The Letter That Made Apple Change Its Music Plans

By Human Business Works

On Sunday, June 21, 2015, Apple was a little more than a week away from launching one of its biggest new services.

Apple Music was scheduled to go live on June 30 in more than 100 countries. The plan was ambitious: streaming music, live radio, artist connections and a huge catalog, all inside one service. New customers would be offered a three-month free trial.

For listeners, the offer was simple.

Three months of music without paying.

For some of the people who made that music, the arrangement looked very different.

During the free trial, Apple did not initially plan to pay royalties to music rights holders for songs people streamed. Independent record labels had already raised objections. Beggars Group and other representatives of independent music argued that smaller companies could not easily absorb three months without that income. 

Then Taylor Swift entered the argument.

That morning, she published an open letter titled “To Apple, Love Taylor.”

Swift was 25. Her album 1989 had been one of the biggest releases in the world, selling nearly 1.3 million copies in the United States during its first week. She had already made her position on streaming clear the previous year when she removed her music from Spotify.

Now she said 1989 would not be available on Apple Music.

Her concern was not the price listeners would pay after the trial. It was what happened during those first three free months.

Swift described Apple's policy as disappointing and focused much of the letter on people with less financial power than she had: new artists, young songwriters and producers who could not simply give up a quarter of a year's streaming income.

One sentence reduced the dispute to something almost anyone could understand: “Three months is a long time to go unpaid.”

She ended by pointing out an uncomfortable part of the word free. Someone still absorbs the cost.

A free trial was not free for everyone

From Apple's side, a three-month trial made sense.

A new streaming service needed customers. Giving people time to use it without paying removed one of the biggest barriers to signing up.

Free trials were hardly new. Businesses had long used them to introduce customers to products they might later pay for.

But Apple's original arrangement raised a different question.

Who should finance the trial?

Apple could give its service away to listeners. But if the company also withheld royalties during that period, some of the cost of attracting those customers would effectively be carried by the companies and people supplying the music.

That distinction mattered especially to smaller operators.

Independent labels had been making this argument before Swift's letter appeared. Beggars Group said it understood Apple's goal but questioned why rights holders and artists should bear part of the cost of acquiring Apple's new customers. Britain's Association of Independent Music warned that smaller labels could be particularly exposed to a sudden interruption in revenue. 

Swift gave that concern a much larger audience.

She was not asking customers to boycott Apple. She praised the company in the letter and said she hoped Apple Music could become a platform that treated creators fairly.

But she attached something valuable to her objection.

Apple Music could launch without 1989.

At that moment, that was not a small absence.

Apple answered before the weekend was over

The response came remarkably quickly.

Later that same day, Eddy Cue, Apple's senior vice president responsible for internet software and services, announced that the company would change the policy.

Apple Music would pay royalties during the free trial after all.

Cue publicly addressed both Swift and independent artists, saying Apple had heard them. He later said that Swift's intervention had helped solidify the issue inside the company, though independent labels had also been protesting the policy before her letter. 

That nuance matters.

The simple version of the story is that Taylor Swift wrote a letter and Apple immediately surrendered.

The real version is more interesting.

Pressure had already been building. Independent labels were resisting. Apple was preparing to launch a new service that depended on having a broad music catalog. Then one of the world's biggest artists made the issue understandable to millions of people in a single public letter.

A private business disagreement had become a public question about who pays when customers receive something for free.

Apple decided the answer should change.

Swift responded that she was relieved the company had listened.

Four days later, she announced that 1989 would be available on Apple Music. She made clear that the arrangement was not an exclusive deal. 

Apple Music launched on June 30 as planned.

The argument was bigger than three months

The dispute lasted only a short time, but the business problem behind it appears everywhere.

A restaurant gives away a meal to attract new customers. The ingredients still cost money.

A delivery company offers free delivery. Drivers still have to be paid.

A software company offers a free trial. Servers, employees and support systems still operate.

“Free” usually describes the customer's bill.

It does not mean the cost disappeared.

Somebody pays it.

The difficult part for a business is deciding who.

Sometimes the company absorbs that cost because attracting a long-term customer may justify losing money at the beginning. Sometimes suppliers are asked for lower prices. Sometimes workers carry more of the load. Sometimes investors finance the loss while the business tries to grow.

The customer may never see those decisions.

For three months of Apple Music, the question briefly became visible.

Swift had enough commercial weight to refuse the original terms. Independent labels had their own collective leverage. Apple had something important too: a new service that needed music companies and artists to participate.

Nobody in that relationship was operating alone.

That is often the part hidden behind a simple consumer offer.

A company can announce “three months free” in a few words.

Behind those words may be negotiations between platforms, suppliers, creators and employees over who will finance those three months.

In June 2015, one of those negotiations spilled into public view.

A letter appeared on a Sunday.

Apple changed its plan before the new week had properly begun.

And when customers finally opened Apple Music on June 30, the free trial still looked free to them.

The difference was that the people supplying the music would now be paid while they listened.