Apple> Once the trial period is over, they [trial users] would [either] convert to a paying customer or they would decide that the service is not for them...
Sword> Apple had always intended to pay, just when the revenues were booked... When Apple charged the cards for subscriptions made during the trial period, the artists would be paid.
What about the trial users who "decided the service is not for them"? All they wanted was a freebie deal. Their cards were not charged, and they didn't make any subscriptions during the trial period. They got three months of music for free and then walked away.
We both know there would be LOTS of people who would do that.
So... Who was going to pay the artists whose music was taken for three months by the freebies who walked away? I haven't read that Apple intended to fund that loss, but that seems to be what they've agreed to do now.
What am I not understanding about the handling of the walk-aways?
You are simply not understanding that Swordmaker got this “all wrong.”
Apple would, out of revenues from those who did pay subscriptions. Apple would wait for profits to manifest. They can afford to. Generally Accepted Accounting Practices (GAAP) rules apply to this, just as they do to all corporate income and expenditures. . . that's what some on here and elsewhere simply do not understand. Several years ago, Apple was forced to initiate a $2 charge for an upgrade that had been free before the Sarbanes Oxley laws were passed. . . The license as it existed did not allow them to give it away and some stockholders filed a lawsuit over giving it away on the grounds it caused a loss of stockholder return. The license Apple was offering the artists was a greater payment later for a delay in payment during the trial period.
As usual, there are people who would prefer to HATE Apple and obfuscate the issue than to understand what Apple was offering. . . which was a pretty good deal.