otherwise paid, and that if that number is less than $10/month the devs (/musicians) win. This is certainly true.
However, there's the additional benefit that not every user that subscribes will entirely drop their purchasing habits. Perhaps less often, but some subscribers will buy apps (/music) on top of their subscription.
> Can anyone at Apple (or perhaps formally at Apple) explain why this is the case?
Apple is a super secret walled garden, full of itself. From my experience with people that work there, I doubt any of them would even know why (let alone come out here to explain).
I would imagine the downvotes are because of the 'super secret walled garden, full of itself' comment, which is negative in tone. You could have said instead something like,
'As someone that knows people who've worked at Apple, I doubt many of them would know the answer to this or be allowed to post here if they did.'
Snarky comments (like 'full of itself') tend to gain downmods just for that. It's a lot softer than it used to be, though - it used to be that using the lightest touch of humour would also bring the downmod brigade. HN is becoming a much more generic "tech and this-article-I-saw-on-nytimes" site.
I didn't downvote but can see that some people might, in addition to what was previously mentioned, be upset by the vagueries of "From my experience with people that work there..." We don't know you - how many people do you know who have worked there? What were there roles (or thereabouts)? It's just so vague that I can't really derive any value from your post.
(1) They bring an enormous number of new subscribers and that this 3 month trial maximizes revenue for everyone including the artist.
(2) they pay a slightly higher royaly share than spotify in part because of this longer trial.
(3) Apple shares revenue with the artist in the same 70/30 split we see elsewhere and the 30% is the finders fee they get for delivering many of their x hundred million users to the service. Since there's no revenue in the first 3 months, 70% of $0 is $0. Apple eats the bandwidth/server costs of the service in this time with no revenue coming in.
(4) Spotify paid users are fairly happy with that service and won't all switch to Apple Music overnight and the same with people who buy music and radio so it's not like all the money these artist's see turns off for 3 months. The free trial effect will be heavily staggered as a steady stream of users signs up over years.
It's pretty obvious. They are going to take streaming to a whole new level. My dad doesn't know what Spotify is, but has an iPhone and is a couple of clicks away from lighting this service up.
You give away a couple of months, get people hooked and you and reap years of recurring revenues. It's a model that works for drug dealers, razor blade makers (Gilette gives away 5 packs of blades in many schools) and SaaS companies.
I don't really feel too bad for Taylor Swift. She doesn't get a dime from radio airplay as an artist. But she benefits immensely from the marketing and promotional value of having it played.
As someone else alluded to: drug suppliers still get paid for those free 'hits'. It's the distributor who swallows the cost in exchange for recurring revenue.
> imagine if developers recieved payment everytime a user used and app
If software developers were compensated for their creative output the way musicians are there wouldn't be so many software developers.
I had a really innovative startup idea once where I planned to have developers work for years to create hit software products that made many people's life better and then get into a crappy van and travel the country to do 90 minute demos of their product for a few hundred dollars.
But only if they had a genuinely successful product mind you, obviously being merely competent at software development meant you didn't get paid at all, you had to actually amass significant numbers of fans of your products willing to come to these demos.
Never did figure out why I didn't get more developers interested in the platform.
I agree with everything she said... but she didn't answer the question she posed at the start: why is she withholding 1989, (and not any of her other albums), and what does that have to do with the 3 month trial? If she disagrees with the free trial don't put any of your music up for that time span.
She probably is withholding the rest like on Spotify but people typically only care about the newest album. Alternatively maybe it's to stop them from being able to promote their service as being the only one with 1989 on it?
The one album can be seen as her token of protest without going as far as shunning the service as a whole. So, this is probably a carefully calibrated objection, and we're not privy to the details of why she did it this way and not some other way.
Or she and her label recognize that the back catalog is not as valuable as the latest album. Giving away access to the back catalog on free streaming services will act to develop fans, and increase purchases of the new album. This new album that is not available on free streaming services.
> If she disagrees with the free trial don't put any of your music up for that time span
Because Apple will not allow her to do so. It is not 3 universal calendar month: every user gets 3 months free when they start a subscription, depending on when they sign up for the service. Artist cannot opt-out of the free-service tier catalog and just go with the paid users.
So Taylor Swift is withholding her music because she won't get paid for all the listens by users in their first 3 months.
I'll suggest this is all a fairly straightforward negotiation ploy.
Apple's deal obviously makes sense for the artist otherwise the major labels would not have signed up, full stop.
What then are these independent's doing? I'd suggest since there is no money at stake in the first 3 months they are holding out to pressure for slightly better terms (and a couple headlines never hurt sales) and then will jump on in 3 months once the money is actually flowing.
You'll note that there will always be many people in the 3 month free trial, Swift isn't threatening to hold her album out forever (or her other music!) to stop the supposed bad business model, just for the 3 launch months when guaranteed revenue zero.
Kudos to these artists for knowing where their leverage is and using it though!
Apple has a couple options:
(1) just eat it, prolly what happens.
(2) they can pay up a bit but the big labels would be steamed at getting a worse deal than independents so that isn't happening.
(3) pay everyone a little bit more for the launch months. This might happen but the clock is ticking.
(4) they can make these artists sit out longer than the initial 3 months. That compromises the quality of their service though. Still they might do it, hoping it would pressure them to signing up for the release.
(5) they could weight the streaming for awhile so that holdout artists appear less than they might normally. I expect this might happen but if they do this hopefully be done openly ("we're rewarding our launch partners").
(6) go back in time and do a 3 month beta rollout so money is at stake when you do the big rollout with the new phone.
What makes sense for the major labels doesn't necessarily make sense for the artist. Major labels have billions in net worth and have invested heavily in the stock/equity of companies such as Apple, Spotify etc etc. They could care less about the royalty pennies that drip out the bottom to feed the artists. They're getting rich on equity.
The independents on the other hand don't have this luxury.
>> Apple's deal obviously makes sense for the artist otherwise the major labels would not have signed up, full stop.
What then are these independent's doing?
It's very simple. The biggest portion of a records sales are going to come int he month or two after release, after the big marketing push. If an indie releases a record during those 3 months they are going to lose a ton of potential revenue. For a small record label that can be terminal. They're running on fumes they can't take the hit like the majors.
I think release in the window is a good point but the point of streaming services is to mitigate this by shifting a much larger percent of income to back catalog.
I also take issue with characterizing streaming income as a "ton of revenue" (perhaps you meant actual sales sales in which case somewhat irrelevent here?) while everything I've heard over the years is how streaming revenue is a small fraction of artist revenue, especially independents.
Here's numbers from a pro-spotify independent artist [1]:
$1,359 from spotify, that's apparently a career to date number.
The Apple Music free trial thing is shitty but Taylor seems quite out of touch with the shape of the industry here.
Taylor Swift can withhold her music from streaming services because she's a PHENOMENON who can still shift albums via iTunes (and even physically) because people want her music. Artists starting out don't have that luxury and, increasingly, their music won't get the listens if it's not on streaming services.
It strikes me as similar to the situation with people only buying games that are on Steam. Consumers love the convenience of a platform that is in many ways quite anti-creator. Tough one.
Taylor Swift can withhold her music from streaming services because she's a PHENOMENON who can still shift albums via iTunes (and even physically) because people want her music. Artists starting out don't have that luxury and, increasingly, their music won't get the listens if it's not on streaming services.
Did you read the post where she explains what is her goal for doing this? Here is the relevant part:
This is not about me. Thankfully I am on my fifth album and can support myself, my band, crew, and entire management team by playing live shows. This is about the new artist or band that has just released their first single and will not be paid for its success. This is about the young songwriter who just got his or her first cut and thought that the royalties from that would get them out of debt. This is about the producer who works tirelessly to innovate and create, just like the innovators and creators at Apple are pioneering in their field…but will not get paid for a quarter of a year’s worth of plays on his or her songs.
Do you really believe that? Or is that maybe carefully crafted language to fend off the parent's valid argument?
Plenty of creators currently put their music on Soundcloud, Bandcamp, Youtube and more, and get exposure that way without getting paid.
The choice is really up to the artist. I do agree that Apple has the ability to pay artists during the 3-month trial, but should they have to? I don't know..
btw not saying I have the answer here, but as parent said, the current landscape doesn't really line up with her argument much.
> I do agree that Apple has the ability to pay artists during the 3-month trial, but should they have to?
Unless the artist (or representative) have given them permission to use their content for free, they should absolutely have to. It's the same IP laws that Apple like to use in their own defence: you can't just use someone else's stuff without their permission and without remuneration. What do you think Apple would do to me if I started selling an OS that used Apple's graphics set?
Just because some artists put their music on free media doesn't mean that a corporation can use that music as a loss-leader to sell their service.
But is Apple planning to use the content without permission? It doesn't seem to be the case, since they're contacting artists asking them to join Apple Music. There was a guy claiming they threatened kicking him off iTunes, but they've denied it.
Taylor is pulling her music because those small artists can't. She's making a statement, and because she's such a phenomenon her statement is likely to at least be heard.
I find this hopelessly naive. Yes she said that. Why is she only pulling 1989? Not her other albums? It seems the most likely true answer is "because that one is still selling strong so it is in her interests to do so."
It's also very possible that Swift doesn't have control over where the other albums appear, since they're from old deals she made before she had much leverage.
Most likely, it's a combination of all three possible explanations: some albums are from old deals she has no control over, others (1989) she wants to make more money on, and she's also disgusted with Apple's treatment of artists and taking a stand.
People don't need a single pure motivation for their actions to be legitimate.
A number of developers have been complaining (unreasonably, IMO) about the recent refund policy. Oh, and there's the 30% cut which can be seen as a bit too high.
Otherwise, I would also be genuinely curious to hear what problems developers have with Steam.
"Taylor seems quite out of touch with the shape of the industry here."
She is VERY in touch with its shape... And she is trying to change it. She also famously ditched Spotify and has been consistent in using her fame and leverage.
What she is doing is very important...Spotify is bankrupting artists while bleeding cash with no real business model to make the money back. She was outlasting them while the vc money ran out and it was working.... Now that Apple is in the game, the danger of them using their cash to bankrupt artists with a bad business almost indefinitely is very scary to artists. She is trying to be diplomatic while making a point.
That is a great question that I'm also curious to hear the answer. She seems to be signed with Universal, how come does she have fine-grained control over her publishing rights unlike most other artists? Or are these actually moves by the labels using her to earn sympathy from the public?
Ultra successful acts like Taylor Swift certainly don't just sign some standard contract the record label gives to them, but negotiate every single clause in it, using extremely competent and experienced managers and lawyers.
That's what distinguishes Taylor Swift from 95 percent of acts who maybe negotiate a little thing here and there, but are mostly happy to get signed.
I just posted about this at the top level, but thank you for being a critical thinker: Taylor Swift _may_ deal directly with a distributer but only because she's mega-ultra-super successful. 99% of musicians use third parties to get their music to distributors. You do not do deals directly with Spotify: you sign up with ASCAP and tell them the gist of where you want your music.
Taylor can easily get on radio playlists. Unknown artists cannot. They CAN get on Apple music, spotify, etc. There's no way to get known beyond local clubs without the free exposure.
Yes, unknown artists can't, but the point is that they are going 3 months without income. There have been many local one-hit-wonders in my country, make a decent album with one or two 'hit' singles, and never get enough money to stay afloat. Hence the one-hit-wonder bit.
If it took me 6 months of no income to produce an album, then as I release it I go 3 months with no income (assuming that Apple is the only streaming service, and that people choose to stream instead of buy). By the time the 3 months are over, people have moved on to something else. This hurts me as I don't recover my expenses.
Taylor mentioned that she can support herself, team, etc. The unknown mostly can't, so the trial hurts them.
Given the volume cap of Apple and the formulas they can pop out stating "after three months of free use, x users will convert into paying users resulting in y revenu and z profit for you" to record labels, all it boils down is record labels willing to believe Apple their predictions and whether they are happy with that y in return of 3 months of upfront payment.
If you don't need the promotion hold your music off for 3 months. If you do, go for it. Problem solved?
Maybe there was some sort exclusivity thing but it doesn't make sense that artists would have to take it or leave it now.
Also, someone with her streaming numbers is basically the only kind of artist that would even care. Streaming royalties are really low unless you have really huge numbers so while she stands to potentially lose significant revenue in 3 months tons of artists won't.
> Three months is a long time to go unpaid, and it is unfair to ask anyone to work for nothing.
It is safe to assume that max. 10% of the subscribers will be in this 3 month trial. You will make money from the other 90%.
Also, just a little industry insight: Taylor makes $1.5m+ at each concert, plus travel, hotel, technical rider. I have a very hard time understanding all this cry baby talk.
I worked in the live music industry and have a pretty good idea of these numbers. But you can just google up some leaked booking agreements (The Smoking Gun has some pdfs).
Yes, obviously a lot of people must be paid from that fee (crew, management, band...), but it is still shitload of cash.
What did you do? Because it seems like you're pretty dramatically underestimating the cost of a stadium tour and confusing costs for a tour with payments for private bookings(separating travel expenses for example which would come from the artist on a tour).
So you obviously didn't read TFA then. Like the second or third sentence in clearly states that she is not doing this for herself but for all of the smaller artists who don't have the power to make a stand like this.
So, because she's successful, she should roll over and forgo one of her income steams? If she truly believes this Apple deal will hurt her bottom line, or the bottom line of other content creators, she has a legitimate complaint.
533 comments
[ 7.9 ms ] story [ 847 ms ] threadI am starting to doubt that Taylor Swift really is as 'representative' as she wishes to portray, and not simply greedy, considering the extent to which she avoids non-profit-maximising revenue streams (e.g. Spotify).
Like someone running a business you mean?
And slightly off-topic, I fail to see how anyone could call any of this the complaints of a spoiled child even if she would flat out say "fuck you, pay me". Are you not allowed to ask for your dues if you're rich already?
Basically, she refuses to be ad-supported, or give her music away.
So, Apple should pay for it, rather than attempting to enforce themselves as a middleman who takes only profit as they have done in every other sphere.
Making Apple's revenue be directly tied to artist revenue makes a lot of sense.
How? The trials would still be free. Nothing would change for the consumer, therefore you couldn't argue that.
If Apple doesn't pay the artists for the trial, then they run the trial and get $5M extra profit. The artists get $5M extra profit. The audience gets more music. Everyone wins.
If Apple pays the artists for the trial, they see that it will cost them $10M licensing to get back a mere $5M. They don't run the trial. Nobody wins.
Edit: fixed the numbers
Their competitors win. The artists make out the same or better. Apple isn't the only player on the market, even though they act that way.
There's a difference between not charging the end user and not paying the supplier.
The music industry has been dying for a while but this really is a fantastic example of it. Everyone who thought Apple cared about artists now has to come up with a new rationalisation.
> This is not about me. Thankfully I am on my fifth album and can support myself, my band, crew, and entire management team by playing live shows. This is about the new artist or band that has just released their first single and will not be paid for its success. This is about the young songwriter who just got his or her first cut and thought that the royalties from that would get them out of debt.
Scum.
Likewise, any lead Apple gets here is shared with the artists.
This is rude to force on artists without asking, but only because they're not asking. It's not scummy.
For anyone who doesn't know, a loss leader is something advertised like bread for 50 cents or something, where the store loses money on each and every sale. It's a customer acquisition cost, and the goal of this is to "lead" with the loss, get people in the store, and there they will buy not only bread but anything else they need at the time, at normal market prices. Normal market prices give enough profit to offset the loss taken on the "lead." This works because people don't just go to a store and buy the one marked-down item and nothing else. (Or more specifically the extra profit for people who buy other things after only coming in due to the loss leader, covers the loss on them, and on everyone who only gets the loss leader.)
The strategy itself is to sell something at a loss, to get a lead/marketshare/conversion.
define: loss leader
[1] https://twitter.com/antonnewcombe/status/611122009007882240
Apple developed the software, is footing the server, power, bandwidth, and ops bills for three months all for free. The labels are chipping in their content for three months.
Sounds like everyone is bringing something to the table. Apple is incurring real costs. The labels, not so much.
Three kinds of customers will try the service:
People who buy their music: these will either become long term subscribers or not like the service and buy the songs they want anyway. Perhaps slightly delayed.
People who currently freeload: no loss for the trial. Possible huge win if they subscribe.
People using another streaming service: this is where the labels might actually give something. If a customer cancels their existing service while trying Apple's that will reduce the label's take by up to ~25% for the year. Month alignment and a comparison period will both drop this.
I suspect the third category is not the target audience. A small loss on service switchers is worth the big win for the labels in converting freeloaders to customers.
Apple built a service that wouldn't exist without the content. The content would still exist on other services without Apple though.
no one is arguing that their costs don't exist, but that they have nothing to lose to put it on. It's not like the artist will somehow have a lower cost by _not_ putting it up.
You have zero evidence of this. We don't know and may not know for a number of years whether Apple Music is more profitable for artists (or not) than competitor services.
Apple is placing the value of artists work at $0 in a bid gain market share. It should be them who incurs the full cost not the artist.
When the music is offered on free, the prime beneficiary is Apple.
It's really weird that you specify "developing the software" as a real cost, but not "developing the music".
By your logic everyone should support The Pirate Bay because they developed the software and they foot the server bill to distribute content.
Except first features downloading and owning it and the other streaming rights through certain period of time.
In the creation of Apple Music, Apple didn't not require any musician to create more music. Apple did have to develop their delivery system.
Apple does not require any music owner to put their music in Apple Music. But if a music owner does want to be included, then when Apple isn't paid, the music owner doesn't get paid. When Apple isn't paid the music owner does not have to chip in on the operations costs, that's nice of them.
Stated a different way, during the promotional period which the music owner agrees to, to promote their music in what they believe will be a profit making venture, Apple will pay all of the distribution costs out of their own pockets.
About Pirate Bay (which I didn't really want to comment on, but HN won't let me edit the grand parent) The content owner's, by and large, did not agree to put their material on Pirate Bay. If the content owner's did, I'd use Pirate Bay all the time and pay for the privilege. Instead I have to wander the balkanized world of video content looking for which of the four services I subscribe to might have the video I want to watch. It is a terrible solution and should burn in fire, but we are stuck there for now.
Of course they do. No music, no product.
I think they'll get a pretty large amount of trial users simply by advertising it in iTunes - oh you're about to buy this album? Why don't you listen to it and the majority of our catalog free for three months instead?
Other than Android they have a lot of music use cases supported, free of charge - why would you buy?
I honestly don't know how much this will affect sales but Apple are certainly in a position to push users away from those sales and toward the free service.
I think it was Eddy Cue who said specifically in an interview that they will not do this.
Edit: from the Guardian
He also denies a recent report that Apple is planning to aggressively promote its new streaming service to people buying albums on the iTunes Store. “That’s the wrong way to look at it. You shouldn’t take a customer who’s buying an album, who’s happy buying an album, and try to tell them that what they’re doing is wrong,” he says.
“But we don’t have to, and we shouldn’t try to kill the iTunes Store or kill people that are buying music. If you’re happy buying a few albums a year and that’s the way you’d like to continue doing it … but if we can help you discover some new artists or some new albums through Connect or through listening to Beats 1 radio, great.”
A band will put in a long time creating an album: writing the songs, orchestrating, rehearsing, reworking, etc. Then they pay real money for recording, editing and mastering as well as paying an artist and photographer to create the album art. They're also creating marketing materials online and off. This is all for a usually small time period when a new album will sell. And when streaming (which generally makes them next to nothing) will hit its peak. All these costs are front loaded and then there's a usually short time period where the band hopes to make this money back. During this time, the band is spending additional money and time doing marketing and promotion as well.
Apple's deal is a raw one for these artists as they'll lose a good chunk of revenue during that small time period. And it will leech purchases away from iTunes as well. I can guarantee that Apple will have prominent notices within iTunes about which albums are available on Apple Music and suggest that would-be purchasers sign up.
Plus there's the fact that Apple is threatening independent artists with removal from iTunes if they don't agree to stream for free on Apple Music. And the fact that these artists can't just decide to sell the music themselves on their website to iOS users because, thanks to Apple's carefully-designed walled garden, iOS users can't download music from the web or 3rd party apps and add it to their music library like they can on Android.
Wrong. Apple has unequivocally stated that this isn't happening.
> iOS users can't download music from the web
Wrong. You can just add it using iTunes.
A couple different independent artists online have stated that Apple told them this.
> Wrong. You can just add it using iTunes.
Did you purposely take my quote out of context to make your answer seem correct? I specifically said that iOS users can't download a song from the web or a 3rd party app and add it to their music library like they can on Android. On Android, I can download a song while out on the go from anywhere I want and add it to my music library. Every app can add music, every app can play music. Can you do that on iOS... or do you have to go back to your home computer, add the song to your computer, add it to your iTunes library and then sync it to your iPhone/iPad? The last time I helped a friend do this, this is what we had to do.
Well I am far more likely to take the measured, legally considered statement from Apple over a single independent artist's Twitter posts. Apple would be in a for a world of hurt if they deliberately mislead people.
> Did you purposely take my quote out of context
No. I am an iOS user and half my music collection is from the web. It is completely legitimate to use iTunes to add it to your collection. Otherwise third party apps exist which allow you to download from the mobile web. I am not saying it isn't as flexible as Android but it is disingenuous to say it isn't possible.
Considering the way Apple lied... ehem... misspoke? misled people?... about ebooks, lying about music isn't that far fetched.
> No. I am an iOS user and half my music collection is from the web. It is completely legitimate to use iTunes to add it to your collection. Otherwise third party apps exist which allow you to download from the mobile web. I am not saying it isn't as flexible as Android but it is disingenuous to say it isn't possible.
So, as I said, it is impossible for an iOS user to just download a song and add it to their music library on the go. It would be technically easy for Apple to enable this, but they purposely disallow this to make it harder for customers to purchase from 3rd parties. The same way they won't let 3rd parties sell music within their apps without paying 30% to Apple (making it financially impossible).
Having to go all the way home, add your music to iTunes, plug your phone into your computer, and then sync to iTunes just to be able to add a single MP3 to your phone's music library may be "legitimate" but it's anything but reasonable. It's in this state solely to make it inconvenient to the user and push them into the open arms of iTunes.
30 years playing in and recording with independent bands. Dong just fine on understanding up front investments.
Apologies, then. Though I am curious about your take on this... specifically why it differs from my other friends. All of my independent musician friends I know online and off think this is a raw deal as soon as they learn the details. I understand why it makes sense for the big labels (they don't care about artists' incomes and likely got a sweet payoff from Apple). But I'm curious why a smaller musician/music producer would be happy with it.
Enter MP3 and suddenly musicians are looking at a hostile world where their primary consuming demographic believes it is silly to pay for music at all. Bands have traditionally felt screwed by labels, now their customers are screwing them. Apple sets up a service where the labels contribution to the free trial period results in no revenue for bands and that's the distributor screwing them. That makes it pretty much the entire industry top to bottom.
I don't see it that way. Apple Music will likely tap a huge population that doesn't currently have a streaming service which is a great thing.
As far as "losing" micropayments from song plays during the trial… If someone is forced to listen to my song by their robot DJ and doesn't care enough to come see a concert or buy something, or listen to it in the future… that wasn't really a sale I missed out on. That was some poor schmuck that wasted 4 minutes of his listening time on my song and in some alternate economic system would have paid me for the privilege, but didn't.
Also: I'm eating in August no matter how this plays out.
There's another point being overlooked regarding how music is consumed: music is listened to repeatedly over months, and the free trial is no different than a promotional period. Artists, even indies, will still receive income from the myriad other services, and will soon receive a better rate from Apple. Distribution is an enormous service to the artists, and it's value shouldn't be overlooked.
That being said Taylor Swift has every right to pass on Apple's offer, and it's great for the recording industry to have a major check/balance like Swift.
Unrelated, but interested to see if artists will ever abandon the labels and go direct to distribution. I'm sure labels provide more value than people want to acknowledge.
Edit: formatting
I get why you think that way, because most celebrities do indeed hire PR firms and assistants to handle their fan relationships. Ms. Swift is unique in the fact that she doesn't, and it's documented well enough that even a non-fan like me knows about it. I wouldn't have said what I did above if I didn't know it to be true.
[1] http://www.businessinsider.com/taylor-swift-is-a-business-ge...
I mean I'm sure she's great, but she's also a brand and a business in her own right. Stuff like this is too important to let an artist just go off and say whatever she feels.
As compared with whom? Ariana Grande? Metallica? Madonna? Jello Biafra? Efrim Menuck? Nicki Minaj?
Sure, she's probably market-positioned as "more authentic" than Paris Hilton. You shouldn't be blinded by the marketing any more than you should believe Iron Maiden to be devil-worshippers.
> intelligent and articulate.
Which usually translates to "White, non-Southern American accent". ("British" also applies, but usually to men.)
(it's not War and Peace FFS, it's not even written at a college level. Why are people surprised or even impressed by basic literacy?)
Not that this excuses what they're trying to pull here or anything. By trying to weasel out of paying any US taxes, they can't spend their own money. So in this case they really might be too poor to make this deal work otherwise.
Good for Taylor Swift to stand up to this kind of crap.
There are actually people who do everything they can to minimise their tax liability in order to reduce the money spent on things they consider unjust: https://en.wikipedia.org/wiki/Tax_resistance.
Every dollar not paid in US tax is a dollar that won't contribute to blowing up people in the Middle East who have the misfortune of being in proximity to suspected terrorists (tens of thousands of people over the past decade) [1]. Similarly, every dollar not paid in US tax is a dollar that won't be spent putting poor people in prison for smoking a weed that causes less violence in a decade than alcohol causes in a day.
https://en.wikipedia.org/wiki/Civilian_casualties_in_the_war...
Edit: answered above.
The conclusion:
I found it an interesting article so I decided to share.You often see 12% or 13% bandied about as the effective rate, but that's intentional intellectual fraud: they refer to 2010 numbers, when the US was coming out of the great recession and corporations had lost a ton of money.
The corporations have the money and the drive to get the laws changed, who else does?
It seems pretty simple to me. If you want your laws changed, pool your money and go lobby the gov't just like every other corporation.
https://medium.com/@lessig/we-tried-we-learned-we-re-trying-...
A recent Senate campaign in one of the nation's cheapest media markets (Jon Tester's) was run for ~15 million bucks[0] in coordinated campaign funds, plus probably-larger undisclosed amounts of "independent" campaign funding through PAC's etc.
In the same cheap media market, Senator Max Baucus raised >$5 million[1] for the coordinated campaign in his final Senate race, in which he ran effectively unopposed. Again this $5 million does not account for his pre-existing war chest from thirty five years of Senate campaigns or the (vastly larger) fundraising of his GlacierPAC or other related "independent" political organizations.
So the minimum single-senator campaign cost is probably somewhere between those two bounds. Therefore I don't regard the core idea of Mayday PAC as a failure; instead it seems like they need to scale it before we can decide if it's workable.
[0] http://www.opensecrets.org/politicians/summary.php?cid=n0002...
[1] http://www.opensecrets.org/politicians/summary.php?cid=n0000...
Any rule set can be gamed / broken.
To keep the game going, sometimes players just need to do the right thing, thereby honoring other player's investment in the game.
And law is so much more complicated than a board game.
https://en.wikipedia.org/wiki/Gödel%27s_incompleteness_theor...
I could see a coherent tax code that taxes corporations, but not individuals, or one that taxed individuals, but not corporations (Of course with either of these there would no doubt be all sorts of new loopholes to deal with). But taxing both seems odd to me.
In Australia, my company gets taxed at a flat 30% on all profits in a year. If I want to take cash out of the company after that tax has been taken, I pay "top-up" tax that brings the total tax paid to the level of my income tax rate.
For example, if the company earned $10000, after all expenses, then it would pay $3000 in tax, leaving $7000 left that I can take out. If I earned no money in the year, my income tax rate is 0%, so the top-up tax is -$3000 (I.e. I get a tax refund for $3000). If I earned $50000 in the year, then my income tax rate is 32.5%, so I would have to pay top-up tax of $250 (I.e. 2.5% of the original $10000, which has already been taxed 30%).
Double taxation shouldn't happen, and while my company was set up for tax minimisation purposes, international corporations are able to do an insane level of fuckery to avoid almost all taxation.
1: http://assets.amuniversal.com/921b06d016420130ff2c001dd8b71c...
http://www.irs.gov/Individuals/Sales-Tax-Deduction-Calculato...
Taxing corporate profits directly at all only accomplishes the following things:
* The profits that are redistributed to shareholders end up being double-taxed; the corporation pays tax on them, and then distributes them to shareholders who pay income tax on them.
* The profits that are reinvested end up being taxed, which reduces the amount that the corporation can reinvest. This directly reduces economic activity, since reinvestment often manifests itself in things like hiring and construction; in other words, increased economic activity. In practice, it might be possible to avoid taxes on these reinvestment activities by accounting for them as expenses and saying, "I guess we didn't make any profit this quarter".
* The profits that are held as cash are taxed, and this isn't actually as big of a deal unless the company is building up a massive stockpile to reinvest later, but in this case it would be fairer to just tax a corporation's cash holdings directly. This would also incentivize corporations to either reinvest their profits or distribute them as dividends, either of which is better for the economy as a whole.
If you are in the libertarian and/or conservative branch of U.S. politics why do you look to other countries' tax rates for guidance on what our tax rates ought to be? I have been under the impression that looking to other countries for guidance on our social policy is bad and contrary to the notion of exceptionalism.
The U.S. uniquely, I believe, considers corporations persons. Hence the Citizens United decision. Given this shouldn't the tax rate on these citizens be the same as on other citizens with like earnings?
Blaming Citizens United (certainly a harmful decision) on corporate personhood is, while popular, unduly reductive; the actual ruling was more about freedom of association. Even in the context of the debate about corporate personhood, your rhetorical question about tax rate is pure demagogy.
People who refer to taxes as confiscatory rather than as being too high are attempting to frame the topic of taxation as it being, necessarily, wrong. It's a ridiculous starting point. These same people almost always scoff at arguments that the U.S. ought to adopt some social policies because all other industrialized nations have them. It is, with this fact in mind, quite rational to ask why looking at the corporate tax rate of other countries is a good argument.
Why is it demagoguery to ask why a person in the form of a corporation should pay less in taxes than a person in the form of a human?
As for what I called demagoguery: I mean, corporations are considered legal persons in most countries - that's where the word corporation comes from - which is what allows them to own property, enter into contracts, etc., as well as to violate the law. So then the US has been more uniquely inclined to allow corporations to claim rights originally intended for natural persons (such as free speech, contract rights, property rights, rights of the accused); and there is valid criticism of that idea for various reasons, the most obvious one being that they're very different from actual people, so Congress should have to explicitly decide what privileges corporations should have rather than the judicial system tacking on existing ones. But on the other hand, it's not completely ridiculous to say that since corporations and people have similar sets of abilities in the eyes of the law, the same principles should apply, especially with respect to commerce.
Even in the case of corporate free speech, there are certainly situations where governmental restrictions on a corporation's speech would feel fundamentally wrong - e.g. suppose Congress decided political activism groups, from the EFF to the NRA, were only allowed to use corporate funds to spread their message at all if Congress liked them. Citizens United, as I said, approached this in terms of freedom of association more than corporate personhood, but neither does it seem immediately absurd to try to solve it the latter way. (Incidentally, the need to find, and the partial arbitrariness of, a dividing line between that example on one hand which should have constitutional protection, and super PACs on the other which should not, is why "corporations aren't people" is a bit simplistic as an approach to solving the Citizens United problem. You really don't want to remove protection from the former.)
Anyway, it seems self-evident that corporations and individuals need at least somewhat separate treatment by tax law (e.g. because of the double taxation issue when corporations pay out earnings to shareholders). Given that corporate personhood in general is not fundamentally and irrevocably an evil or unfair idea, merely specific implementations of it, it's not fair to be reductive and say that the person analogy must be taken to absurd extremes.
I'm uncomfortable with the line of reasoning that we "can't do anything until we change the system," but I do wonder how Wall Street would react to a company that decided for moral reasons to avoid the schemes and pay more taxes.
Amazing. We think of the RIAA, or "big music" as some kind of juggernaut force in society and politics - especially Internet politics.
But their entire industry top line is smaller than what fedex makes in a month.[1]
[1] http://www.nasdaq.com/symbol/fdx/revenue-eps
That debt starts to add up, even when you're paying record low interest rates on it. Right now they're losing a billion a year just in interest on their debt, that's up from nothing three years ago. At the rate they're taking on debt, they'll be losing two billion dollars per year to interest within another two years. That starts to become a lot of money to be pissing away just on interest, all to avoid taxes. Over time it'll become a net larger sum than they would have paid in taxes on the cash.
Oh, the horror.
Also likely, this isn't going to be the only or last fuck-you Apple is going to be giving artists or content producers. The ones who agree to be screwed for the 3-month opening trial will be push-overs who can be leaned on again when the time comes.
It's not about avoiding paying any US taxes, it's about avoiding paying US taxes on earnings abroad. This is why so many Americans living abroad are giving up their US citizenship. I'm a Brit living in London and I know several American born friends that have become British citizens to avoid paying both UK and US taxes on their earnings. In fact the current mayor of London, Boris Johnson, is Anglo_America and even though he has never lived or worked in the USA, because he had US citizenship the IRS hit him with a massive tax bill on his lifetime earnings in the UK. On what possible basis could anyone consider that appropriate? He promptly gave up his US citizenship.
The US Government's attitude to earnings abroad is IMHO utterly reprehensible. I'm not aware of any other country that does this. I'm not a US citizen but I do work for a US owned company.
America has a system of foreign tax credits - so if the American tax rate is 35% and the company was taxed 20% in the country where they made the profits, when they repatriate the money to America they only have to pay 15%.
This is much fairer than the British approach to tax-dodging which appears to be "ignore it and maybe the crooks will donate to our political party".
So the British approach is not to "ignore tax dodging". It's to theoretically apply the same system it's always used, along with everywhere else, whilst simultaneously trying to appease populist anger over spending cuts by branding various foreign companies as socially irresponsible, although (a) there is no chance of this making any different to austerity and (b) those companies were only following rules that were considered uncontroversial not so long ago.
It's kind of a dumb strategy.
Not a US citizen here, but I think the reason is that a US citizen has more privileges than someone else: it's easier to travel and get a work permit abroad, if something goes badly they are still under protection of the US government, etc.
This is due to the fact that USA are the most powerful country on Earth, and one of the reasons for that is its military power, which is very expensive.
So the US citizen residing somewhere else would still have to pay their share to be protected by their country.
Not saying that I completely agree but I think it's a valid reason.
Not the case. I have read that the most powerful passport in the world (as in, getting into countries visa free) is the British passport.
Additionally Americans, unlike citizens of other countries, get no protection from their host government. If they get evacuated from a disaster zone they get charged for the costs. And as everything the US Gov does is horrendously price inflated, there are cases of people getting "rescued" and then wishing they'd been left behind after being served with massive bills.
The way the USA taxes citizens abroad is indefensible. There's literally not one single defence for it.
(btw: there are two different Mike Hearn's posting in this thread! I am the other one)
Citation please? The only thing I've ever heard of even remotely close to this ate the occasional local search and rescue operations that are caused by poor judgement. That has nothing at all to do with the U.S. government.
The next time there's a disaster in almost any country - look around. That's a U.S. Navy carrier providing electricity for emergency relief. Those are U.S. Marines distributing rice, ponchos, and water. Those are U.S. Navy Corpsmen delivering first aid to the wounded.
As bad as people like to make this country out to be, we are the first ones there with the biggest shovel any time another country needs to be dug out.
Click the "Will the U.S. government pay for my travel? How much will it cost?" section.
As bad as people like to make this country out to be, we are the first ones there with the biggest shovel any time another country needs to be dug out.
It's not so. Go look at Yemen. The Chinese, Indians and Pakistanis evac'd their citizens when the war started. The USA left theirs to rot.
http://www.theguardian.com/world/2015/apr/01/american-civili...
It's also about structuring earnings so that they happen to be earned abroad.
https://en.wikipedia.org/wiki/Double_Irish_arrangement
If an entity pays for an Apple product or service in the US, Apple has earned an income. This income is without doubt subject to taxes in the US. As far as I know Apple does pay US taxes on these monies. Do we agree this far?
I don't see why we can fault Apple for not repatriating income it earned abroad. They can do as they please with it as long as they don't bring it back in the US. I'm not saying they shouldn't pay a tax if/when they bring it back. I am just saying we should not demonize them for not bringing it back.
America invented the transistor and Internet with tax money, plus educated most of the engineers who built those products up to grade 12. But everyone acts like it'd be some moral tragedy for Apple to pay taxes back into that system. It's disgusting. Our society has been overrun by MBAs. Nobody thought like this 30 years ago.
Also you completely ignored my actual point about the flexibility of where money was 'earned' if you have good accountants.
Buybacks and dividends are post-tax expenses.
Paying royalties is an expense that comes before taxes. If they bring $500MM over and pay it as royalties, they would pay no taxes on it.
Maybe they could do a Kickstarter campaign?
Is this a dick move from Apple? Sure. But the day I'll be arguing on behalf of music labels and distributors is the day the hell freezes over. Their situation is entirely of their own making.
This circumstance, in which Apple essentially pre-installs the service on every device and subsequently offers it for free, isn't so different from 1990s Microsoft bundling IE with Windows to undercut Netscape.
Someone somewhere invested an absolute shit-ton of cash in getting Ms Swift famous, producing her records, promoting her concerts, payola, etc, with absolutely no promise of return.
Honestly, $10 a month to use every app sounds pretty good for me, bad for developers.
You're suggesting a simple view where you look at the average amount people who subscribe to this (e.g. $10/month) service would have otherwise paid, and that if that number is less than $10/month the devs (/musicians) win. This is certainly true.
However, there's the additional benefit that not every user that subscribes will entirely drop their purchasing habits. Perhaps less often, but some subscribers will buy apps (/music) on top of their subscription.
Apple is a super secret walled garden, full of itself. From my experience with people that work there, I doubt any of them would even know why (let alone come out here to explain).
'As someone that knows people who've worked at Apple, I doubt many of them would know the answer to this or be allowed to post here if they did.'
https://news.ycombinator.com/newsguidelines.html
(1) They bring an enormous number of new subscribers and that this 3 month trial maximizes revenue for everyone including the artist.
(2) they pay a slightly higher royaly share than spotify in part because of this longer trial.
(3) Apple shares revenue with the artist in the same 70/30 split we see elsewhere and the 30% is the finders fee they get for delivering many of their x hundred million users to the service. Since there's no revenue in the first 3 months, 70% of $0 is $0. Apple eats the bandwidth/server costs of the service in this time with no revenue coming in.
(4) Spotify paid users are fairly happy with that service and won't all switch to Apple Music overnight and the same with people who buy music and radio so it's not like all the money these artist's see turns off for 3 months. The free trial effect will be heavily staggered as a steady stream of users signs up over years.
You were probably looking for formerly.
You give away a couple of months, get people hooked and you and reap years of recurring revenues. It's a model that works for drug dealers, razor blade makers (Gilette gives away 5 packs of blades in many schools) and SaaS companies.
I don't really feel too bad for Taylor Swift. She doesn't get a dime from radio airplay as an artist. But she benefits immensely from the marketing and promotional value of having it played.
Internet radio is different, as it's not considered to be a public performance.
If software developers were compensated for their creative output the way musicians are there wouldn't be so many software developers.
I had a really innovative startup idea once where I planned to have developers work for years to create hit software products that made many people's life better and then get into a crappy van and travel the country to do 90 minute demos of their product for a few hundred dollars.
But only if they had a genuinely successful product mind you, obviously being merely competent at software development meant you didn't get paid at all, you had to actually amass significant numbers of fans of your products willing to come to these demos.
Never did figure out why I didn't get more developers interested in the platform.
Because Apple will not allow her to do so. It is not 3 universal calendar month: every user gets 3 months free when they start a subscription, depending on when they sign up for the service. Artist cannot opt-out of the free-service tier catalog and just go with the paid users.
So Taylor Swift is withholding her music because she won't get paid for all the listens by users in their first 3 months.
[1] https://news.ycombinator.com/item?id=9738304
Apple's deal obviously makes sense for the artist otherwise the major labels would not have signed up, full stop.
What then are these independent's doing? I'd suggest since there is no money at stake in the first 3 months they are holding out to pressure for slightly better terms (and a couple headlines never hurt sales) and then will jump on in 3 months once the money is actually flowing.
You'll note that there will always be many people in the 3 month free trial, Swift isn't threatening to hold her album out forever (or her other music!) to stop the supposed bad business model, just for the 3 launch months when guaranteed revenue zero.
Kudos to these artists for knowing where their leverage is and using it though!
Apple has a couple options:
(1) just eat it, prolly what happens.
(2) they can pay up a bit but the big labels would be steamed at getting a worse deal than independents so that isn't happening.
(3) pay everyone a little bit more for the launch months. This might happen but the clock is ticking.
(4) they can make these artists sit out longer than the initial 3 months. That compromises the quality of their service though. Still they might do it, hoping it would pressure them to signing up for the release.
(5) they could weight the streaming for awhile so that holdout artists appear less than they might normally. I expect this might happen but if they do this hopefully be done openly ("we're rewarding our launch partners").
(6) go back in time and do a 3 month beta rollout so money is at stake when you do the big rollout with the new phone.
The independents on the other hand don't have this luxury.
It's very simple. The biggest portion of a records sales are going to come int he month or two after release, after the big marketing push. If an indie releases a record during those 3 months they are going to lose a ton of potential revenue. For a small record label that can be terminal. They're running on fumes they can't take the hit like the majors.
I also take issue with characterizing streaming income as a "ton of revenue" (perhaps you meant actual sales sales in which case somewhat irrelevent here?) while everything I've heard over the years is how streaming revenue is a small fraction of artist revenue, especially independents.
Here's numbers from a pro-spotify independent artist [1]:
$1,359 from spotify, that's apparently a career to date number.
http://www.popmatters.com/feature/193667-why-its-time-to-sto...
Taylor Swift can withhold her music from streaming services because she's a PHENOMENON who can still shift albums via iTunes (and even physically) because people want her music. Artists starting out don't have that luxury and, increasingly, their music won't get the listens if it's not on streaming services.
It strikes me as similar to the situation with people only buying games that are on Steam. Consumers love the convenience of a platform that is in many ways quite anti-creator. Tough one.
Did you read the post where she explains what is her goal for doing this? Here is the relevant part:
This is not about me. Thankfully I am on my fifth album and can support myself, my band, crew, and entire management team by playing live shows. This is about the new artist or band that has just released their first single and will not be paid for its success. This is about the young songwriter who just got his or her first cut and thought that the royalties from that would get them out of debt. This is about the producer who works tirelessly to innovate and create, just like the innovators and creators at Apple are pioneering in their field…but will not get paid for a quarter of a year’s worth of plays on his or her songs.
Plenty of creators currently put their music on Soundcloud, Bandcamp, Youtube and more, and get exposure that way without getting paid.
The choice is really up to the artist. I do agree that Apple has the ability to pay artists during the 3-month trial, but should they have to? I don't know..
btw not saying I have the answer here, but as parent said, the current landscape doesn't really line up with her argument much.
Unless the artist (or representative) have given them permission to use their content for free, they should absolutely have to. It's the same IP laws that Apple like to use in their own defence: you can't just use someone else's stuff without their permission and without remuneration. What do you think Apple would do to me if I started selling an OS that used Apple's graphics set?
Just because some artists put their music on free media doesn't mean that a corporation can use that music as a loss-leader to sell their service.
That's how the music business has always worked. With a few exceptions labels take a loss on the startup costs of establishing new artists.
Most likely, it's a combination of all three possible explanations: some albums are from old deals she has no control over, others (1989) she wants to make more money on, and she's also disgusted with Apple's treatment of artists and taking a stand.
People don't need a single pure motivation for their actions to be legitimate.
Without wanting triggering an argument here...would you mind giving me a 3 sentence summary of what aspect of it is anti-creator?
Otherwise, I would also be genuinely curious to hear what problems developers have with Steam.
She is VERY in touch with its shape... And she is trying to change it. She also famously ditched Spotify and has been consistent in using her fame and leverage.
What she is doing is very important...Spotify is bankrupting artists while bleeding cash with no real business model to make the money back. She was outlasting them while the vc money ran out and it was working.... Now that Apple is in the game, the danger of them using their cash to bankrupt artists with a bad business almost indefinitely is very scary to artists. She is trying to be diplomatic while making a point.
That's what distinguishes Taylor Swift from 95 percent of acts who maybe negotiate a little thing here and there, but are mostly happy to get signed.
No, she's signed with an indie label called Big Machine Records. Big Machine Records has a distribution deal with Universal.
If it took me 6 months of no income to produce an album, then as I release it I go 3 months with no income (assuming that Apple is the only streaming service, and that people choose to stream instead of buy). By the time the 3 months are over, people have moved on to something else. This hurts me as I don't recover my expenses.
Taylor mentioned that she can support herself, team, etc. The unknown mostly can't, so the trial hurts them.
Maybe there was some sort exclusivity thing but it doesn't make sense that artists would have to take it or leave it now.
Also, someone with her streaming numbers is basically the only kind of artist that would even care. Streaming royalties are really low unless you have really huge numbers so while she stands to potentially lose significant revenue in 3 months tons of artists won't.
It's crazy how the industry leaders are so prevalent compared to the people they employ.
It is safe to assume that max. 10% of the subscribers will be in this 3 month trial. You will make money from the other 90%.
Also, just a little industry insight: Taylor makes $1.5m+ at each concert, plus travel, hotel, technical rider. I have a very hard time understanding all this cry baby talk.
Did you read the whole article?
And if that's true, then Apple should be taking the hit up front, not the artists.
Your last point is just irrelevant and unnecessary.
Yes, obviously a lot of people must be paid from that fee (crew, management, band...), but it is still shitload of cash.
That money pays a lot of other peoples salaries too. It takes a large staff to put on a tour for a performer of her size.