Taylor Swift vs. Apple from the inside
July 23, 2015
When the best-selling musician in the world decided to do battle with the world's most valuable company last month, Scott Borchetta was stuck in the crossfire. But he came out unscathed, Borchetta recalled recently at the annual Fortune Brainstorm Tech conference in Aspen.
The Big Machine Records founder, best known for discovering Taylor Swift, was in the midst of negotiating with Apple executives on royalty payments from Apple's new music-streaming service when Swift — unexpectedly — posted a blog criticizing the payment plan and vowing her album "1989" wouldn't be included on the service. Apple Music planned to pay no royalties to musicians for tracks streamed during its free, three-month trial period.
During his talks with Apple's Eddy Cue and Jimmy Iovine, Borchetta received a text from Swift. It read, "Don't be mad," and included a link to her blog post.
The unexpected, very public salvo from Swift gave Borchetta — and, it turns out, musicians worldwide — some key leverage.
"I said, 'Here's the good news,'" Borchetta recalled. "'You haven't launched yet. You can still do the right thing. And if you do the right thing, the artist community globally (is) going to look at you as the good guys. It's a rare opportunity to do something for the greater good.'"
Swift's blog drew worldwide attention and forced Apple's hand to pay artists from the start when Apple Music launched June 30, chalking up a rare battle win for musicians in the ongoing war with online streaming services and tech disruption.
Recommended Stories For You
Despite the Apple win (some would say win-win, as the company has gotten its share of good press for deferring to artists), Borchetta is still battling Spotify and its founder, Daniel Ek, to change its model, which pays a much lower royalty rate for spins on its free service than its less popular premium one. Like many in the music industry, Borchetta and Swift — who pulled her music from Spotify last year — are lobbying the service to stop putting all music on its free, ad-supported service.
Borchetta predicted Spotify "will implode on itself" and suggested a hybrid model, where lesser-known artists seeking exposure would stay on the free version while bigger ones such as Swift would keep their music behind a premium paywall.
"(Ek has) got to realize that if he doesn't support this community, we're not going to support him," Burchetta said.
Of course, most musicians don't have the industrial clout that Swift has. Scooter Braun, the young talent manager and label owner who brought us Justin Bieber (and who is a Spotify investor), said the music industry will lose if it keeps fighting new technology, pointing to the industry-building technology of radio a century ago and the advent of Napster that crippled the industry at the turn of the millennium.
"Our entire industry was created by technology. … Every time we try to fight technology, it kicks our ass and it shifts," he said.
Braun, who found Bieber on YouTube and signed him, offered some insight into the 21st-century world of artist discovery and talent scouting, where he's as likely find the next big thing online as he is in a coffee-shop open mic or a music club.
Braun recalled receiving an email from a friend in 2012 with a link to Psy's "Gangnam Style" video. The sender meant it as a joke, but Braun saw dollar signs.
"I said, 'We should sign him!'" he recalled. "I went to a lot of parties when I was a kid, and this is 'The Macarena.' This is 'Cotton Eye Joe.' I know what this is."
He apparently knows what he's talking about. The YouTube video had about 60,000 views when Braun saw it. It went on to become the first YouTube clip to top 1 billion views. And these days it induces about as many groans as "The Macarena" or "Cotton Eye Joe" when it comes on.