Tuesday, June 23, 2015

(The Big Disrupt) Apple: Why Apple can bend the knee to Taylor Swift and still win

So Apple, the big Cupertino based leviathan that permeates modern culture almost as much as it does the consumer electronics market is brought to its knees by Taylor Swift is the prevailing narrative you’ll read just about everywhere on the internet but, as in most cases, the truth is much more complex and interesting than meets the eye.

While Taylor Swift’s public objection to Apple’s plan to not pay royalties to artists for three months was the straw that rather large and intimidating camel’s back, it was the public outcry small indie and labels artists registering that brought it to a fever pitch where Apple would have no choice but to address the shortcomings of a plan that might have put some indie labels out of business.

While it’s quite a feat that one of the most powerful companies on the planet backpedaled so quickly and publicly on its plan because of a Tumblr blog from a prominent artist, the sad truth is that Apple can afford can back down from challenges from artists and indie labels as, for them, the stakes are not high enough given the sobering fact that the company comfortably makes in a quarter what the music industry makes in a year.

This large disparity between the scale of Apple and entire music industry gives a certain whiff about Apple Music’s launch that suggests that Apple’s only taking on the music industry just to see if they can be as dominant as they was with iTunes back in the early 2000’s and, given Apple’s ridiculous cash and talent advantage over just about every player in the music streaming market, only a fool or a clairvoyant would bet against them.

The only real reason Apple were able to make music executives kill the album and give birth to the singles driven music market we have today back in 2003 and are very likely to dictate terms to industry once again is that the music industry has never truly been able to control or own the means of how music was distributed or disseminated which has left the industry ripe for disruption since Thomas Edison invented the phonograph in 1877. The problem of how music was distributed and/or disseminated became more pronounced in the download era and now with streaming which has made this long term industry problem even harder to ignore. Say what you want about Tidal but the artist owned streaming service represents the best step the music industry has taken to control how music is distributed or disseminated for decades which, unfortunately for the music industry, too little, too late.

Because of this lack of control over how music distributed or disseminated, music fans, writers, artists, insiders and executives have had to dine on steady diet of books and articles that wonder out loud as to what new company, app, software, device and/or visionary will save the music industry or gives us culprits to vilify (usually major labels or naïve ambitious tech companies like Spotify who make the mistake of thinking they can save an entire industry) every time the industry contracts in record sales but not in the demand for great music.

With every generation this long term industry problem gets worse and doesn’t look like it’s going to get better and as long as it persists, innovative last mover companies like Apple with the deep pockets and talent to capture markets will always be able to control how we get to listen the music we love.

The real losers in this equation is almost always going to be artists who find themselves getting screwed by their labels who license their music to Apple for large fees and are nickeled and dimed by streaming companies who, in most cases, are forced to do so because of the large licensing fees they have cough up to labels to host their music.

In sum, while Taylor Swift, indie labels and other indie artists can take heart that Apple backed down under pressure but, in the end, Apple can bow down to every artist in the Billboard top 100 and still come up trumps because they have the ultimate ace in the hole: the music industry short termism which has given innovative companies from Edison Speaking Phonograph Company onwards a chance to dominate an industry that can’t see the blood on the leaves and realize that it’s theirs. 

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