A few days ago, the largest company in the world capitulated to the request of a 25 year-old pop/country music star.
On the surface, the 24-hour feud between Apple and Taylor Swift was about music royalties. Apple is rolling out its new music streaming service at the end of the month, and the company had planned to not pay musicians while it offered a three-month free trial to users.
Swift posted an open letter to Apple on Sunday morning, chastising the business for a decision that she characterized as “shocking, disappointing, and completely unlike this historically progressive and generous company.” By Midnight on Sunday, Apple had reversed course, announcing that it would pay artists royalties during the three-month trial period.
Taylor Swift and Prompt Payment
At its heart, the challenge put forth by Ms. Swift is about the value of work.
This isn’t the first time that Swift has stirred this conversation. Last July, she decided to pull her music from the streaming service Spotify, arguing that “Piracy, file sharing and streaming” have hurt musicians financially. Swift defended that decision in a Wall Street Journal opinion piece, writing, “Music is art, and art is important and rare. Important, rare things are valuable. Valuable things should be paid for.
Well, the same can be said for construction work, whether you install specialty ceilings or pour concrete. Work is work. Work deserves to be paid, and work deserves to be paid on time.
You don’t have to look far to find this principle manifest in American policy. 47 states have prompt payment laws that dictate how quickly a contractor or supplier—those who do the work on a project—must be paid. All 50 states have mechanics lien laws that provide more leverage to those contractors and suppliers, so that they can defend against non-payment.
Yet, just as Apple had planned to do before Taylor Swift became involved, many companies use their size and influence to place the financial burden on smaller businesses, asking them to work on credit for longer periods of time. A recent New York Times article discusses the growing trend of large companies asking 120 days to pay their suppliers, despite the fact that those companies are themselves usually paid within 30 days.
Construction Needs a Champion
“This is not about me,” Swift writes in her letter to Apple. “This is about the new artist or band that has just released their first single and will not be paid for its success.”
While contractors and suppliers might not have a Taylor Swift to speak up for them (yet), but there are several options that exist to support smaller businesses. As mentioned above, mechanics lien law exists to help those that perform work when they are having trouble being paid (in addition to other benefits).
Also mentioned above were prompt payment laws, which are designed to help businesses who work on credit support their cash flow. Prompt payment cycles are usually short (7-14 days), and generally begin counting down when the party that owes you money has been paid.
President Obama’s Supplier Pay is yet another initiative with the goal of boosting small companies’ working capital.
Despite the solutions that exist to address it, payment in the construction industry remains a problem.
Parties at the bottom of the chain—equipment lessors, material suppliers, contractors—work on credit, and often they are often pushed to accept unfair terms. Moreover, when payment becomes an issue, it is these businesses, the ones that are first to put physical work into a project, that must wait the longest before and fight the hardest to be compensated.
These businesses doesn’t have a Taylor Swift (yet) to speak up for them, so the best they can do for now is take advantage of the laws, programs, and tools designed to help in these situations.
“We don’t ask you for free iPhones,” wrote Swift. “Please don’t ask us to provide you with our music for no compensation.
Nobody should have to go unpaid for work well done.