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Analyst: Why Apple needed to appease Taylor Swift

Apple's last-minute decision to dole out streaming music royalties shows the tech giant realized it needed to "open up the wallet" for the venture to survive and compete, one technology analyst said Monday.

"They need to make sure from a content, from an artist perspective, they do whatever they need to do to make sure this is successful," said Daniel Ives, managing director at FBR Capital Markets, in a CNBC "Squawk Alley" interview.

Over the weekend, pop star Taylor Swift bashed Apple's choice not to compensate artists during Apple Music's three-month free trial, calling it "shocking" and "disappointing" in an open letter. She claimed to advocate not only for herself but also for smaller independent artists who would lose out on streaming revenue.

Apple CEO Tim Cook
Getty Images
Apple CEO Tim Cook

On Sunday, Apple executive Eddy Cue confirmed that the tech giant will pay artists royalties during the trial period.

The change comes just days before the June 30 launch of the streaming service. Ives believes Apple made a safe move to appease artists as it enters a crucial time in a crowded space.

"This is more symbolic of what they need to do to make sure that they court the artist and there's no speed bump during this key three-month trial period," he said.

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Apple's quick response to Swift's concerns corrected a "big mistake," said Slava Rubin, CEO of crowdfunding site Indiegogo.com. He noted that, with nearly $200 billion in cash, Apple could not be seen as constricting small artists.

"You don't want to be squeezing out from somebody who's in a garage working on their next song," Rubin added on "Squawk Alley" on Monday.

Still, Apple's gesture did not appease all musicians. The tech giant quashed some negative sentiment, but seems to be extending an olive branch to only top-tier artists, noted Billy Corgan, lead singer of alternative rock band Smashing Pumpkins.

"The rest of us will be out here scrambling and begging for scraps," Corgan said in a "Squawk Alley" interview Monday.

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However, he noted that Swift showed "a level of social responsibility" by airing her grievances to Apple.