Apple, Taylor Swift Were Fighting Over Fractions Of Pennies

NEW YORK (TheStreet) -- Taylor Swift railed publicly against Apple (AAPL) Music, and Apple blinked -- but the troubles that the pop star and many other musicians have with streaming music platforms go well beyond the newest service.

When Apple changed course and agreed to pay royalties to artists for the songs it streams to customers during their three-month free trials of its new streaming platform, it was hailed as a success for all musicians, not just Swift. But the stakes in the showdown between the 25-year-old singer and the world's largest company by market cap equate to fractions of pennies per streamed song.

Even as streaming services have grown into a $6.9 billion digital music industry, musicians are still rely on CD sales and touring to get by -- and CD sales are steadily declining, largely thanks to the growth of online options.

"[The money] basically trickles down," Paul Verna, senior analyst at said. "What's pretty clear across the streaming services, is that the amounts that artists are getting is paltry."

The streaming music business is relatively young, and companies in the industry have yet to nail down the perfect business model. Pandora  (P), the only publicly traded company in the streaming music space -- until Apple enters the market later this month -- has had trouble finding profits. Musicians share the pain of the streaming services when they don't earn enough to make a living off their art.

At the heart of this struggle is an ongoing, three-way price war between the streaming services, music labels and artists. The money paid to a streaming service passes through several choke points -- where various entities take their cut -- before any of it lands in the artist's pocket. The amount taken off the top at each stage depends on both the service being used and the contract between the music label and the artist. 

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