Recork the champagne and put your pen back in the drawer. When Apple exec Eddie Cue reversed course, promising Taylor Swift and the world that “artists will be paid” during its free 90 day trials, the indie music community rejoiced. But the reality of what Apple Music will pay is likely far less than expected.
“We don’t ask you for free iPhones. Please don’t ask us to provide you with our music for no compensation,” Taylor Swift penned on Tumblr, echoing the complaints of many musicians and indie labels. Apple exec Eddie Cue responded saying they “will pay artist for streaming” and “will always make sure artists are paid.”
But Cue stopped short of saying how much Apple would pay.
Apple says: “Rate(s) will increase when customers start paying.”
Yesterday, responding to the Wall Street Journal, “Apple declined to say how much it plans to pay during the trial period, though it said the rate will increase once customers start paying for subscriptions.”
If the rate “will increase once customers start paying for subscriptions”, what is Apple paying during the free trials? Certainly, less that 71.5%.
Music streaming payments are based on a percentage of income. But during a free trial there is no income to calculate. Will Apple assume that every free trial will convert to paid and pay 71.5% of the $9.99 per month they would have paid during the trial?
Spotify pays 70% of revenue from paid subscribers. It reportedly pays half of its normal rate during free and low cost trials and about 20% for plays on its free ad supported tier.
Which formula will Apple use? 100%? 50%? 20%?
The answer could lead to another PR nightmare for Apple.