Top of the Order:
Money for Something: Apple has made music an integral part of its business for years. There can be no doubt that creating the iPod and the iTunes Music Store were critical to Apple’s rebirth more than a decade ago, and it can be argued that the iPod and selling digital music saved Apple and set in on the path that would eventually make it the world’s most-valuable publicly traded company.
Apple changed how people listen to, and buy music. And even though people still buy physical and digital music, the future of the music industry lies in streaming services, and getting people to pay a monthly fee in order to stream, say, Justin Timberlake’s hit “Can’t Stop The Feeling” over and over and over, just like my daughters ask me to do every time they are in my truck. That’s why Apple launched Apple Music, and began charging subscribers $10 a month for the service.
One of the biggest issues for any music-streaming operation is how much it pays to the musicians whose music it plays. This has been a central debate since before Bill Haley rocked around the clock, and it remains so today. Taylor Swift just recently made her music available, again, on streaming services other than Apple Music, and reportedly generated $400,000 a week as a result. And just last Friday, Bob Seger, one of the very last notable streaming-music holdouts, made 13 of his albums available for Apple Music, Spotify and other streaming services. Seger had been keeping most of his music off of streaming sites due to a dispute between his management and Capitol Records.
(And now, I know you have “Old Time Rock n Roll” stuck in your head. You’re welcome.)
When it comes to paying artists, Apple has been unlike other streaming services, and according to Bloomberg, paid 58 percent of its streaming revenue to musicians. That amount was higher than the 52-percent rate that Spotify recently negotiated. Apple is said to have originally agreed to a higher rate due to the major record labels’ concerns that Apple Music would eat away at sales from Apple’s iTunes store, which is still the world’s biggest seller of digital music, and a big source of sales for the record companies.
But, with streaming taking off, and music companies realizing it is likely to grow, Apple is said to be negotiating for a rate closer to that of Spotify after Apple’s current deals expire at the end of June. The music labels are said to be willing to work with Apple, as the company is expected to grow its Apple Music business from the approximately 20 million paying accounts it already has. By contrast, Spotify has said it has 50 million paying subscribers. Spotify also recently said it will pay at least $2 billion in royalties to record labels over the next two years.
Apple hasn’t said how much it expects to pay music companies, but cutting a check worth, say, 52 percent of the $10 a month from 20 million accounts equals … Money. And that’s what the record labels want.
Middle Innings:
Ch-Ch-Ch-Changes: Another day, and yet, another departure from Uber. Bill Gurley of Benchmark, said he will step down from the ride-hailing company’s board of directors, to be replaced by a fellow Benchmark colleague, Matt Cohler. Gurley’s departure is especially notable because he was one of the main drivers behind the effort to get Chief Executive Travis Kalanick to step down from his job.
Also, David Trujillo, of TPG, will replace David Bonderman on Uber’s board. Bonderman, also of TPG, stepped down last week after delivering a sexist joke at an Uber company meeting.
Bottom of the Lineup:
Tweeting Up: Twitter, yes, Twitter, has been on a roll this last week. With a gain of more than 2 percent Thursday, to close at $18.16, Twitter shares have risen nearly 10 percent since last Friday. Investors have showed some faith in Twitter following an analyst report that said the company has improved its advertising strategy. Twitter has also announced a new way for users of its Periscope live-video feature to make money from their posts.
Quote of the Day: “There is a growing need and desire to locate fulfillment centers within cities, such as in downtown districts and densely populated parts of the cities.” — Amazon, in a patent application for the creation of gigantic drone-delivery towers that would be based in some U.S. cities.
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