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Chapter 14: Problem 5

When Apple first launched Apple Music, singer Taylor Swift refused to allow her album \(1989,\) which had been the best-selling album of the year, to be made available for the service because Apple did not intend to pay royalties on songs it streamed during an initial three-month period when the service would be free to subscribers. In response, Apple changed its policy and agreed to pay royalties during those three months, even though doing so reduced its profit. Do singers typically have substantial bargaining power with Apple, Spotify, and the other streaming services? Briefly explain.

Short Answer

Expert verified
Singers can have substantial bargaining power over streaming platforms, though the level of this power can vary significantly based on individual circumstances such as popularity, fan base, and the competitive landscape of streaming platforms. However, it's not universal and depends on numerous factors.

Step by step solution

01

Review the Taylor Swift Case

The situation with Taylor Swift and Apple music provides a relevant starting point to understand the negotiation dynamics between artists and streaming platforms. Looking at this case, it's clear that Swift had substantial bargaining power over Apple, given her influence and the success of her album '1989'.
02

Analyzing The Structure of Streaming Services Industry

In the music streaming industry, the primary source of value is the music content i.e., songs produced by the artists. This implies that the presence or absence of a popular artist's music on a platform can directly impact the platform's user base and revenues. Considering this interdependence, artists do have a level of bargaining power.
03

Consider The Variety of Artists

Despite the narrative painted by the Taylor Swift situation, not all artists share the same level of influence. Established, internationally popular artists often have more bargaining power compared to emerging or less-known artists. These smaller artists may lack the leverage to negotiate terms to their advantage.
04

Evaluation of Bargaining Power

By taking into consideration the various factors, we can conclude that the bargaining power of artists with streaming platforms varies. While it would be incorrect to state that all artists or singers have substantial bargaining power, it is equally worded to dismiss their influence entirely. Factors such as an artist's popularity, the consumer fan base, and the competitive landscape of streaming platforms collectively define an artist's bargaining power.

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