At the end of June, Apple’s current deal with major labels for Apple Music will wrap up, so Apple and those companies are current in negotiations working out new deals.
As Bloomberg reports, Apple’s stance at this point is to lower its share of revenue that record labels earn based on streaming from the service. Specifically, Apple wants to lower its rate of payments down to around the same mark that Spotify currently finds itself, after its own renegotiations took place earlier this year. Currently, Apple pays upwards of 58 percent of revenue from subscribers to Apple Music, but the company wants to be around 52 percent.
Spotify, for what its worth, was able to work out that deal for its own streaming platform due to a promise of subscriber growth. As it stands right now, Spotify has a gigantic lead over the other services, including Apple Music, in terms of paying subscribers, and it looks like the numbers will continue to go up.
If Apple wants to work its way down to a similar revenue payout as Spotify, the labels are looking for the same subscriber growth promise they were made by Spotify. Apple more than likely just wants to reduce that revenue payout, simply because it had to pay more than the industry standard just to convince music labels that Apple Music wouldn’t cannibalize iTunes altogether.
Record labels clearly see a worthy proposition in lowering the revenue payout as long as there is an offset of subscribers, which the companies will obviously be looking for in the negotiations with Apple, too. While the current deal is set to end in June, if the companies cannot come to terms before that, it will simply continue until they do work something out.[via Bloomberg]