Here's the math: suppose Apple get 25 Million users to sign up as a paid subscriber at the end of the trial. I'm assuming only about 5 or so more million than Spotify which is probably an underestimation since Apple is going to embed this as default right into iOS 9:
http://bgr.com/2015/06/10/spotify-paid-subscribers-20-million/ Pick your own number and redo this math if you feel like Apple can't woo more paying subscribers than Spotify with this free trial and embedding it in iOS.
25 million paying subscribers times about $2.80 per month times 12 months = $840 Million dollars per year. Can you really believe that $840 Million won't be able to cover the startup R&D, pay some "not cheap" engineers and a worldwide adversiting campaign? Let's allocate $400 Million to advertising and let's allocate $100 Million to R&D. Of the $340 Million left, let's hire a good number of "not cheap" engineers at- say- $250K per year. How many can we afford to hire? 1,360 "not cheap" engineers. I just don't see it taking that many. How many do you think they'll need solely dedicated- and thus billed to- Apple Music (and nothing else)?
Or do we need to spend more for advertising this one service, which I've already budgeted at about 40% of ALL Apple advertising spent to advertise EVERYTHING that Apple makes:
http://www.cbsnews.com/news/apples-ad-budget-hits-1-billion/ I've probably far overshot that number which, if true, could be reallocated to any of these other high costs being implied.
Or do we think it cost more than $100 Million in startup R&D for this service?
Step forward in time. Eventually, all of that startup R&D is fully recouped whatever that number is. They don't have to keep pouring startup R&D sunk costs into this every year. Eventually it is fully researched & developed. Eventually, the big splash of a worldwide marketing campaign has done it's job so they don't have to keep running advertising for this product at that level EVERY year. So only those Engineer costs and maybe "future development" recurs into subsequent years.
So, let's see year 2 with the $100Million in R&D back in the usable pot and maybe $300 Million of the $400 Million I arbitrarily chose for marketing launch budget back in the new revenue pot too. Unless I have a much larger army of "not cheap" engineers and/or future development that is not engineer costs is spiking up beyond anything I can imagine, it's hard to see where all that money would go to prove your guarantee true. It seems eventually Apple will make a lot of profit from this even if we aggressively spend a lot of this money in the first year.
And knowing Apple and how much Apple loves it's relatively fat profit margins, why are they bothering with this business if there is guaranteed to be no profit in it?
But, but, but, what about the free trial cost? I appears you've budgeted that at $3 Billion dollars but Apple has already said that they artists will get paid and the deals already in place (presumably with the labels) will remain as is. If that interpretation is true, the vast majority of the money that would flow through in the 72% won't during the trial. Why? Because the labels are very likely taking most of that 72%. So, only the scraps that flows through the labels to the artists is what's at stake in the free trial reversal and I suspect that will prove to be scraps to Apple.
There's no blaming the big giant corporation here. Apple hasn't done anything particularly wrong. However, they do stand to make the most revenues of all individual players in this whole deal. I doubt any label will get a 28% cut right off the the top as it looks like their cuts is likely to be less than Apple's cut at most. Tens of thousands of artists will only get a cut of those cuts (or scraps).
So the entity with the most to gain is taking on the bulk of the cost. That makes sense to me. The artists at the other end of the equation are going to get paid some tiny scraps without having to take on this startup period risk. The labels are going to get nothing during the trial as that's what they've already agreed to with Apple... and nobody is arguing for Apple to throw them a bone.
Unlike you, I think Apple will make a LOT of money from this business. It's unlikely to be billions of dollars but it does look like they can make hundreds of millions each year for many years to come. If there is not much of a market to pay for streaming music, Apple could take a hit here. But to he who takes the bulk of the risks, gets the bulk of the rewards... or losses when they try something and it doesn't work.
