Taylor Swift took the world by storm this week for her open Tumblr letter to Apple Inc. AAPL. Within 24 hours of her post, Apple announced its new music service -- Apple Music -- will now pay artist royalties during the three-month free trial period.
Billy Corgan, '90s alternative rock icon and TNA wrestling creative producer, applauded the move, but not without some reservations.
“I think [Apple] saw a rising tide and they tried to stem it,” Corgan said. “In the social media era, every artist has the clout.”
In an exclusive interview with Benzinga, the Smashing Pumpkins frontman discussed big tech, the music industry and changes that need to be made.
“It’s not really about Apple. It’s about the tech companies trying to put a new fuzzy face over what is the old record business, and people like me who are independent artists, we’re not having it.”
Creating Leverage
Corgan explained that, “the music business for a long time, and obviously Apple is in the music business now, it works on leverage.” However, “if 10 percent of the artists that aren't represented” decide to leave a service altogether, “that would hurt that streaming service way more than a singular artist because” taking an entire contemporary collection of music, such as metal bands, off a streaming service, “that’d be a big hit to anybody.”
Corgan reiterated his point made previously that “all hell is going to break loose.” He said he doesn’t remember “bowing and scraping” to music retailers in the past, but tech companies have enjoyed a “10-15 year period of grace. This thing with Taylor was the official announcement that that era is over.”
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The New Model
How can this change? Corgan said it’s simple: bring in corporate money.
“It’ll be so-and-so music sponsored by Coca-Cola. It’ll be Coca-Cola putting up the money, Coca-Cola will take the marketing, the tech company will take the hardware sales and the music artist will get paid fair for what they bring to the market in terms of market value,” he explained. “That'll be the way to settle issues..tech companies are not going to open the door to hardware sharing because when they do, it’s all downhill from there.”
If these corporate partnerships don’t happen, Corgan said non-music companies would then cut in front and build their own streaming services.
A company will “offer you if you come to cocacola.com, any artist that we represent, you can listen to their music for free -- no commercials, no ads. All you have to do is sign up for cocacola.com,” Corgan said. “Imagine if Coca-Cola decides that Beyonce is part of their next round of marketing. They go to Beyonce and say ‘Check this out - if you give us the exclusive on your next album for six weeks, we’ll give you $10 million upfront and we’ll pump the shit out of you - your face will be everywhere. All this free marketing, plus $10 million, all you have to do is give us the exclusive for six weeks.’
“Once those dynamics change, what are the tech companies gonna say?”
Using The Coca-Cola Co KO was just an example; Beyonce signed a $50-million deal with PepsiCo, Inc. PEP in 2013.
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Cultivate New Artists
Corgan also talked about his peer-to-peer model that he previously laid out on CNBC. By having a transparent system that incentivizes an artist to bring more artists to the service, and in turn sell more music, everybody reaps more rewards.
“We’re gonna make double what we can make and we can still be ourselves. Once you create that business model, then everybody’s in the game. Everybody's an entrepreneur,” Corgan said. “That’s really what the leading tech companies of the world should be looking for. Instead, they’re putting the same people in charge to run the same old business model, albeit through tech, with more juice and with the ‘wow’ factor.”
Corgan said this incentivized system would not only been be fair monetarily, but also brings new artists to light.
“If artists don’t profit, who is profiting?” he asked. ”We’re selling cell phones and laptops. How come everybody else gets to make money, but not the artist?”
Generational Change
Corgan respects Apple as a company, but disputed the idea that they’re revolutionizing music, something many believe it did when it invented iTunes and the iPod.
“We're still talking about their radio station. Okay, great. You think they’re gonna play alternative bands on that station? How do indie bands, or bands that have been around 25 years sustain in the marketplace without embarrassing themselves?” Corgan asked. “That’s 97 percent of the music business. So we’re willing to ignore 97 percent of the music business?”
“I build up my own world, my own social capital. People can argue all they want for or against it, I’m here and I’m gonna stay here and I'm just one guy. Imagine if 50 other people of credibility start speaking out. There's no way a corporation can stop that pride if it gains momentum in the social marketplace.”
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Corgan praised a recent CNBC article that said millennials are dictating the conversation on social consciousness. Beyond millennials, the social media age has helped this movement.
“It’s a social conversation, not a business one,” Corgan explained. “Right now it’s about one artist versus one monolithic company, but honestly, if a trio of artists rose up and said we’re not having it, that might create an even bigger problem. But of course that doesn't make the headlines in Entertainment Weekly because they don't know who those people are, but we do.”
He continued, “At the end of the day, it might change whether or not we buy Apple products, it might change whether we do business with a particular website. It might change [which streaming service we go to].”
“People vote with their feet. Or maybe now they vote with their fingers,” Corgan said.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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